Week two is here! On a similar note as last week, I’ve opened another savings account with Synchrony Bank. The rate for the savings account is higher than the average at 1.05%. Unlike the Netspend account I talked about last week, this account does not have a limit on how much I can have deposited. While just opening an account isn’t exactly noteworthy, I have an unorthodox plan for this account. I plan to have my direct deposit sent here, instead of my checking account. I’m going to test the theory that I can earn interest on the idle cash between deposits and bill payments (like rent). If I can have my $1,000 of rent money sit in an account earning 1.05% for the majority of the month, versus 0.01% in a checking account, I should be able to accumulate an additional $10.50 a year. A small victory, but a victory nonetheless! This should be doable, considering that most banks calculate your accumulated interest based on a monthly average balance (e.g. the longer the money for bills sits idle in the account, the better). The only concern that I have with this experiment, is that federal law only allows 6 withdrawals from a savings account per month. This is definitely a problem if each bill is paid individually, since it’s very likely to have more than six bills each month.That leads to another interesting part of this experiment though. If I can only access money six times a month, is there a chance that I will not be tempted to spend the money? I’m very interested to find out!
Some other useful information:
- Synchrony was formerly GE Capital (General Electric).
- There’s no minimum balance requirement or monthly service fee.
- The website is easy to use, but in all honesty it looks a little dated.
This account was found just like the Netspend account from the last post, a quick Google search. There are other HYSAs at the 1.05% rate, but I chose Synchrony for their high reviews on bankrate.com and the fact that I have a credit card with them as well.
Finally, just like with Netspend make sure to thoroughly check the FDIC insurance and fee schedule before, just in case the information provided here is no longer relevant.Also, don’t forget the six withdrawal limit.
Now that I have this account in place, a budget will be more critical than ever. That sounds like a great place to start for week three!
Until next time!
UPDATE: Ensure that your brick and mortar bank originally used for Direct Deposit, does not charge any fees! Most checking accounts now appear to have a maintenance fee that is typically waived by direct deposits during the statement period. Switching to the Savings Account, may eliminate the fee waiver and consequently charge a fee to the checking account. I will be reviewing which accounts do not charge these fees in a future post.