Changing How I Save Money in My ING Accounts

With my focus on ways to save money one thing I look at is the interest rate I am getting.

I have been a loyal fan of ING and it is currently my main savings and main checking account.

I was speaking to Baz earlier and he mentioned opening a new savings account take advantage of the savings account rates that ING offers. This made me realize that I have not looked at the rates in a while so I logged in to my account to see what was going on.

  • ING Savings account: 3.00%
  • ING Electric Checking account: 1.74%


This startled me because not only had I been using Electric Orange and my main checking account, it was also my main account. Period. I was having my paycheck direct deposited there because it was easy to set up and manage.

When I got a payment from a sponsor I used the Electric Orange account to collect the funds when possible. My Lending Club Loan comes out of my Electric Orange account so I also linked that account to the payments received from the people I lent money to on Lending Club.

I just realized that my Orange Savings account is earning almost double the interest that my Electric Orange account was getting but I was not taking advantage of the money there. The only thing I had there was my Never Go Back To Fresno Fund and I have already said that it is a very small amount right now.

I had the bulk of my money just sitting in Electric Orange and earning 1.74% when it could have been earning 3%! Now how smart is that? I quickly logged in to my ING account and figured out the difference between what I needed to send out as payments between now and the next payday and the balance that might be left over in the account.

It came to $374.25 so I immediately transferred $300 over to the Orange Savings account to take advantage of the interest rate. $50 will be sent in as a snowflake payment to the credit card and the other $24 will remain in the Electric Orange in case I overlooked something. This will lessen the amount that I have to transfer out of savings next month in order to cover all purchases and bills.

This means I will always have a $24 buffer in the Electric Orange account that is gaining interest at the rate of 1.74%.

I am also going to transfer the amount of the paycheck (less half of my monthly expenses) back into the savings account and only move a bulk of money over to the checking account as I need it to pay bills . This will allow me to take advantage of the higher interest rate while still keeping within the limit of less than three withdrawals from the savings account per month.

By doing this I will be able to see my savings grow and while I will still have the โ€˜expenseโ€™ of my Never Go Back To Fresno Fund I will also have a separate savings account that will take care of all the growing snowflakes.

  • What do you think of this method?
  • Have you tried something similar with your finances?
  • What are the flaws you see in this system?

Author: Lulu

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8 Comments

  1. It sounds like you have a great plan.

    I do basically the same thing, except I moved away from ING a long time ago. They have wonderful customer service and I was very happy with them, but ultimately I am a rate chaser and they haven’t been competitive in a long time.

    One thing I do along the same lines is with credit card payments. I transfer the money that we spend on our credit cards every couple of days to one of our savings accounts so that as it sits waiting to be used to pay the credit card bill it is also earning more interest than it would in our checking account. The benefit is two-fold. The extra interest and the piece of mind from knowing that you are always going to be able to make the credit card payment.

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  2. I think it is a good strategy as long as you have the time to devote to this activity. I find it difficult to find the time to manage this type of activity on a monthly basis although Ralph has inspired me with his post to start looking at this closer.

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  3. @ Ralph:
    That is a great strategy but a bit time consuming as you have to move the money twice. ๐Ÿ™‚

    Now of course if you kept the money in your Electric Orange checking account you would get more interest than your other checking account…but you would save yourself the hassle of moving the money two times. (subliminal message: switch back to ING ๐Ÿ™‚ )

    @ Passive:
    You need to start this now because you will see that it really helps.

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  4. I keep my extra money in a regular savings account as well, but I am not sure of the interest rate and really not too concerned with it. The money is my emergency fund and my monthly additions for my Vegas trip in January. While I suppose getting interest is good, 3% or so isn’t enough for me to worry about it. After all, its earning less than inflation ๐Ÿ™

    Once I get to the point where I have money to invest long-term, a good mutual fund will earn me around 12%, more than enough to stay ahead of inflation rates ๐Ÿ™‚

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  5. At 3.00%, ING is now the highest MMA that I hold. Time to transfer money.. [sigh]

    Best Wishes,
    D4L

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  6. It is somewhat a good strategy. I am not quite sure I understand but if I get the gist of it, you are saying your paycheck is being deposited into your checking acount and you plan to move X number of dollars into your savings account.

    Why not direct deposit into your savings and meter the money you need to pay your bills with every two weeks?

    Remember the interest is based on how much money is in your account each day during the cycle, not what you have at the end of the month.

    I think my confusion is coming from the debt-free side because I can see the logic behind your approach from your side however my own approach is in reverse.

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