My husband and I have long-standing ties to our local brick-and-mortar bank, which provides us in-person service if we need it, a safety deposit box, and our paychecks are direct-deposited there. We don’t pay any fees, but the savings accounts there pay an interest rate of 0.01%. (Translation: keeping $10,000 there for a year generates $1 in interest!)
Online, high-yield savings accounts like Capital One and Discover Bank now offer interest rates over 3%. That’s 300 times the interest rate of our local bank!
Taylor wrote last year about having separate savings subaccounts for non-recurring expenses that don’t fall into a normal monthly budget (see link at bottom of this blog).
So I we went ahead and opened several savings accounts at Discover Bank. It was easy and quick to set them up online, and also easy to link our brick-and-mortar bank to Discover. The only downside? When transferring between the banks, it takes a day for the money to arrive at the other bank. But now we have the best of both worlds: high interest savings, and a local bank presence.
My husband and I now do weekly transfers from our local bank into our Discover savings accounts. Our latest big-ticket item we’re saving for? Our daughter’s wedding in late 2024!