Savings and Checking Accounts

Most people have a savings account with a local bank. In general, all banks offer some type of savings/checking accounts. Depending on the bank you choose to do business with, they offer different benefits, such as APY (Annual Percentage Yield), online banking, ATM services, cash back bonuses, and customer service. Historically, there have been two places to open a savings account; at a community bank or a national bank. Nowadays, a breed of online banks now gives the public a place to do business with new benefits.

Let me first address savings accounts. Today the average savings account returns much less than .5% APY. My personal recommendation is the high yield online savings account at Ally Bank. At 1.29% APY, the intreset is earned at a much higher rate than most. Another benefit is that they accrue interest on a daily basis, opposed to monthly - which is what most banks do. This gives you the added benefit of compounded interest, where you can earn interest on interest.

Also with Ally, they offer interest checking accounts. This online bank allows you to access your money anytime with a debit card, which is not only free to use at any ATM, but they will reimburse you any fees charged by the other bank. The APY you get for their checking account begins at .5% and can go upwards of %1.05 (at the $15,000 level), which is not bad considering most checking accounts earn no interest and may charge you to use. Ally also offers daily compounding on these accounts as well as free checks.

Overall, given the amount of money you would like to open these accounts with, I highly recommend shopping around, just don't forget to look at the online bank market. Also, with the options of other retirement plans and investment opportunities (IRAs, 401Ks, Hedge Funds, bonds, ETFs, etc.) I recommend using a variety of investment to reach your retirement goals. Savings accounts tend to have trouble competing with inflation rates, so keeping your money in these is really a last resort. Remember if you have debts (credit cards, mortgages, etc.) that are charging you at a rate higher than your investments, it makes more sense to pay these off as soon as possible. Finally, remember to use an FDIC insured bank when deciding where to store your money.