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I'm going to be opening up a new bank account for grad school soon. I'll be relying on student loans to finance everything. A savings account with TD Bank requires a minimum of $250 in the account to not be charged fees. The interest rate in savings accounts are ridiculously low. I just don't see much point in opening one up.
Just dump it into the Checking account. Woops, should have made that more clear.
Maybe once again the savings accounts will pay interest.
In the mean time they still serve their main function well:
reinforce the discipline of the act of setting aside your savings.
Nothing else in the realm of investment (or use) can happen until that pool of cold hard cash has been accumulated.
This will then allow you to make an actual choice of what to do with $Xthousand on hand...
rather than just speculating on what you would like to do if you had $Xthousand.
But after you do something with that $Xthousand...
immediately start to replenish it all over again.
If they have the same variety of checking accounts as my bank does, there is probably a checking account which pays more than any of the savings accounts. If you need to have a physical separation in order to keep from spending it, then that is reason enough, despite the lack of interest.
We have, for example, a checking that pays .75% but you need to jump through certain hoops to qualify for it.
i would open it and add money to it use it as a emergency security account if you put it into your checking you are more likely an more tempted to spend it sooner then later. .
Just dump it into the Checking account. Woops, should have made that more clear.
have your checking account, and for "savings", open an account with Ally bank or American Express Personal Savings. Their rate is around 0.80%, which sounds pathetic, but is pretty good in today's world. No minimums, no fees. Charles Schwab might be a good all around option for you, because their account has ATM reimbursements, so you can use your debit card anywhere, and it pays around 0.30% interest.
Most banks have a structured plan in which a checking overdraft will automatically be covered by the balance in your savings account. So there is a defense against overdraft fees if you accidentally overdraw. That's the only reason I have one, and I've never had to use it for that purpose, but it's still there and pays about four cents a year interest. It's kind of like setting your alarm clock ten minutes fast. You have ten more minutes than you think you have, in case of a tight squeeze.
Just dump it into the Checking account. Woops, should have made that more clear.
While it certainly true saving accounts pay almost nothing in interest, it still a useful way to save money. If all your money is in your checking account, the temptation to spend the extra money might will be much higher then if you have a separate account. At least it's this way for me. And while I do sometimes have to take money out of savings to cover expenses, I make a point of replacing it soon as possible.
Another thing I do is always claim Zero exemptions on my W4, while it's certainly true it's allowing the government to use my money interest free, it really doesn't amount to much and I like getting a bigger return at the end of the year.
I sign up for savings accounts when they offer a sign up bonus. Sign up, stay for a while, collect signing bonus, and bounce to the next one.
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