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Questions on online savings accounts
Hello everyone, I am new to this board. I am starting to get serious about budgeting and saving. I like doing weekly transfers so I can easily budget per pay check. I am setting up some savings goals, as follows:
My yearly bills are
HOA fee of $437 per year
Car insurance of $563 per 6 months
Gym membership $281 per year
So I calculated I would need to save $35.46 per week to cover these expenses.
Now for my long term goals, I would like to save
E fund $15,000 by 5 years
House down payment $40,000 by 5 years
Baby fund $5,000 by 3 years
[Background info, my husband and I are in a starter house with no children and are looking into buying our next house in a few years when we will have a baby or two]
Now here is my question. For my long term savings goals, I was looking into high-interest savings accounts, like Ally bank online. What would be the best way to fund these online accounts? Direct deposit? Currently I have a checking and savings account with Bank of America and do an automated transfer from checking to savings to cover the yearly expenses, which is free, but BofA charges a fee to do "outside the bank" transfers. So to avoid transfer fees, my options are direct deposit or writing a check every week and scanning it? Or should I leave BofA altogether and get an online interest checking account? I just don't understand how you would fund these accounts if you had cash or checks to deposit. Any other tips are welcome.
Re: Questions on online savings accounts
We have ING/CapitalOne360 as well. We have an interest checking account through them, so we have our paychecks direct deposited, split between there and our other checking accounts. We also transfer to/from our other banks sometimes, and I use their mobile app all the time to deposit paper checks directly, which is super easy - takes me like 20 seconds.
I *think* it should be free for you to open an online savings account and fund it from BofA. I'd look into it to be sure, but here is how I think it would work if you want to keep BofA and get an account with CO360, Ally, etc (this is how our CO360 works with our bank, but our "normal" banks don't charge to send money out):
When you open an account, you will have to link it to a physical bank's checking account (such as yours at BofA), and this is how you will fund your account initially. You can then add more links later if you want, but you always need at least one. To fund the account, and to make savings deposits in the future, the online bank initiates an ACH transaction, which doesn't look any different to BofA than if you have any bills set up to automatically charge your account each month (through the biller's website - billpay through BofA is a different type of transaction). Essentially, you're "pulling" money from outside of BofA, rather than "pushing" from inside. I'm fairly certain this is a free transaction at any bank, but again, I'd check with BofA to be sure.
Once you have the link set up and an account created, you certainly can set up direct deposit through your employer so you don't ever see or miss the money.
HTH!
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