Savings rates are really low right now. But, getting some interest on the money is better than none at all and I’ve been trying to figure out what to do with some money I have, that I want to keep more liquid than it would be in a mutual fund, bonds or CDs. So, I’ve been looking around at different rates for savings accounts and money market accounts to find who has the best rates. There are plenty of online accounts that offer rates hovering around 1.15%. In my searches I fumbled across a credit union that is located down the street. They don’t have any accounts that match that rate, but the Money Markets they offer are currently at .70%. So, on $10,000 that difference is around $45 for the year. If I was comparing two online banks this would be a no brainer, but a credit union versus a bank it seems like the lower interest rate is worth considering.
Credit Unions, in general, aren’t known for being a pain with charging hidden fees, or making it difficult to access your money. This credit union is in my neighborhood, so if I have any questions or complaints it will be a simple matter of walking over there and talking to a person face to face. I don’t know how true it is, but going through their website this credit union claim to be a positive force for the community.
I am already a member of another credit union that is in another part of the state. Their money market rates aren’t nearly as good. But, the interest rates on auto loans are a lot better. So, I wouldn’t be taking advantage of loans from this new institution.
The only thing better about the online bank (DiscoverBank, ING, SallieMae…) would be the interest rate. Everything else they offer I can replicate with the credit union.
What do you all think? Is the local convenience worth the difference?
Not really. You can easily park your money in an online savings bank, and keep checking accounts at the local credit union. It only takes a day or two to transfer money to or from the online savings account, which probably wouldn’t ever be a problem. That way you get the better interest rates but still have a local bank for your everyday needs.
But you can probably even survive entirely from the online bank. My bank* lets me deposit checks with a scanner or smartphone, and they refund ATM fees so I can get cash anywhere. They’ve got good phone customer service as well. IMO I don’t think I’ve missed out on anything by not having a local branch.
*not one of the online banks you mention, their savings interest rates aren’t anything special.
I’d go with the credit union as much as possible. My credit union has online banking, which is really pretty intuitive. Also, if you have ANY sort of problem, your local credit union will make every reasonable effort, and even some unreasonable effort, to get it straightened out ASAP. That big online bank is going to do things strictly by the numbers, and it doesn’t care how long doing it by the numbers will take to resolve your problem.
I use both. With ING (what I use) I can easily move money back and forth between my credit unit and my ING account. Might take a day or two to move. Interest rates these days means that both places suck as an investment. This way I at least get the extra $50 or $100 a year in interest from ING without having to give up easy access to the money and without paying $50 or $100 in fees.
If you want to talk about making your savings work for you, no bank is a good place. Mutual funds are generally pretty liquid too. I think you can do all that on-line and I doubt it takes more than a few days to get at your money.
Also, if you can get a decent rate in a CD, I wouldn’t worry too much about liquidity, as you can always break the CD early if you have to (although you’ll pay a penalty of a few months interest when you do).
There’s no reason you can’t do both, like shiftless does. Use the online one as a savings account to get maximum interest on the money you keep sitting around, and use the credit union for bill paying, ATM money and whatever services they provide.
You may someday need a last-minute cashier’s check, a used car loan, or even a free notary (well, my CU does this) and it’s really nice to have a nice neighborhood credit union at your disposal for those sorts of things.
FYI, Capital One is taking over ING, if that matters to you. (ING has a generally good reputation for customer service while Capital One has a terrible one.)
This doesn’t happen often, but I am an insurance adjuster. When customers have a claim, sometimes we have to include their mortgagee’s name on the check. The customers with a local bank have very few problems getting the insurance proceeds while those who deal with the non-local lenders have to fight for months to get the funds released.
I try to use local businesses (banks, retailers, whatever) when possible.