The other night I spent some time streamlining our banking system. I’ve more or less settled on three core online savings accounts: ING Direct, Ally Bank, and Discover Bank to go along with our local bank accounts.
Why these three? As many of you know, I love the convenience of ING Direct. They’re so good at so many things. Thus, we’re currently using ING as the “hub” of our online financial world.
Unfortunately, ING Direct has fallen back a bit in terms of interest rates, so we’ve kept Ally and Discover around because they have a history of paying competitive rates. We’re currently getting 1.60% APY at Discover vs. 1.60% APY with Capital One 360.
Now that I’ve identified the core pieces of our banking puzzle, the next step is to get them to work well together. As things stood earlier this week, certain accounts were linked up in a daisy chain fashion, where money had to move from A to B before it could get to C.
In the interest of creating a more efficient system, I decided to go spend a few minutes systematically linking the accounts to one another. Stealing a page from my pal Jim’s book, I’ve drawn up a simplified financial network map to illustrate how things are configured.
A few words about this map… The arrows indicate the direction of links. Some accounts (with double-headed arrows) are capable of pushing and pulling money from either side. In other cases, the arrow runs from the “master” account to the “servant” account.
For example, I can log into ING Direct and push/pull money to/from our Bank of America checking account. I could configure our BofA checking account to access ING Direct, but BofA charges fees for certain types of external transactions initiated from their end, so I haven’t bothered.
As you can see from the map, I can shuffle money around within BofA very easily. Once it’s in the checking account, it can be pulled out to any of our online savings accounts, and from there it can be shuffled back and forth at will.
Is this more complex than it needs to be? Sure. That BofA savings account isn’t strictly necessary, and we don’t really need three online savings accounts. At the same time, however, I like flexibility and being able to eek out a bit more in the way of interest earnings whenever I can. What can I say? I’m a maximizer. 🙂
Our true financial map is, of course, considerably more complex than this. For example, Lending Club is set up to push/pull money to/from our checking account, and our Vanguard accounts have access to both our checking account and ING Direct. I also haven’t drawn in our automatic billpay, all of which originates from checking.
Nonetheless, this should give you a pretty good picture of how we’ve set things up.
What about you? How streamlined is your banking system?