This post is about 15% self-serving and 85% intended to help you, the reader and my friend.
About a month ago, I signed up with a savings account through
ING Direct. You've probably seen their commercials on television and elsewhere. We just moved and had to set up new accounts with a local bank. I opened a checking account with the local bank but I decided to go online with my initial savings account.
If you've
read or listened to
Dave Ramsey or figured this out on your own, we understand the need for an
emergency fund: $1000 set aside just in case
something happens... and it will. My advice to you (coming from the wisdom Dave Ramsey and grandmothers everywhere) is make sure you have $1K for emergencies stowed safely away as soon as possible.
There are two reasons and a bonus why I chose ING Direct for my emergency fund savings account.
- A buffer reduces impulse purchases
The savings account is tied to your checking account at your local bank and you can make transfers between each account easily. However, because the accounts are with separate institutions and the transfers go through the clearing house, it takes a couple days for the money to be transfered. Why is this important to me? Impulse purchases.
"Ooo... shiny new 5.1 Dolby Digital surround sound system! I don't have the money in my checking but I have it in my emergency fund."
Since I have to go through the effort of going online to transfer the money and wait a couple days for it to hit my account, I will most likely have talked myself out of the purchase. After all, it takes the impulse out of impulse purchasing if it's difficult to get to the cash. It provides a buffer so I don't blow the money on something for which it wasn't intended. Would I go through the effort (just a couple mouse clicks) and wait a couple days if my car suddenly needed a new alternator? Absolutely. - 4.40% interest. (updated 9/6/06 from 4.35%)
Even though an emergency fund is not a wealth-building tool, it's good to know that you're earning money while staving off Murphey. If Murphey shows up, you're prepared to deal with it but if not, you're earning 4.40% in interest. I just checked the rates of one of my local financial institutions... .05% for a savings account. If I don't touch my emergency fund at ING for a year and take out the interest I earned, I could take my wife out to a nice dinner. At the other bank I'd have to save for three and a half years just to buy the Sunday paper!
- Bonus - $25 sign on incentive
I purchased some books from Amazon.com and received a coupon for $25 as a sign on bonus for opening an account with ING Direct. Since I was going to open one anyway, I figured I might as well take advantage of the free money. Sho' nuff... as soon as I opened my account that free money appeared. It's not immediately available for withdrawal but, nevertheless, it's there.
When I logged in to my account the morning, I saw a means to refer other people to ING Direct. As a part of the referral, if you open an account with a minimum of $250, you will receive the same $25 sign on bonus and I will receive $10. That's a pretty good deal for both of us.
If you're interested and have at least 250 clams to slap down at the virtual teller window, email me at mattbook [some symbol goes here] gmail [single pixel] com and I'll send a referral through. More importantly, make sure you have money set aside in an emergency fund for when the inevitable happens.
