To read Part 3 of the Online Savings Accounts Series, go here.
Your official game plan to opening your online savings account
In this series we’ve talked about the importance of online savings accounts to your habits, mindset and long-term wealth building potential.
We talked about how to avoid scams when opening an online savings account.
Now let’s get into the nitty-gritty of how to go about actually DOING it.
My goal = To help you overcome any decision fatigue you’re experiencing!
If you’re anything like me, there might be any number of things I want to do — but if, in order to do it, I need a bit more information or I need to do even some basic research beforehand, it’s easy to procrastinate.
I don’t want that to happen to you and your online savings account. So, in this email, I’m going to take allll the information that’s “out there” and distill it down to only the most important things for you to know.
Choosing your bank.
The bank I use for my online savings account is Ally Bank. I get zero kickback or commission from Ally Bank, but I recommend them all the time because they’re great! They hit all the key points I’m looking for in an online bank:
- No minimum balance requirements
- Free to set up and free to use (A.K.A. — no fees!)
- Links to most checking accounts at other banks
- Competitive interest rate (currently 4.25%)
- Easy to use app and desktop interface
- Offers an online checking account too (so accessing your funds is easy)
- MOST IMPORTANT: FDIC Insured
Ally isn’t the only one we recommend, it’s just the one I use, so my personal favorite. Other options include: CitiBank, Discover, Capital One, and SoFi.
Setting up an account.
First things first, you’re doing something new and while I hope it goes smoothly and is easier than you expect, sometimes websites are just frustrating and there’s nothing me, you or the internet gods can do about it.
Go into it prepared. Get cozy, make your favorite coffee, put on some comfy socks and turn on some chill music.
When you open the account, it will ask for basic contact information.
But then it asks you for your routing number and account number to your primary checking account.
This part freaks people out a bit but remember, you transfer money in and out of your new online savings account by using your main checking account so this information is needed.
Once you complete the enrollment steps, you still aren’t done.
The bank will make two small deposits into your primary checking account (like .02 and .08).
Once you see these deposits show up, you login to your new online banking account and confirm the amounts.
This is how they verify you have access to the bank account you’re attempting to link.
Once you verify the two amounts, now you’re all done with the setup.
Congratulations, you now have an online savings account!
Remember, one of the benefits of these accounts is that most of them don’t have minimum balance requirements and there’s no fees so you don’t need to keep any money in there right away.
You’ve got the first step done.
You’ve made progress.
Look at you getting more financially fit! It looks good on you!
Mistakes to avoid
There are just a few common mistakes I want to help you avoid.
- Don’t keep all your savings at your online bank until you feel super comfortable accessing it. Remember, the transfer back into your checking account isn’t immediate. Instead, keep extra in your checking account or some money in savings at your main bank just in case you need to buy yourself a couple days while you wait for the transfer to happen.
- You should not have to pay to transfer funds to or from your online bank. To transfer money, always initiate the transfer from the online bank, which should be free.
- Some banks still have a 6-withdrawal limit per savings account. We don’t see this causing too much trouble for our clients but I wanted to make you aware of it just in case.
Now that your account is set up, you can begin saving! Start small – remember, it’s the habit that matters more than the amount!