| One thing to be aware of when you have an online savings
accounts is not only the methods you are allowed to us to withdraw
your money, but also the number of times per month you are allowed
to withdraw money.
Most banks hide the fact that in common terms an online savings
account is treated as a money market account if used a certain way
and a traditional savings account at times. For instance when you
withdraw money from your account and transfer it to another bank,
you are only allowed to do that a maximum of six times per month.
This is usually only true for Money Market Accounts. On the other
hand, if your account has an ATM card attached to it you are allowed
unlimited withdrawls. Most banks offer you two options for getting
your cash back from them:
1. ATM- You can withdraw money using any ATM card. Many
banks are even offering ATM rebates, so you can basically use any
ATM without any fees. Honestly, ATM rebates alone makes an online
account worth its weight in gold. Think about it, if you are using
a traditional savings and you have a balance of $2,000. Let's compare
the difference between an online account with rebates and an offline
traditional savings account based on the current rate as of this
article:
Rates:
Traditional: 0.75% APY
Online: 4.5% APY
ATM Fees:
Traditional: $1.50 - $3.00 Each out of network ATM Withdraw.
Online: All out of network fees rebated.
Average number of times people use out of network ATMs per month:
3
Let's look at a snapshot of a month when you have $2,000 and are
an average person:
Traditional Savings Account Balance: $2,000
Interest Collected Per Month: $15.00
ATM Fees: $6.00
Overall Gain Per Month: $9.00
Online Savings Account Balance: $2,000
Interest Collected Per Month: $90.00
ATM Fees: $0.00
Overall Gain Per Month: $90.00
The ATM rebates make Online Accounts a no-brainer!
2. Transferring the Money to another account within the same
bank or an outside bank-
Most the banks break this down into two segements:
You can start a transfer online or over the phone.
This is simply the middleman technique for banks. Since everything
is electronic their fees are minimal.
One of the things to be aware of is that these transfers are not
instantly processed. I have some transfers that take 1 day and some
that take 3 days. For some odd reason, I find that if I start a
transfer on Wednesdays, they happen the fastest. I'm assuming Mondays
are slowed due to volume of people setting up transfers over the
weekend, because Mondays take 2 days on a good transfer and as much
as 4 days on bad transfers.
Although you would think that this is the banks fault, I have used
over online savings account providers all with the same results.
Some people jump at new rates and transfer money like crazy. You
should remember that during the transfer period you are not receiving
interest from either account. So if you constantly jump your money
around without taking into consideration the interest you will lose
during the transfer period, you'll actually be losing money.
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