Optimizing My Own Accounts – Making My Money Work for Me

Friday’s discussion was about making your money work for you with high-yield savings accounts.  Today, I will go through all of my own personal accounts and the benefits that each offer their customers (I will even touch on what funds I have invested in).  You can use my accounts as a guide for making your own banking decisions.  If, after reading, you have any questions about my accounts or similar accounts at other institutions, feel free to leave a comment or get in touch with me at bscheur@gmail.com.  Here goes!

Checking Accounts:

I have two checking accounts.  My first account is with a brick and mortar bank (M&T Bank), it’s a no frills, no minimum balance, no-fee account.  You should never pay a fee for a standard checking account.  If you are unsure if you are paying a fee, call your bank and find out.  I keep almost no balance in this account.  Its sole purpose is to be a convenient place for depositing cash and checks, and to transfer money to my “real” checking account.

My “real” checking account is an Electric Orange Checking Account through ING.  This account links seamlessly with my savings accounts (discussed below) and offers a .25% interest rate. Considering there aren’t many checking accounts that offer interest, this is a great deal.  Also, there are no ATM fees at over 30,000 ATMS throughout the country (only catch is you need to know which ATMS waive the fees, but if you don’t deal much with cash, this isn’t a big deal), electronic checks that can be sent via e-mail, or paper checks that can be mailed at your request.

Savings Accounts:

I love my ING Direct Savings Accounts.  I say accounts, because I technically I have more than one.  ING Direct Savings has a feature that has yet to be matched by other institutions as of yet.  This feature is the ability to open up “sub accounts”, giving each a specific name so you can keep track of separate savings goals.  For example, I have a primary savings account, and additional savings accounts for the following goals: a trip to Rome, a new car, a down payment for a house, and next year’s taxes.  Each of these accounts earns 1.5% in annual interest.  This rate is not the highest out there, but it is competitive compared to all the other online banks.  The “sub account” feature keeps me focused on specific goals, and for me, that’s worth a little less interest per year.

Credit Cards:

I have three credit cards, the first being my Chase Visa that I opened when I started college.  There is a $1,500 limit on the card.  This card doesn’t get used other than a $10 subscription each month, but I keep it open to increase my credit score as this is the card that I have the longest history with.

My next credit card is my American Express Blue.  This card has a $25,000, however, I have stopped using this card as I was only earning Amex reward points.  When I was looking to optimize my credit cards a few months back, I decided that the reward points weren’t as valuable to me as cash-back, hence this card also has only a $10 subscription being charged to it each month.  With such a large credit limit, this card helps my credit utilization score on my credit report, therefore will remain with me for some time.

Lastly, my new credit card, and now the only card I carry in my wallet, is my Schwab Invest First Visa Card.  This card has a $7,500 limit and offers me 2% cash-back on all purchases, with no international fees.  The 2% gets deposited into my Schwab Brokerage account (discussed below) and automatically invested into which ever fund I choose.  I am excited that I have this card, and it will be the only one I use on a regular basis moving forward.

Brokerage Account:

As mentioned above, my brokerage account is with Schwab.  Schwab’s low cost portfolios were perfect for a novice investor such as me.  I was able to open up the brokerage account with no minimum deposit because I opened up a Schwab Investor Checking Account at the same time, even though this account doesn’t get used.  I am currently only investing in one index fund, Schwab’s S&P 500 Index Fund that closely mirrors the S&P 500’s performance.

Roth IRA Account:

My Roth IRA is set up through Vanguard.  Vanguard is known for the lowest fees around, and since I will be putting $5,000 a year into this account for as long as I am eligible, the small fees are very attractive.  Furthermore, Vanguard has target date retirement index funds, allowing me to pick a fund (Target Retirement 2050) and let the fund diversify itself according to what is best for my current age in relation to my retirement.  For example, since I am only 24, the fund is stock heavy (90% ) because I can afford to be riskier with my investments.  However, when I am 50, it will look drastically different and may only be 65% stocks and 30% bonds and 5% cash reserves.  This rebalancing happens automatically, making this a stress free investment that will follow the market through its ups and downs (hopefully more of the former than the latter).

401(K) Account

My 401(K) is not officially active yet.  I become vested with my current employer on July 1st, so look for a 401(K) article around that time.  I do know that I will be working with Fidelity come the 1st, and I am excited to learn about the specific funds they offer (target retirement date funds – I hope!)

My accounts are very straightforward and simple.  However, they offer me all the flexibility I need to change my savings strategies and my investment strategies if the situation should arise.  My credit cards are focused on returning me the maximum possible rewards.  Another significant aspect of my accounts is the ease of the web-interface for each bank.   Each one is very easy to use and offers great customer service.  Prior to setting up an account, I do a trial run to see how long it takes to get a representative on the phone in the middle of the day.  I have never had to wait an exorbitantly long time for any of these institutions.  Because of their customer service, rates, and rewards, I felt it was important to share how my finances are set up.  Are there other institutions that I should look into or institutions that other readers are happy with?  If so, leave a comment or contact me here.

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