The Writer’s Coin

If you’ve read anything about finances on this blog, you know I am a huge fan of ING—I use their high-yield savings account to put any and all extra money I have. But with the Fed cutting the rates over and over, the interest we get in accounts like this one has fallen. From a high of around 4.5% (when I first opened my account) down to 2.9% today.

Ouch.

So now is as good a time as any to remind ourselves why these types of savings accounts aren’t just about the interest rate (keep in mind that all of these banks have cut their rates, so it’s not like you can just switch out to a 4.5% yielding account right now).

First of all, ING is a great place to build your emergency fund. You could just as easily have it in your bank’s savings account, right? Sure, but one of the big advantages of having it in a separate account is that it’s harder to get access to it. Even the simple act of having to log on to a totally different site with a different color scheme and user name gives you that sense that you are doing something different with your money. It isn’t “just” saving—it feels more active than that.

Also, having it in a separate account is great for those people that feel like they have to do something. Many of us feel like we aren’t doing enough when it comes to saving and managing our money. The whole separate account thing makes me feel like it’s another thing I’m actively “doing” to help manage my finances and save more money.

ING also lets you make some money by telling others about them. They will give you $10 if you refer a new person to open an account with them. That person will get a free $25 to start them off. Not a bad deal if you ask me.

I still believe that “high-yield” savings accounts are a good thing. Sure, now I’m making a few dollars less per month in interest, but the main idea is that I’m saving. I’m stashing as much money as I can into that account so that I can buy a house soon and travel when I want to. The amount of money in the account may not be growing as fast because of the rate cuts, but my mentality won’t be affected—ever since I started with ING I’ve become a better saver, a more conscientious spender, and a more organized person when it comes to finances.

So who cares about a few points of interest lost?

Tags: buying a house, fed rates, ING, saving, travel