Why You Should Combine Your Online Savings and Checking Accounts

The traditional bank depositor has both a savings and checking account.  The checking account provides the depositor with liquidity – a means to pay bills and withdraw cash when needed.  The savings account typically provides a much higher rate of interest.  But what if you could combine the two and harness the advantages of both?

How to Implement

What you need is an online bank that offers tiered interest checking.  A good example is ING Direct.  The interest rate for their basic online savings account is currently 1.85% APY.  However, the interest rate for the highest tier of their Electric Orange online checking account is 1.95% APY.  Therefore, if you have the means, you are automatically incentized to maximize the balance of your checking account.  So put $1 in your ING savings account and everything else in your Electric Orange.

Fewer Transactions

Now that your savings and checking accounts are essentially congruous, you never have to worry again about overdraft fees.  Because you have all of your money in one place, you can always rest easy in being able to fulfill the transfers you authorize.  By using this setup, you can just imagine the hundreds of “transfer $$$ amount from savings to checking” transactions that have been eliminated.

More Interest

By not having to move your money from account to account, you are essentially permitted to leave all your money in the highest interest account at all times.  It’s only a couple of days of additional interest, but over-time, this “micro-interest” can add up.  And let’s not forget the magic of compounding.  🙂


This only works if you have the highest tier of interest for a tiered online checking account.  (Basically, you need to deposit a ton of cash)  Additionally, while Electric Orange is probably still the best option for this strategy, it should be noted that the current interest rate for their highest (1.95% APY) is still lower than the interest rate offered by the First National Bank of Omaha savings account (2.40% APY).

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