Banking: It's time to start shopping for the right bank

By knowing a few things about banks you can improve your financial health dramatically. First you should shop around and use the best banks available (hint: this might mean doing some banking online). Once you've found a bank, put your money in the right places.

Finding a bank

If you haven't noticed life is a lot easier if you avoid physical banks altogether. Direct deposit and electronic bill pay are making our lives so much simpler. The result is that you no longer need to spend much time at the bank or rely on your bank for getting things accomplished. So what purpose does a bank now fulfill? I believe that banks are now used chiefly for storing and organizing your money. Most banks (physical and online) offer the traditional checking and savings/money market accounts. Most offer those services free of charge. So the secret is finding banks that will pay you to keep your money there. Physical banks will typically offer less than 1% interest on your savings and checking. Online banks offer as high as 4.5% for those same accounts.

I personally love ING Direct, the world's largest online bank. In their Orange Savings account there is no minimum balance required, no fees, 24-hour access to your account, and it is FDIC-insured. This is a great way to save 3-5% (rates change depending on economy), instead of the 0-1% most people are making on their savings accounts at traditional banks.

If you open this account with an initial deposit of at least $250, you will receive a $25 bonus to get you started and I will get a $10 thank you bonus. To qualify for this bonus, you must use the following link:

Special offer available only through this link and can be used only once. Rules of the game: Bonuses are only paid for accounts that are opened with an initial deposit of at least $250. Initial deposit does not include bonus. The $25 bonus is available only for new accounts with a new Customer as primary owner. Only one bonus will be provided per household. Bonus starts earning interest upon account opening, but is unavailable for withdrawal for 30 days.

Money Market Accounts.

If you have a lot of your savings making a piddly 1% in a savings account than you need to do something about it. You will at a minimum double your interest if you move that money over to a money market account. A money market account is... "A savings account that offers the competitive rate of interest (real rate) in exchange for larger-than-normal deposits. Also known by the acronym "MMDA", which stands for "money market demand account" or "money market deposit account" (dictionary.com). Pros: highers interest rate. Cons: Some banks allow only limited transactions within the account (like 5 per month).

Certificates of Deposit.

If you are really serious about saving your money you will likely put a large portion of your savings into retirement accounts, stocks or mutual funds, and in the bond and commodities markets. However, your local bank usually offers a few services for the ulta safe investments. A certificate of deposit is a written acknowledgment of a bank that it has received from the person named a specified sum of money as a deposit, often for a fixed term at a specified interest rate. Certificates of deposits are great options for a safe investment that doesn't have to be locked away for extensive periods of time. You can often buy into 6 and 12 month CDs at a reasonable rate (4.5% or higher).

Links

ING Direct - The biggest and best online bank there is.