Where I park my liquid cash right now

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(Note: interest rates updated as of 3/7/05)

As interest rates continue to rise, there is again reason to really scrutinize where you park your liquid cash, as that “free” checking account really isn’t free when your money could be earning it’s keep somewhere else. Here is how I handle most of my cash that I want to keep easy access to:

Bank of America
Interest Rate: 0%
Use: Day-to-day expenses, usually Pros: ATMs everywhere for convenient cash withdrawals and check deposits, great reliable online Bill Pay system, free tellers, they take my rolled coins and give me free wrappers, no minimums and free with Direct Deposit.
Cons: 0% interest

Presidential Bank
Interest Rate: 3.00%
Use: Bulk of cash savings (interest rate good up to $25,000)
Pros: Good interest rate, it’s a checking account instead of a savings accounts, so unlimited checkwriting and easy withdrawals with ATM card.
Cons: No local branches, Sub-par Online Banking and Bill Pay, Requires $200 monthly direct deposit and $1000 minimum to avoid fees.

Interest Rate: 2.60% (for bal. up to $10k)
Use: Emergency Money, Excess from Presidential
Pros: No minimums, decent rate. My favorite is VirtualBank, which allows you to connect 3 banks, and allows you to initiate ACH transfers both in and out to those banks. It allows you to redistribute your money as you see fit, and also can simulate a regular direct deposit from your employer.
Cons: Online only, No local branches, No ATM access, Only 6 transfers out per month without fee.

Edit: Updated Bank Account Comparisons.

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  1. I use a free account at a local bank (Wachovia) when I need to quickly deposit something at an ATM.

    I use Citibank online as my main checking account since they give me ATM rebates (up to 4 a month, only available for out-of-state people who open online). Good free billpay.

    I keep a free no minimum balance USAA account because their ACH transfer function is so amazing. They have ATM rebates too and if I had a job where I could use direct deposit the billpay would be free and I’d use this as my main account.

    You do NOT need to be military to get a USAA account. You just need to call them on the phone instead of applying on the web. (You need to be military to get the auto insurance).

    I use Emigrant Direct for savings. Pain in the butt to set up but nice once that’s all done. (You get a login, but then need to wait for a letter with another login, then need to wait another day before transfers to external accounts even appears as a menu option)

  2. USAA is a good company, I’ve though about opening an account with them. With recent interest rate jumps, I’m debating whether to update the whole post or just post the changes here. I’ll the latter first:

    As of 3/7/05:
    ING: 2.60% APY
    VirtualBank: 2.6 % APY (balances up to $10k)
    Presidential: 3.00% APY
    Emigrant Direct: 3.00% APY

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