One of my favorite personal finance blogs, www.getrichslowly.org, wrote about one of my favorite high interest rate savings accounts, ING Direct.  I’ve had an account at ING Direct for several years and I love it.  It’s simple to use and has a great rate.  When you set up an account, you link it with an existing checking account.  You can actually link it to multiple accounts, allowing you to transfer money between two accounts.  The APY is currently 4.1%.  There is no minimum balance or any fees.  You can also set up automatic withdrawals to keep your savings plan on track.  To make it better, there is now an Electric Orange checking account with a 3.15% APY.  Your Orange savings account can be linked to your Electric Orange checking account for instant access through fee-free ATM’s.  Normally, a transfer from your Orange savings account to your regular bank’s checking account can take 2-3 days.

 J.D. on GetRichSlowly.com wrote that he heard about a 6.25% APY checking account being offered by a Portland bank.  To get this rate, you need to meet the following requirements each month:

• Use your check card 12 times or more.
• Have one of the following occur monthly on your account: direct deposit, ACH deposit/withdrawal, automatic bill payment.
• Receive your statements electronically.
• Log in to online banking at least once per month.

If you do not meet these requirements each month, then the rate becomes 0.1% APY.  Even though this account offers a higher rate than ING Direct, I still feel that I like the ING Direct account better. 

The main problem I have with the Portland bank account is that it incentivizes you to combine your savings account with your checking account.  To get the good rate, you will need to use your check card 12 times a month.  I’ve never liked check cards.  I actually asked my bank to give me only a debit card without the check card feature.  The reason I don’t like check cards is that they can be used just like a credit card.  Unlike a regular credit card, the money is deducted immediately from your account when you make a purchase.  If you have to use your check card 12 times a month, that’s 12 opportunities to have your card number stolen.  If someone steals your card number, not only can they drain your checking account, they can drain your savings as well.  It’s all one account.  I know that the banks advertise that you have similar protections to a credit card.  However, when someone steals your credit card, you don’t have to pay the extra charges.  When someone uses your check card fraudulently, you’ve already lost the funds and have to fight to get your money back.  Do you really want to tie your rainy day funds to a check card?