Savings Options

[NicoleCanoes]

I have a savings account and keep 1 month of finances in it at all times. I also put money in it each month so I can pay my tuition each semester. However I have problems keeping more than that in it. Way too tempting. What are my options for other types of savings? I'm thinking more long term but not as long term as a 401k. Something without large withdrawl penalties but enough to make me think. I'm looking to put about half of my tax return in it and then not touching it unless something unfortunate happens. Suggestions?

[ceethegreat]

Have you looked at CDs? They're like savings accounts, but you have to keep a certain amount in there for a specified period of time before you can withdraw without penalty. They come in time lengths of months to years, and often have a higher interest rate than a traditional savings account.

[RoseMadder]

CD's or Money Markets can be a good way to keep money separate.  Most Money Markets don't have a withdrawal penalty, but the account might have a min balance.  CD's are nice because often they are customizable (how long, how much etc). For some folks, just having the money in a place you don't 'see it' is a good thing, so a separate account number or even a savings with another institution can help.

 

Hey, great job keeping so much on an emergency fund!  That really rocks

[Sdanthony]

Keep a separate account in a separate bank (online banks have the best interest rates... ally, ing, etc) and auto-draft  every month/check into it... still very liquid but not as tempting, because it's more inconvienent to access than an account linked to your checking.

[NicoleCanoes]

I think I'm going with a CD. Based on rates/fees/minimum balance a CD with my current bank is my best option right now. It is sad that I only get 0.05% interest on savings but they want to charge 25% for a credit card.

[vagabondette]

If it is an impulse thing then using a separate bank is a good idea.  I keep my short and mid-term savings in ING (now Capital One 360).  I like it because I can set it up to auto-save to multiple named accounts.  So, rather than putting all of your money into one account and having to track how much is for what purpose, you could have an emergency fund, a tuition fund, a vacation fund, etc. all of them getting auto-deposits of however much you want on whatever frequency you want and you can see their balances at a glance.  It is one of the best set it and forget it savings opions available.  If you are worried about tapping it, it takes 3 days to transfer the money so it won't be available on an impulse but is easy to access if needed.

[Terry V]

CD is your best bet but if you really NEED the money than you're stuck paying the fees.  The better approach is probably just more self discipline.

 

The idea of a separate bank is a good one as it'll force you to go there to get money out but will also make it more difficult to put some in.