frugal underground

Human nature being what it is, I was a stickler for status quo, and would have perhaps stayed with my old bank for the rest of my life. But when I made a vow to put our finances in better shape, and started looking around for things that would help me trim off a dollar or two where I can, that’s when it dawned on me:

My old bank was seriously costing me money. A lot of it.

First, my bank was giving me a comedic 4.25% APY on my savings account at a time when some online banks were still giving interest rates in the vicinity of 5% to 6% (oh to go back to those times), and didn’t require any minimums. I had to maintain at least $200 in mine, or (surprise!) get slapped a $3 fee.

I also had my checking account in that same bank and it didn’t earn interest at all. Plus, again I was charged just about everything from checks to ATM fees. Considering that I was still uninitiated then and didn’t really think twice about using whatever ATM was convenient to me at the time I need to access one, this set me back something like $10 to $15 on ATM fees alone. While this figure didn’t send me to the poorhouse, adding up the ATM charges combined with other fees plus the money I “lost” on interest, led me to another shocking realization (gasp):

The bank was earning more from me than I from it.

But that scenario is so 2007. I’ve gotten financially smarter many times over since then. Of course, interest rates have been steadily going down lately and savers have been getting the brunt of the economic downturn, having to contend with rock-bottom rates.

That said however, there are still some banks worth making the big switch to, or at the very least having as a secondary bank. I suggest you try online banks if you aren’t doing so already. Sure you’ll miss that pleasant chat with the nice teller or the occasional cookie in the bank lobby (seriously, do banks still do that?) but with online banks, not only do you get the better rates, you can also have convenient and hassle-free banking anytime you want.

I surfed around and here are some of the best online banks today as rated by consumers based on interest rates and customer service:

ING Direct. One of the earliest internet-only banks to be established, it has grown its reputation steadily over the years as a bank with high interest rates and superb service. While ING’s rates may no longer be the best around, the bank still tops many depositors’ shortlist because of its excellent service, great website that’s easy to use, and some features in its interface that makes savings a lot more convenient.

Ally Bank. The re-branded GMAC Bank is still a relative newcomer in the online banking field but is already making waves where interest rates are concerned. Before the bank ran into some issues with the American Banker’s Association (ABA), it used to have some of the top savings and CD rates. Since then, Ally has been lowering its rates, although it remains to be among the banks with the most competitive rates. One great product Ally Bank has is its 9-month no penalty CD currently at 2.0% APY, the highest among all banks offering this.

HSBC Direct. This is another bank that combines competitive interest rates with good service and the assurance of a tried and tested bank. It’s been voted by Kiplinger’s Personal Finance as the Best Overall Online Bank in 2006 and continues to get great feedbacks from finance sites and consumers alike. One common issue I’ve come across about HSBC though, is that its interface is a bit clunky and didn’t run as smoothly as others (well, ING for instance).

These three banks I’ve listed here may not be the forerunners in the interest rate division. But then again, they were singled out not only for their friendly, no-fuss banking services but also because they do not require any minimums and maintaining balances, and charge no fees. These can be as important (even more) as having the best interest rates.

Lastly, I’m sure this is a no-brainer, but it’s still worth mentioning that whatever bank you choose, make sure it’s FDIC-insured. You don’t want to go through all the trouble of meticulously choosing your bank only to lose all your money in a snap.

If you have some banking experiences you’d like to share with us, we’d be happy to hear them.

Popularity: 14% [?]

Woohoo!  Just got an email from HSBC saying the interest rate has just been raised to 4.65% APY.  We just plunked some more savings in there a week ago, so good timing.  We’re planning on keeping half of our savings in there, and also a chunk of money (don’t have it yet) that will be in reserve for the day our Mazda dies.  I am so pleased to live at a time where I am regularly just given free money!

Popularity: 17% [?]

A while ago, I came across a store on eBay that interested me: The Organic Vanilla Bean Company. I added them to my favorite eBay sellers, and that was the extent of our relationship… until now.

In case you don’t know, vanilla beans are expensive. I thought the prices were kind of outrageous until I read about what’s actually involved in raising and harvesting vanilla beans… it involves precise timing and hand pollinating, if that give you any idea, so the cost is reflecting the work involved. I have a single vanilla bean stored in my pantry right now (a cool, dark place, you know). I’m afraid to use it. I keep thinking, “What if I use it and the recipe turns out lousy? I’ll have squandered my one vanilla bean.” Because at $8/bean or whatever, it’s not like I’m going to be buying more on a regular basis.

Last week I received the periodic eBay email featuring “Your Favorite Sellers”… and saw that The Organic Vanilla Bean Company had just listed some beans. I was feeling adventurous, so I thought, what the heck, and bid on one lot. It was a quarter-pound of 6-7″ grade A Tahitian vanilla beans, and the shipping was $3. A quarter-pound of that size is about 30 beans. I decided to bid something so ridiculously low that if I won the auction, it would be clear that God Himself wanted me to have those vanilla beans. So I bid a very random $6.38, and left for the weekend.

Imagine my surprise when I returned and found that I’d been offered a “Second Chance Offer” at my bid price! I didn’t hesitate. 30 vanilla beans for less than $10, shipped? Sign me up!

The point of this entry? Consider buying your gourmet food on eBay. You might save a bundle.

Popularity: 26% [?]