July 6, 2010

Multiple savings accounts — follow-up

The New York Times' Bucks blog offers good follow-up info on a topic we discussed in the June issue of SMI (subscribers' link): using multiple savings accounts as an aid to reach specific savings goals.

From Bucks' writer Jennifer Saranow Schultz:

A growing number of banks are offering features intended to help you allocate various savings accounts to specific goals.
As of [July 1], FNBO Direct customers no longer have to fill out complete applications to open new savings accounts. Instead, FNBO Direct fills out most of the applications for them. The new feature is aimed at making it easier for customers to open multiple savings accounts, each of which customers can name for a specific savings goal and all of which customers can track online with the same user name and password....

Since last year, Ally Bank has also had a similar offering, including the ability for customers to quickly set up multiple savings accounts, "nickname" them and see them all in one place online.

A spokeswoman for ING Direct, which has long offered such features, said 10 percent of the bank's customers had multiple savings accounts, with the top five nicknames (or savings goals) being "savings," "vacation," "emergency fund/rainy day," "house" and "taxes."...

Many credit unions also offer similar features as do other banks, including Capital One and Bank of America.

As we noted in our June article:

Having a series of dedicated savings accounts creates a structure that will help you follow through on your savings goals, especially when combined with automatic transfers from your checking account.
Goals can be a powerful driver of behavior, and being able to see — at a glance — how much is in each of your accumulation accounts (as well as in your emergency fund) lets you know exactly where you stand in relation to your various savings goals. As you see your balances rise, you'll be encouraged to keep moving forward.

For Ally customers, step-by-step instructions for setting up multiple accounts are here. Details for ING customers are here.

Below, Bob Lotich of ChristianPF.com explains how he uses ING's multiple-savings-accounts feature, which he calls a "virtual envelope budgeting system."