HomesavingIs there any reason I should still have a savings account?

Is there any reason I should still have a savings account?

Girl Ninja and I are in the process of refinancing our mortgage. We locked in our refi rate at the end of January, which saved us 0.25% compared to today’s rates. Might not seem like much at first, but it works out to about $40 per month, every month, for the next 30 years. So yeah, I’m happy about that.

We should be lined up for closing sometime near the end of this month and as soon as closing wraps up, I plan to head over to a local credit union and take out that HELOC I was telling you about earlier. (I had to put that plan on pause since I didn’t want a line of credit on our home to screw up the chances of us being able to refinance easily.) I imagine the HELOC will provide us between $10,000 and $50,000 in immediately accessible liquidity.

The HELOC will essentially serve as our savings buffer. 

For my entire personal-finance-loving life, I’ve heavily relied on my savings account. I opened up an ING high-yield savings account back in 2007 (back when I was earning around 3% on my cash) and it was the start of a beautiful relationship. I used that savings account to pay off my student loans in 2010, pay cash for a $20,000 new-to-us car in 2012, and drop $80,000 on a down payment in 2013.

I loved my savings account so much I had four of them.

  • An “emergency fund” account
  • A “future car savings” account
  • A “vacation” account
  • An “extra savings” account.

But now that I plan to use my taxable investment account as my primary source of saving, I can’t help but think…

Is there any good reason to keep my savings account? 

I mean, I’ll be sure to keep a minimum of $10,000 cash on hand at all times in the event of an unforeseen issue (medical bill, job loss, home repair, etc), but why can’t I just keep that money in my checking account?

High-yield savings accounts used to be appealing, but for the better part of the last five years, they’ve paid virtually nothing. My current Capital One 360 savings account pays a pathetic 0.75% APY.

Or in other words, my $10,000 savings account only earns 75-ish dollars per year.

“THAT’S AWESOME.”  – said no personal finance blogger ever. 

So yeah, I think it’s about time I close out my last remaining savings account, and move that $10,000 to my one and only checking account with Wells Fargo, where it will reside for many years.

I guess the idea of not having a savings account just feels weird. It is as much a part of my personal finance DNA as this very blog.

  • Will I be able to function without one? 
  • Is there any good reason to keep it around? 
  • Am I committing a PF sin by closing this account? 

Only one way to find out. RIP savings account, you won’t be missed.




  1. I think that the number of saving accounts will depend on how a person has their financials organized. I have three myself and it works just fine for my lifestyle. Its too bad that we can’t make more interest on our savings, but I don’t think that there is an exact number for having too many saving accounts.

  2. I use Amex personal savings which, like Capital One, let’s you have pretty much as many savings accounts as you want with no monthly fees or whatever at just under 1% interest. For me personally I like having my checking account to just have a 1 month buffer and the rest of liquid $ in savings so as for my mental accounting I can consider it: things I can spend vs. things I cannot.

  3. We are struggle-busing through this savings account nonsense too. Our bank interest rate is basically nothing. We have thought about opening up an account with Capital 360 or similar, but just haven’t taken the plunge because it doesn’t seem all that worth it to us. But at the same time, it is free money, and for us that little bit of interest a year would be an extra loan payment….so still, not much, but something.

  4. So long as you have adequate safe liquid resources to cover 3-6 months of expenses, I don’t think it matters whether it’s in savings, checking, the principal in a Roth IRA, or even cash under the mattress. I certainly don’t see the need for multiple savings accounts. Money is money, why complicate things?

    • I have multiple savings accounts, and prefer it this way. One account is strictly for gift giving, and saving for Christmas.

      The other is my emergency fund, which I prefer being separate from my checking account.

  5. I just canceled my savings account with Bank of America on Thursday for all of the same reasons. I got tired of accounting for the separate account with no movement. I agree that it really depends on how your mind works. I use spreadsheets for my available balances, so this shouldn’t be an issue for us. If you’re used to using the ATM to check your available funds, you could run into issues.

  6. I just converted my savings account at Chase to a second checking account. I was tired of that stupid Federal rule that only allows 6 transfers out per month before you get hit with a fee – especially for a .03% APY vs the .01% for checking.

    My e-fund is in a “high yield” MM account at .85% with free checks and debit cards should I need them, but the brick and mortar savings accounts are pointless. The ability to have a second checking account with the liquidity I need allows me to store my “funds” there…new car fund, HOA fee fund, etc.

    It is perfect for short term saving as we know the money will be going out, we aren’t using it for interest, and I dont want people charging me fees for moving money around.

    These super low interest savings accounts are pretty much useless

  7. If you were just going to keep the $10k in a checking account, why not keep the old ING/360 account open and get that $75 a year?

    In this whole PF quest, we seem to analyze ever single thing we can in order to pay less interest, reduce debt, increase income, etc… $75 a year seems measly, but I treat it as another piece of the puzzle. Or even simpler, maybe I think of it as the money that offsets a subscription I have to something that I don’t want to give up.

    I don’t see the harm in keeping a savings account. Just cap it and then build up the taxable investments.

  8. I have something like 20 savings accounts. I honestly don’t know how many off the top of my head. I use them for all of my savings goals. Twice a month, money goes to CapitalOne360, then gets spread out across everything else.

    It means I don’t have to track anything. When I want to know how much we have saved for a vacation, I just log in and look.

        • So $10K in a checking account earning no interest instead of $10K in your 360 earning $75 a year? I know it is insignificant, but why do this if you are going to keep the $10K kicking around not invested?

    • I do the same thing with Cap 1 360 accounts… Vacation funds (several, because we like to travel- I set one up for each trip we plan for the year), HOA dues, car expenses (except gas), one for the new patio hubs wants to put in, etc. that way at the beginning of the year, i can figure out what I need to budget for each item, set it to auto draft, and forget about it- don’t have to ever think about it, until I’m ready to pull the money out for something. All of the accounts are completely free (I think up to 20), and while I don’t earn a buttload of interest on them, it’s out of site, out of mind easy budgeting for me.

      My Efund is through my credit union, which doesn’t have transfer online access- I have to actually go into the bank during banking hours should I need the cash. A little harder to get to should a non emergency tempt us (like that patio 🙂 ).

  9. When you’re having an emergency is exactly when you DON’T need to be going into debt.

    Your blog title is Punch Debt in the Face- why are you so eager to get back into debt?

    • Did you not read the article I linked to towards the beginning of the post that clarifies this in great detail? Give it a look and let you know if you have more concerns.

  10. We bank at Navy Federal and they require you to have a savings account with $5 that you can’t touch to remain a member. But the funny thing is that the savings account pays 0.30% and the checking pays 0.45%, so as you can imagine there is no incentive to keep any money in the savings account beyond the $5.

    I too remember the sweet old days when I had my online savings account with HSBC back when they were paying 5%. Those were the good ole days.

    At least with the credit union we have the ability to do a little better than nothing by buying some 12-month CD’s at 3%.


  11. If your checking account should be compromised for any reason, you won’t have any cash sitting in another account while the matter is being straightened out. Keep your savings account.

    GE Capital Bank is paying 1.05% on savings right now. Just sayin’.

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