When comparing banks, I am comparing the banking service and not the rates. The recommended practice would be to keep just as much as you need in your checking/emergency accounts for month to month usage -- and have the rest of your funds in an independent investment/savings account, probably with a different institution. Ideally you time your auto-investments so the money gets invested as soon as it lands in your account via paychecks, etc.
Theoretically, lets say you keep 5k buffer in your checking account. The amount goes up and down as you get paychecks, pay out your rent, credit card bills, etc. That average 5k balance at 5% interest gets you $250 annually, or about $21/mo in interest. You'll give away 30% of that to taxes, so the "opportunity cost" of your checking account is ~$14/mo.
A serious question for any busy professional (as many of us are here) -- is chasing after this $14/mo worth the cost of a substandard checking account and bank service? My experience is that good banking service pays for itsself.
I'll give examples:
- One inexplicable fee from a bad bank will wipe out your monthly monthly interest
- If you have to wait on hold for 1hr to fix it, you've already lost way more
- If you have to pay fees left and right for things like certified checks, again you have lost the interest
- If you have fraud on your account and spend >2hrs dealing with it because the bank is unwilling to help or sends you to some offshore call center, again you lose.
- Suddenly need a statement from a year ago? Some banks will charge for that. HSBC (last I used) neither returns your checks nor shows images of your checks, so you have no record of checks unless you keep them.
A great bank has all sorts of fringe benefits. Mine will even do notary service for free. Mine will give near spot FX rates on overseas ATM withdrawls.
For US customers I would wholeheartedly recommend Chase, no need to be penny-wise pound foolish.
TuringNYC|2 years ago
Theoretically, lets say you keep 5k buffer in your checking account. The amount goes up and down as you get paychecks, pay out your rent, credit card bills, etc. That average 5k balance at 5% interest gets you $250 annually, or about $21/mo in interest. You'll give away 30% of that to taxes, so the "opportunity cost" of your checking account is ~$14/mo.
A serious question for any busy professional (as many of us are here) -- is chasing after this $14/mo worth the cost of a substandard checking account and bank service? My experience is that good banking service pays for itsself.
I'll give examples:
- One inexplicable fee from a bad bank will wipe out your monthly monthly interest
- If you have to wait on hold for 1hr to fix it, you've already lost way more
- If you have to pay fees left and right for things like certified checks, again you have lost the interest
- If you have fraud on your account and spend >2hrs dealing with it because the bank is unwilling to help or sends you to some offshore call center, again you lose.
- Suddenly need a statement from a year ago? Some banks will charge for that. HSBC (last I used) neither returns your checks nor shows images of your checks, so you have no record of checks unless you keep them.
A great bank has all sorts of fringe benefits. Mine will even do notary service for free. Mine will give near spot FX rates on overseas ATM withdrawls.
For US customers I would wholeheartedly recommend Chase, no need to be penny-wise pound foolish.