Did you know that there are three accounts that you really should have if you want to make the most of your finances? These three accounts are as follows:
- An online checking or savings account with a high interest rate
- A regular checking or savings account with easy access
- Rewards credit card
Now there is no hard and fast rule that says you must have these accounts but they will make managing your money so much easier. Let’s start with the online savings account. I have a checking and savings account online with ING, which gives a higher rate of interest than my brick and mortar bank. I use the Electric checking from ING to do almost all of my bill paying because I can adjust the date and amount and I have an automated system to double check my accounting when I am done. I download (for free!!!) my transactions into Money and everything gets reconciled daily. Most of the payments are accepted as electronic checks which means the payment gets to the creditor faster and I do not have to worry about checks getting lost in the mail. Since the payments are automated I am also able to quit worrying about whether or not I actually put the check in the mail or if I just thought I did. If you are looking for an ING account then just hit me up in the comments and I will send you the link where you can make a $25 bonus just for setting up a new account.
I love my online accounts but I still appreciate the convenience of having a physical store where I can walk in if I wanted to. This comes in handy when I need to get quarters for laundry or when I need to deposit a check that someone has written to me. I do not use this account much but you may find it handy for those times when you have a situation (like with my rent) where the only form of payment available to you is to write a paper check.
Rewards credit cards
Rewards from credit cards can come in the form of 0% or very low interest rates. It can also take the form of cash back or point accumulation that can later be redeemed. My credit cards are a combination of both types of rewards and just depend on what I qualified for at the time. I love the 0% cards because they relieve the burden of my credit card debt for a little while. When the zero percent promotion ends then the rates on these cards are low and I have managed to save money by transferring balances from cards that have a higher interest rate. I like cards that give you cash back, although it sometimes takes a long time to build up enough to redeem. These types of cards are essentially offering you a discount on every purchase so that will also help you to save some money. The thing you need to remember when using credit cards is that if you do not pay off the balance then you will end up paying interest charges and that could wipe out the benefits of the cash back. So remember to purchase (as much as possible) only when you have the cash to pay for it. Then pay off the amount, using your online account from ING, to avoid interest charges.
Those are my three must have accounts. What do you think?
I agree on your first too. I have a regular checking account, an ING Direct Savings, and a CapitalOne Money Market (for my emergency fund). The CapitalOne has check writing privileges.
I disagree on the Credit Card. There is just too much risk with them. Even if you pay off your balance each month, what if they lose your payment, or decide to just change the rate structure?
Remember, they give you those rewards and they aren’t fee. Credit Card companies are out to be profitable.
I am a low risk kind of person, so just don’t want the hassle of a credit card. Plus, I prefer to purchase items with my money, not someone elses even if only for a few days.
Thank you for your comment. I have not had any problem with using the credit card because I pay off the amount within a few days of making the purchase. I always check to see if I have the money available before I buy something on the rewards card and then pay it off, leaving a few days so that I can get the rewards points. It works out if you are very careful.
I would add retirement / brokerage account to that list as well. Perhaps make it 4 best accounts to have 😉
You don’t have to be “very careful”. Just don’t do dumb things. If you treat it like a debt card then you’re in a win win. You get rewards and you build great credit.
Paying cash is fine, but there is something to be said for establishing a good credit history. If you can afford to pay cash, I see no reason for not having a good rewards card. I finally have a decent one and right now I’ve averaging over $12 a month in rewards (and those are instant. No storing them up till they reach whatever, then having to cash in).
As someone with an online account I don’t get the “what if they lose your payment”. If you pay online and get a confirmation number, then what’s the problem? About the rate structure: I have a few credit cards and I don’t really recall what the rate is on any of them. If you pay off the balances, these things don’t come into play.
The only reason I can see why people would opt not to get a credit card is because they don’t trust themselves, that’s it. They see the card as free money and forget they have to pay it back.
Use the credit card company (get points, get miles, get cash) don’t let them use you.
Day In The Life of Baz
@Baz L – There is a difference in doing dumb things and making mistakes. Dumb things are intentional, mistakes are not. With a credit card, either one of these can really mess you up.
While the notion of having good credit is a noble goal, it isn’t as necessary as people think. If someone isn’t going to borrow money, than it serves no purpose. Yes you can get a mortgage without a credit rating.
I’m not saying you can’t be disciplined and be ok, it just another risk and another hassle I have to add to my life. The $12 bucks just wouldn’t be worth it for me.
It’s like playing with a loaded gun, if your disciplined you should be fine, but doesn’t make the gun any less dangerous. Now, granted guns and credit cards aren’t really a fair comparison, but hopefully you get the gist of my point.
I think the bottom line is, there are some people that a very disciplined but most aren’t and to the general population, credit cards are not a good thing, and I would never under any circumstance recommend them.
One thing to consider, the only reason you can use them is because they are using millions of other people. If everyone was like you, they wouldn’t be in business long.
I guess I have to answer now?
Dude, this wasn’t a personal attack. With that being said:
You are right, there is a difference between dumb things and mistakes. A mistake is to think that you’ve set up an automatic payment on the 4 accounts you manage and forget to, then you get a late payment. A justifiable expense is using a credit card to pay for auto repairs. A dumb thingis knowing that your monthly disposable income is $100 and charging a $2,500 television that you don’t need. I’m sure everyone can agree with me here.
The point of a credit card is to pay for things that you can’t afford now. Some people use it for emergencies and some use it for dumb things.
You may be able to get a mortgage without a credit card rating, I guess. The vast literature that I’ve read leads me to believe that you wouldn’t be able to get a good rate. Are all the people who ‘say’ they can’t get a mortgage because of no credit history lying? What I can testify to (by observing 3rd parties) are people who get denied for bank and auto loans because of not enough credit history. I myself had an outrageous rate quote from one company, and their reason was because (after 3 years) I was still ‘new to credit’. So that should put that to rest. You may not have a credit rating and do just fine because you have cash to pay for everything, the vast majority of us don’t.
About the discipline. Honestly, I don’t see the difference between managing a credit card and a checking account. Now mind you, I was specifically referring to the situation where you do have enough money to pay off the balance everyone. With a checking account (debit card or whatever) you have an allocated amount of money. You know that if you go over that limit then you get penalties from the bank and also your transactions don’t go through. It’s the same with a credit card, except that your transactions do go through and you simple owe for your purchase. Where people get into trouble is thinking of the limit as their money instead of somebody else’s.
About the $12 a month. I’m talking about playing the credit card companies, plain and simple. They offer cash back, why the hell wouldn’t I take it? Again, maybe you’re at the financial level where that doesn’t amount to a hill of beans for you, but I’m a cheapskate, I take every penny where I get it. And if I can make $12.00 a month by pumping gas that I’d normally pump anyway, why the hell not?
Credit Car……..Loaded gun…..?? I’m not even going there.
Now am I supposed to feel bad because, according to you, my credit card exists because the company is using other people? What do you think the bank that hosts you’re checking account is doing? They provide loans, and I wouldn’t be surprised if they offered a credit card service. People fall into bad situations, but I’m not going to feel bad for the guy that charges a brand new leather couch on his 19% APR card, and pays $15 a month on the card while continuing to make purchases. He needs to charge everyone that sits on it a buck, or something. That’s dumb stuff.
But honestly. I’m sure we’re all adults here. If you can balance a checkbook then you should be able to manage a credit card without blowing your brains out like @glblguy over there.
Day In The Life of Baz
Baz L, I didn’t take yours as a personal attack at all, and didn’t intend mine to be one either. I thought we were actually having a decent debate about credit cards that might be useful for people to read. I actually thought you had a a pretty decent argument and some great points…right up to the point you said “If you can balance a checkbook then you should be able to manage a credit card without blowing your brains out like @glblguy over there.”
If everyone that could handle balancing their checking account could handle a credit card, the average credit debt in America wouldn’t be $8,000. Thanks for the interesting discussion and the creative little jab at the end.
@LuLuGal – Thanks for putting up with our little debate, just sorry it had to end like most discussions on the internet.
Well it was certainly getting to be interesting to see what two people on two completely opposite ends of the credit card platform were thinking.
I would have liked to see more folks join in though.
Wrote a quick post today that describes just one of the many reasons I hate credit cards and credit card companies.
Thought it was funny I had this experience after having this debate with Baz L.
LuLuGal – Who/Where are you getting the INGDirect Ad? I am a customer and advocate of their account and would like a link on my site. Feel free to email me if you would prefer at http://www.gatherlittlebylittle.com/contact-us
yes glblguy I read that post and it was an eye opener. I thought it was funny too….I commented on it.
I did not even think about the retirement/brokerage account Chuck so thank you for pointing that out. I did not include those because I do not have the extra money to invest so I was just using the simplest forms that I personally use. Good idea though for when I do have more disposable income.
oh this is such a welcome blog. I’m looking to open the ING account anytime soon. Can I hit you for the $25 bonus link?
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