Looking at options for Online Banking/Savings

Orestus

Let me preface this by saying I'm not particularly financially savvy when it comes to investments and savings. In my adult life, I've always been fortunate enough to have a well enough paying job that I could basically just deposit money into my checking account, use my debit card for expenses, and slowly save up a bit of money, much of which I spent on an engagement ring/wedding/honeymoon.

After recently getting married I moved in w/ my new wife, so other than cell phone/nights out/games I don't really have any expenses. With that we've decided that I am going to start putting the majority of my paycheck into some type of savings and, after 2 years, we will have enough money for a downpayment on a real house (we are currently close to a city in a townhome).

I really don't have any clue where to start on the best place to put this money. My wife uses ING direct as an online savings account, and I've used it a bit too at her urging the last couple years; ING direct offers fairly competitive rates for a savings account, so I'm leaning towards just doing direct deposit into there every month. I'm trying to shop around though and see if there are any better options. Since my goal is to withdraw this money in 2 years or so and use it as a downpayment, I can't do anything too long term or anything w/ too much risk. I'm curious though about any experience anyone else might have, as even an extra .5% would be a not insignificant amount of money for what I will be depositing.

Thanatos

You should probably talk to a financial planner, but I believe you can use an IRA for a down payment on a house without penalty. This would be an ideal way to save for it (if this is the case), since an IRA is tax-deductible.

matt has a problem

Interest rates are awful at the moment. CD rates are usually slightly better. You can get a 2.3 APY from Capital One on a 2 year CD with a minimum of $5k.

Mr Blonde

You can raid your Roth IRA for $10,000 per spouse tax free. You need to have had a Roth for 5 years though. Of course that just hurts your future retirement, but that's another story.

Check out Mint, they have up to date savings rates. I think Ally bank (formerly GMAC), offers the highest savings in the country right now.

Mr Blonde

Just checked mint myself, Everbank (an online only bank - FDIC insured) offers a 1.77% savings account and that is the highest that Mint knows of. Ally is down to 1.55.

nome

You can withdraw contributions from a Roth IRA at any time because you've already paid taxes on it. You can also put it back in if you do it within 60 days. The earnings in your Roth IRA are what has all those restrictions mentioned by Mr Blonde.

Thanatos

nome wrote: »

You can withdraw contributions from a Roth IRA at any time because you've already paid taxes on it. You can also put it back in if you do it within 60 days. The earnings in your Roth IRA are what has all those restrictions mentioned by Mr Blonde.

Yeah, but there's no real reason to stick the money in a Roth IRA for two years of returns then pull it out.