Savings account as primary?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Post Reply
Topic Author
manlymatt83
Posts: 1287
Joined: Tue Jan 30, 2018 7:23 am

Savings account as primary?

Post by manlymatt83 »

Now that the Government has suspended Regulation D indefinitely (https://www.federalreserve.gov/supervis ... stions.htm) -- this is the regulation that used to limit withdrawals to 6 per month on savings accounts -- I'm wondering if banks encouraging use of savings accounts as primary accounts will become more popular over the next few years.

M1 Finance seems to already be doing this with their 5% savings account with up to 5 million in FDIC insurance and Unlimited transactions (https://m1.com).

If you think about it, the only benefit checking accounts offer are debit cards and check, neither which apply to many people these days. I haven't written a check in ages, and I don't use debit cards as I prefer responsible use of credit card points. Pretty sure you can attach a good old ATM card to a savings account, so banks who want to offer ATM access and/or ATM refunds will still be able to do so (albeit without a debit card).

I'm actually thinking of switching my primary account to one of these 5%+ savings accounts for both direct deposit and ACH withdrawal of bills. I have about ~10 bills per month when all is said and done. I know the Fidelity brokerage account has similar features if you enable checks, debit card, etc. but for me, the interface makes it really challenging to filter out certain transactions.

Curious what others think. Is anyone using a savings account as their primary account?
exodusNH
Posts: 10350
Joined: Wed Jan 06, 2021 7:21 pm

Re: Savings account as primary?

Post by exodusNH »

manlymatt83 wrote: Fri Jun 02, 2023 11:03 pm Now that the Government has suspended Regulation D indefinitely (https://www.federalreserve.gov/supervis ... stions.htm) -- this is the regulation that used to limit withdrawals to 6 per month on savings accounts -- I'm wondering if banks encouraging use of savings accounts as primary accounts will become more popular over the next few years.

M1 Finance seems to already be doing this with their 5% savings account with up to 5 million in FDIC insurance and Unlimited transactions (https://m1.com).

If you think about it, the only benefit checking accounts offer are debit cards and check, neither which apply to many people these days. I haven't written a check in ages, and I don't use debit cards as I prefer responsible use of credit card points. Pretty sure you can attach a good old ATM card to a savings account, so banks who want to offer ATM access and/or ATM refunds will still be able to do so (albeit without a debit card).

I'm actually thinking of switching my primary account to one of these 5%+ savings accounts for both direct deposit and ACH withdrawal of bills. I have about ~10 bills per month when all is said and done. I know the Fidelity brokerage account has similar features if you enable checks, debit card, etc. but for me, the interface makes it really challenging to filter out certain transactions.

Curious what others think. Is anyone using a savings account as their primary account?
I would, but the HYSA I use still enforces 6 withdrawals a month. It's not worth the effort to find a different one.

I want a brick and mortar bank. The $3500 I keep in checking is a cheap opportunity costs to deposit cash, get cashier's checks, and have a physical location to resolve issues.
rgs92
Posts: 3436
Joined: Mon Mar 02, 2009 7:00 pm

Re: Savings account as primary?

Post by rgs92 »

Good question. I'm surprised online banks (or credit unions) haven't introduced (decent)interest bearing accounts that have every feature except for paper checks (or debits I guess).
As long as you have ACH, what more do you need?

More broadly, the distinction between savings and checking accounts seem archaic these days as far as I can tell.
Fubs
Posts: 43
Joined: Mon Apr 16, 2018 10:56 pm

Re: Savings account as primary?

Post by Fubs »

No, I would still prefer to having a checking and savings so as to have a level of separation between where the bulk of my cash is stored. If my debit is ever swiped or one of my linked financial accounts is hacked, the thieves would be limited to only what's in my checking (which is usually a small minimum balance).
gotoparks
Posts: 1149
Joined: Sat Jan 28, 2023 9:19 am

Re: Savings account as primary?

Post by gotoparks »

I would rather have multiple accounts in case of fraud or something going wrong. I am not an optimizer with my checking account.
lazyday
Posts: 3849
Joined: Wed Mar 14, 2007 10:27 pm

Re: Savings account as primary?

Post by lazyday »

I've been using savings accounts to pay bills maybe for almost as long as I've been banking online. My main bank has two savings accounts. When the 6 transaction limit was enforced I used both to pay bills. The same bank also has a checking account for the rare times I needed to do more than 12 transactions in a month. Normally the checking account had $100 or less.

I generally have companies automatically pull from my bank using ACH. There may have been times I had to claim that my savings account was a checking account. But in recent years I don't think that's been necessary for me.

I don't keep a large amount of money with the same bank I use to pay bills. Most assets are in brokerage accounts, banks/credit unions with good CDs, and Treasury Direct.
User avatar
JoMoney
Posts: 16260
Joined: Tue Jul 23, 2013 5:31 am

Re: Savings account as primary?

Post by JoMoney »

Note that despite the regulation requiring savings accounts limit to 6 withdrawals per statement period was rescinded, there are still many banks that have kept that in the terms for their savings accounts and will fee you if you go over it.
That said, it's entirely possible to do what you're asking about I've done it. My bills are pretty much limited to a rent payment and a credit card payment (there are a few other bills, but those are all paid through the credit card), and both of those payments could be done through ACH direct debit of the savings account.
At many banks and credit unions, savings accounts don't usually have requirements to avoid monthly fees, so that could be an advantage depending on your usage and the bank.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
User avatar
Cheez-It Guy
Posts: 4007
Joined: Sun Mar 03, 2019 3:20 pm

Re: Savings account as primary?

Post by Cheez-It Guy »

This is what I already do with my Marcus Savings Account. They let you exceed 6 withdrawals per month, although they still keep a count. My W-2 compensation is direct-deposited there, and then I use it for auto-payment of 3 credit cards as well as weekly auto-investment at Vanguard. I have a basic Wells Fargo checking account that I rarely use and in which I only keep a minimum. Just for incidental utility bill pay and taxes not payable by credit card without excessive fees, and also for emergency cash access.
normaldude
Posts: 803
Joined: Tue Jan 27, 2009 3:41 am

Re: Savings account as primary?

Post by normaldude »

manlymatt83 wrote: Fri Jun 02, 2023 11:03 pmM1 Finance seems to already be doing this with their 5% savings account with up to 5 million in FDIC insurance and Unlimited transactions (https://m1.com).
Personally, I'd be wary of keeping my money with M1.com:

1) Not a Bank. Neobank fintech startups like Chime & M1 are not banks. It even says so at the bottom of the M1.com page: "M1 is not a bank." These arrangements can increase the risk of problems, since you're calling the customer service department at one company (the neobank / fintech platform), but the actual funds are held at another company (the partner bank).

https://arstechnica.com/gadgets/2021/07 ... ing-money/

https://www.americanbanker.com/payments ... -detection

2) Absurdly Small Partner Bank. "M1 High-Yield Savings Accounts are furnished by B2 Bank". B2 Bank (formerly known as First National Bank of Buhl) is an absurdly small bank in Minnesota that only has $34 million in deposits. https://www.depositaccounts.com/banks/t ... -buhl.html

To give you an idea of just how small this partner bank is, let's compare amount of deposits:

- Capital One: $355 billion

- Ally Bank: $156 billion

- Axos Bank: $16 billion

- Redneck Bank / All America Bank: $477 million

- B2 Bank / First National Bank of Buhl: $34 million

Some posters on Bogleheads.org probably have more than $34 million in their Vanguard account.

The slick M1 website makes you think your money is being held by a futuristic tech giant. But in reality, here's what the 2 branch offices of B2 Bank (First National Bank of Buhl) look like:

Image
https://i.ibb.co/cXSNTsW/b2bank-1.jpg

Image
https://i.ibb.co/HG1Mqp4/b2bank-2.jpg

https://www.b2.bank/about/locations

If I'm going to store my money with a neobank arrangement, I would at least want the partner bank to be a major financial institution. Just my opinion.
safari
Posts: 651
Joined: Mon Nov 08, 2021 1:23 pm

Re: Savings account as primary?

Post by safari »

I've been using Ally Money Market Savings account as my primary account for a few years now. My paychecks get automatically deposited there, and I use that account to pay all my bills via ACH pulls and Zelle. The account also offers free checks and ATM card, which reimburses other banks' fees. The ATM card can be locked/unlocked in the Ally app. Ally still warns me when I exceed 6 transactions a month and imposes a $10 fee for each transaction over 6, but that fee gets automatically reimbursed the following day. No idea why they bother doing it that way, but either way, the limit on transactions has not been enforced for the last 3 years.
snowday2022
Posts: 721
Joined: Sun Jan 16, 2022 1:48 pm

Re: Savings account as primary?

Post by snowday2022 »

Lots of people still routinely use checks and have no plans to stop.
chinchin
Posts: 830
Joined: Tue Nov 14, 2017 7:02 pm

Re: Savings account as primary?

Post by chinchin »

It's not that hard to push a button and move money between savings and checking. Having said that, I have $1 in my savings account since it earns 0.01% interest. I have more in money markets.
not financial advice
gotoparks
Posts: 1149
Joined: Sat Jan 28, 2023 9:19 am

Re: Savings account as primary?

Post by gotoparks »

normaldude wrote: Sat Jun 03, 2023 9:48 am
manlymatt83 wrote: Fri Jun 02, 2023 11:03 pmM1 Finance seems to already be doing this with their 5% savings account with up to 5 million in FDIC insurance and Unlimited transactions (https://m1.com).
Personally, I'd be wary of keeping my money with M1.com:

1) Not a Bank. Neobank fintech startups like Chime & M1 are not banks. It even says so at the bottom of the M1.com page: "M1 is not a bank." These arrangements can increase the risk of problems, since you're calling the customer service department at one company (the neobank / fintech platform), but the actual funds are held at another company (the partner bank).

https://arstechnica.com/gadgets/2021/07 ... ing-money/

https://www.americanbanker.com/payments ... -detection

2) Absurdly Small Partner Bank. "M1 High-Yield Savings Accounts are furnished by B2 Bank". B2 Bank (formerly known as First National Bank of Buhl) is an absurdly small bank in Minnesota that only has $34 million in deposits. https://www.depositaccounts.com/banks/t ... -buhl.html

To give you an idea of just how small this partner bank is, let's compare amount of deposits:

- Capital One: $355 billion

- Ally Bank: $156 billion

- Axos Bank: $16 billion

- Redneck Bank / All America Bank: $477 million

- B2 Bank / First National Bank of Buhl: $34 million

Some posters on Bogleheads.org probably have more than $34 million in their Vanguard account.

The slick M1 website makes you think your money is being held by a futuristic tech giant. But in reality, here's what the 2 branch offices of B2 Bank (First National Bank of Buhl) look like:

Image
https://i.ibb.co/cXSNTsW/b2bank-1.jpg

Image
https://i.ibb.co/HG1Mqp4/b2bank-2.jpg

https://www.b2.bank/about/locations

If I'm going to store my money with a neobank arrangement, I would at least want the partner bank to be a major financial institution. Just my opinion.
The pictures are funny. Reminds me of the Wizard of OZ when the curtain was pulled.
User avatar
Cheez-It Guy
Posts: 4007
Joined: Sun Mar 03, 2019 3:20 pm

Re: Savings account as primary?

Post by Cheez-It Guy »

The first one especially since there's no one there and no other buildings even in sight.

Image
Topic Author
manlymatt83
Posts: 1287
Joined: Tue Jan 30, 2018 7:23 am

Re: Savings account as primary?

Post by manlymatt83 »

normaldude wrote: Sat Jun 03, 2023 9:48 am
manlymatt83 wrote: Fri Jun 02, 2023 11:03 pmM1 Finance seems to already be doing this with their 5% savings account with up to 5 million in FDIC insurance and Unlimited transactions (https://m1.com).
Personally, I'd be wary of keeping my money with M1.com:

1) Not a Bank. Neobank fintech startups like Chime & M1 are not banks. It even says so at the bottom of the M1.com page: "M1 is not a bank." These arrangements can increase the risk of problems, since you're calling the customer service department at one company (the neobank / fintech platform), but the actual funds are held at another company (the partner bank).

https://arstechnica.com/gadgets/2021/07 ... ing-money/

https://www.americanbanker.com/payments ... -detection

2) Absurdly Small Partner Bank. "M1 High-Yield Savings Accounts are furnished by B2 Bank". B2 Bank (formerly known as First National Bank of Buhl) is an absurdly small bank in Minnesota that only has $34 million in deposits. https://www.depositaccounts.com/banks/t ... -buhl.html

To give you an idea of just how small this partner bank is, let's compare amount of deposits:

- Capital One: $355 billion

- Ally Bank: $156 billion

- Axos Bank: $16 billion

- Redneck Bank / All America Bank: $477 million

- B2 Bank / First National Bank of Buhl: $34 million

Some posters on Bogleheads.org probably have more than $34 million in their Vanguard account.

The slick M1 website makes you think your money is being held by a futuristic tech giant. But in reality, here's what the 2 branch offices of B2 Bank (First National Bank of Buhl) look like:

Image
https://i.ibb.co/cXSNTsW/b2bank-1.jpg

Image
https://i.ibb.co/HG1Mqp4/b2bank-2.jpg

https://www.b2.bank/about/locations

If I'm going to store my money with a neobank arrangement, I would at least want the partner bank to be a major financial institution. Just my opinion.
Normally, I would agree with you, except that the founder of M1 owns B2 bank. He acquired it two years ago. There’s a reason it’s called B2 (Brian 2 after M1). The goal is to eventually roll it up into M1 but at the time he purchased the bank, M1 didn’t have the legal structure to be able to buy the bank (they supposedly do now and I anticipate the rollup will happen soon).

https://www.b2.bank/baas
Post Reply