I was more than a tad dubious when I first heard about this promotion from CITIBANK. An “eSavings” account – an interest earning savings account linked to your checking account so you can quickly and easily transfer funds between the two – either in person at a branch office or from any computer on line. In this way, the reserve I used to keep in checking for emergencies, can now be maintained in a readily accessible, fully liquid, savings account that earns some reasonable rate of interest – unlike the checking account itself which, of course, earns bubkis (1% or so.) The promotional interest rate on the eSavings account a year ago was 5%. It has since been lowered to 4.65%, still a FAR better rate of return, based on average daily balance, than that paid for funds held in a checking account that pays “interest” and not much less than “CD” of “Monet Market” accounts locked into periods of time currently ranging from four up to twelve months.
The complete liquidity of interest earning funds is the real value added to this account. From home, in a matter of seconds, I can transfer money from eSavings to checking when I need it to pay a bill. Conversely, when/if I build up a surplus in checking, I can transfer it into the eSavings vehicle where it will earn some real interest. Now, clearly, one can usually earn a better rate of return by locking funds into time specific CDs – some for as little as four months – others for as long as three years. What is lost in exchange for what usually amounts to one percentage point or less, is the complete and easily accessible liquidity of this eSavings account.
Up until now, the choices were fewer and less desireable. A person could keep a surplus of funds in their checking account in the even of an emergent need and earn literally nothing on that money OR put savings into some form of ‘time-locked’ account where the funds became inaccessible, without substantial penalty and interest lost, for a fixed period of time. Two pretty poor choices. This CITIBANK eSavings account and others like it, offer the best of both worlds. Cash available within the same day through your checking account while being ‘held’ in a fully liquid, interest bearing savings account.
For years, I had come to resent the passing of the “Passbook” savings accounts I had grown up with. That Passbook was an indicator that we, as children, had taken an early lesson to heart: Pay yourself first! We did, and although the interest at the time was low, it seems high compared to the insultingly negligible interest offered on most similar liquid savigs or, where you can still get them, Passbook accounts today.
Completely liquid accounts that earned some interest. To have a choice in between locked-in CD rates and no-tangible-interest checking accounts is a real boon for consumers and is a model being offered now by other banks as well. Do yourself and your money a favor and check it out! Don’t accept nothiing or next-to-nothing when you can get a CD level rate of return on money you can get to when you need it – without penalty.
