The Savings Account That Makes Your Money Work Harder

If you’ve been reading our stuff for a while, you know that Stash is a big fan of keeping your short-term savings (for things like annual travel, holiday gifts or your emergency fund) at an online bank. We don’t really care where you keep your checking account, as long as you’re not getting hit with fees and there are no strings attached – like being required to use a debit card or making a certain number of deposits each month.

But when it comes to your short-term savings, there’s no better place to keep it than in a savings account at an online bank.





First of all, it keeps it out of sight and out of mind. Typically, when people keep their checking and savings accounts at the same bank – it’s very easy to move the money from savings to checking and use it to pay bills.

Annual interest earned at:

Chase is $15 – insulting, we agree

Second of all, online banks are just like brick and mortar banks (FDIC Insured) except they don’t have a physical presence, like a bank branch that you can walk into. No real estate and less headcount translate to lower overhead and savings for the bank. Part of this savings gets passed on to you in the form of higher interest rates. Higher interest rates mean your money is working harder for you.


A couple of years ago, we were loving CapitalOne360 for their savings account. Formerly known as ING Direct, CO360 is the online banking division of Capital One Bank – yup, 2 different banks means 2 different interest rates offered on their respective savings accounts! We found a lot of clients didn’t realize it and were not benefitting from the higher online bank rate – we think it would have been nice if they could have made that distinction a little more obvious – but moving on.


Because CO360’s interest rate was really good and consistently getting stronger for many years, we were advising most Stash clients to open up their “sub-savings” accounts at CapitalOne360. But towards the end of 2017, they changed their strategy and decided to start “competing on customer service” – their interest rate has been lagging the other online banks ever since.


| Read: more about Stash’s sub-saving account strategy – the Reverse Budget™ here. |



As of late, there are a couple new’ish players in the space who are playing hardball. They want your business and they are willing to pay up for it. Ally Bank, who was relatively unknown until a few years ago and Marcus (a division of Goldman Sachs) are both offering a 1.80% interest rate on savings accounts*. To put this in perspective, CapitalOne360 is currently offering 1.00% and brick and mortar banks like Chase are offering 0.01%**. If you choose one of the high-interest savings accounts, your money is essentially working 100 to 180 times as hard for you!


To show you how the math breaks down here’s a quick example.



Let’s say you’re a H.E.N.R.Y.™ saving up to buy a home in the next year or two and you have a $50,000 down payment sitting in a savings account.


Annual interest earned at:

Chase is $15 – insulting, we agree

CapitalOne360 is $500 – much better

Ally/Marcus is $900 – now we’re talking


We realize that earning $900 per year will not make or break a H.E.N.R.Y.s’ ability to retire early, but it’s an international plane ticket, a week-long cruise, or a couple really really nice dinners out.



We think it may be worth it. Ally and Marcus have all the same features we loved about CapitalOne360, including the ability to open up separate savings accounts for each savings goal (a key to saving successfully) and the option to nickname each account according to the thing you’re saving for (which we highly recommend).


| Read: 3 Benefits Of Online Savings Accounts |


We understand that having to set up a new savings accounts can be a real pain in the a$$, but depending on how much you have sitting in your savings account, the benefit could really add up.


Do the math and drop us a comment below to let us know how much more money you’ll make by upgrading to an online bank.


*Interest rates quoted are based on time of publishing and acquired directly from the respective banking institutions’ website.


**There are discrepancies online about whether the interest rate on Chase’s Savings Accounts is 0.01% or 0.04%, this is the link Stash used to source its info – which states the current rate at 0.01%.

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