That regular savings account you hold on to... It's worthless.

Most of the posts I've made (especially the ETF nonsense below) is fairly technical, and it has been for me. One day I figure a few people (mostly those I know) will read this Blog and I'm sure they'd rather read something they can act on.

I'll discuss money market savings accounts. You see the adverts, you hear about them all over the place, but have you looked into one? Online Money Market Savings accounts are here to stay. These vehicles have pretty much replaced the money market mutual fund as an intelligent place to store your cash. Why keep your money in a regular account making 0.5% interest when you can be making 5.0% risk free and FDIC insured. You're basically just donating money to your bank, and that's kind of you. The online banks can offer these higher rates because they pay much less overhead and they focus on this niche market in banking.

They (those responsible financial planner types) recommend keeping at least 2 months of income on-hand (in cash) for rainy day expenses. Say you make 60k annually, that's 10K set back in cash (we'll disregard taxes), many people still keep this type of money in regular savings accounts. At previously mentioned rates, you are losing $450 a year.

There are only a handful of big names in the internet Money Market Savings game. I'd recommend GMAC or HSBC. Lately, GMAC has always had the better rate by a hair and their customer service is very responsive (The rate is 5.1% APY at the time of this post). It's easy to open an account online and they will send you a packet of info. So long as you have $500 in the account at all times there will be no fees or penalties. It's easy.

Now to make it easier. I enjoy online banking, there is no need to have all these papers and checks flying around everywhere; I get my statements online and try to pay everything online. It is easy to set up these internet MMAs to link to your banking account online and have the ability to transfer funds back-and-forth between the two. It's just like sending a check, but online; much like online bills are paid. Some bank sites, like Bank of America, allow you to import your other accounts and even credit card balances from outside B o A and manage or view all your finances in one spot. Convenient.

There's my two cents on savings accounts, and here's my advice. Every working person should have one of these Money Market Savings accounts. And no person should have that ordinary low paying savings account, period.