5 MIN READ
This Reader Spent One Hour Switching Banks and Saved $1,240
I’ve been a big fan of The Penny Hoarder ever since I discovered it on Facebook, and have found lots of creative ways to earn and save both large and small amounts of money. If I had to sum up one major theme I’ve seen consistently, it’s to regularly take inventory of your bank accounts and credit cards and always be on the lookout for better rates, promotions and offers.
I’ve been meaning to change over my bank accounts for a long time now. I used to have checking and savings accounts with a small community bank that offered high interest rates and benefits, but since People’s United bought them, I’ve been getting hit with tons of monthly fees: a monthly maintenance fee, plus ATM fees charged by both the ATM and People’s.
I’ve also had a high-yield savings account with American Express for years, which I opened when they were offering 4%-5% interest. Now the account earns a meager 0.9%, and after some research, I realized I could do much better.
Finally, I opened a Chase Sapphire Preferred card about six months ago to take advantage of a 40,000 points bonus offer (which translated to $400 cash back). The card’s rewards are OK, but there are better cash-back credit cards out there and I wanted to close it before the company started charging me the $95 annual fee they’d waived the first year.
After browsing the Penny Hoarder for a couple of hours one afternoon, I came with a plan that will not only save me $10-$15 a month in fees, but will actually generate an estimated $1,240 in interest and rewards annually. Here’s how I’m planning to change my financial strategy.
Move My Checking and Savings Accounts
I closed my People’s United checking and savings accounts and moved them to Santander. Santander’s Extra 20 checking account is free with a direct deposit of $1,500 per month.
Plus, each month you can earn up to $20 in bonuses deposited to a linked savings account. The first bonus is $10 for your direct deposit of $1,500 or more, and the second bonus is $10 is for completing two online bill payments using Santander’s portal.
By moving my accounts to Santander, I not only saved $10-$15 in monthly fees but I will earn $240 per year in bonuses.
Total annual bonuses: $240
Open a Kasasa Account
I moved my savings from American Express to two Kasasa Cash accounts. Kasasa is a program I learned about on The Penny Hoarder, that helps community banks stay competitive with larger national (and international) banks. Terms will vary by bank, but generally you need to enroll in online banking and make 12 debit card purchases a month to qualify for a higher interest rate plus other benefits like reimbursements for ATM fees charged by other banks. If you miss a month, you get a lower interest rate, but no matter what, the Kasasa accounts are generally free.
I found a Kasasa Cash account at a local community bank that offered 2% interest on balances up to $10,000. They also offered a free Kasasa savings account at 1% interest on balances up to $50,000. The balance in my American Express account was about $18,000, so I moved $10,000 to my new Kasasa checking account and $8,000 to savings. I set up a small weekly direct deposit to the checking account for the amount I usually budget as spending, to ensure I get my 12 debit card transactions a month without ever touching the $10,000 in savings.
Total annual interest: $280
Try Credit Card Arbitrage
I opened a new credit card to try this credit card arbitrage strategy, also called “stoozing,” I read about on The Penny Hoarder. Credit card arbitrage is when you use the credit card company’s money to earn interest and other rewards by taking advantage of 0% interest and bonus offers. Instead of paying your balance each month, you take the money and deposit it into a high yield savings account.
I opened a Citi double cash back card, which has no interest for the first 15 months and no annual fee, and offers 1% cash back when you make a purchase and 1% back when you pay it off. I moved every automatic payment I could over to this card (gym membership, cable, etc.), plus I plan to use this card for every purchase except the 12 monthly debit card transactions required to earn interest on my Kasasa cash account.
Rather than paying the balance off in full each month like I would normally do, I’ll move the money into my Kasasa Savings account, where it will earn 1% interest. At the end of the 15-month interest-free period, I’ll pay the balance in full out of my savings account. Any money left over will be mine to keep.
I estimate my annual spend to be $24,028 and at 3% (1% interest + 2% cash back) I’ll earn $720. I also closed out the Chase Sapphire Rewards card I’d opened to take advantage of a promotion, and saved the $95 fee I would’ve been charged later this year.
Total earnings (interest + cash back): $720
Grand Total: $1,240
I’ve often heard people complain that it’s too difficult or time consuming to change banks, but I did the majority of the work online in an hour or so. For upwards of $1,200, it’s definitely worth the effort!
Your Turn: How much have you earned or saved by switching to a new bank account or credit card?
Kerrie Urban is a regular reader of The Penny Hoarder and loves finding great deals. She also blogs at The Reward Ninja.