Financial Travel Tip # 88: Managing Your Online Savings Accounts

by Nora on July 13, 2013

If you’re traveling long-term or full-time, you’ll want to have online savings accounts in your repertoire of investments. They offer better yields than bank accounts, they’re more secure (since debit card access is often restricted or impossible), and they are great vehicles for saving money to travel.

Here are some tips for using and managing your online savings accounts effectively as a traveler:

 

Two-Factor Authentication

Having an extra layer of security during the log-in process is ideal since you can’t count on local WiFi access being secure. The harder it is for people to hack into your accounts, the better.

 

No Fees

Online savings accounts have pared-down services (since everything is online); thus the fees should be similarly pared-down. All you should need to do with your travel savings account is move funds to and fro between your bank account – which should never carry a fee.

 

Check With Your Bank

Your bank might offer a high-interest online savings account, which will make it even easier to transfer funds between accounts. (But again – check for fees!)

 

Set up Dedicated Accounts

I have an online savings account for my taxes, one for savings, and one as a “slush fund” where I invest extra earnings from my higher-income months (to use as needed during lower-income months).

Compartmentalizing each savings goal helps you track your progress better.

 

Watch Your Balance

If you have a lot of money in your online savings account (and you don’t have an immediate need for it all), consider moving some of it into a longer-term investment that will get you a better return. You don’t have to go crazy and risk it all (or any of it), but if you can afford to let it sit for a while, consider bonds (if you want a guarantee) or low-risk mutual funds.

Check out this post for more on choosing the right investments.

 

 

Some more to whet your appetite:

Financial Travel Tip #28: Managing Your Travel Savings Account  *including a 25% bonus for opening an ING savings account

Financial Travel Tip #41: Banking on the Road

Financial Travel Tip #27: Where to Invest Your Travel (and Other) Savings

 

 

 

 

{ 19 comments… read them below or add one }

1 Sheralyn July 13, 2013 at 6:01 pm

Since you’re from Canada, as I am, I was wondering what bank you use that offers 2-factor authentication when logging in?

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2 theprofessionalhobo July 13, 2013 at 10:30 pm

Hi Sheralyn,
All the banks I use have 2-factor authentication – eg: a special keyword they ask you after you’ve entered in your initial password. (I have accounts of one sort or another with CIBC, TD, and ING).

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3 Sheralyn July 14, 2013 at 12:11 am

Thanks for the info! I’ll have to investigate further, since I’d prefer to have such a system for my on-line banking!

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4 Deane Bong July 17, 2013 at 4:32 pm

I use RBC and they have a 2-step log-in system too.

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5 theprofessionalhobo July 17, 2013 at 6:57 pm

Good to know – thanks, Deane!

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6 Sheralyn July 17, 2013 at 7:08 pm

Yes, this is good to know – I have lots of options to investigate now! 🙂

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7 Janna August 12, 2013 at 11:23 pm

ING Direct is now Capital One 360, but they are still great!

I have a savings account with them, a checking account with Chase bank (because it’s no fees and they have the most ATMs…call me old-fashioned, but I still prefer dropping off checks at the bank vs. using high tech mobile apps). I also have a Roth IRA and general (taxable) investment accounts with Vanguard. I invest in life-cycle funds…not exactly low risk (80% stocks 20% bonds) but since I’m only 25 I can afford to take on higher risk for higher returns.

I love your idea of having multiple sub-accounts and I do just that.

However, earlier this year I just made the transition to a commission-based income and my income varies from month to month…some months it’s 5 figures, other months it barely reaches 4 figures, ha.

One of my funds is my “6-month-fund” which sounds like your “slush” fund. However, I was wondering if you could share some tips (maybe in a separate article?) about cash flow management. Do you set up auto-investments from this slush fund to your checking? How do you deal with varying cash flow, beyond just having a backup fund, but actually getting into the specific logistics of managing your transfers, automating as much as possible, and optimizing cash flow without going crazy?

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8 theprofessionalhobo August 13, 2013 at 10:19 am

Hi Janna,
Cash flow management with a variable income is a real trick. I wrote a post about this a while back on Wise Bread, which you may find useful:
http://www.wisebread.com/saving-for-retirement-and-other-long-term-goals-on-a-variable-income

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9 Janna August 13, 2013 at 11:12 am

Thank you Nora that is very helpful! I read the article and I can’t agree more.

I think you’re right that once you’ve been earning variable income for a year or two you have a better idea of what your lowest month will look like.

For this year, I just set my retirement savings to maximize the contribution to the Roth IRA ($5500) and I’m hoping my earnings won’t put me over the limit to contribute. If so, I can just adjust at the end of the year. And I set up automatic contributions to take out a rather large amount each month since I wanted to maximize my contribution earlier in the year, as the stock market was going up and I didn’t want to wait until the end of the year to contribute.

I guess these are things we figure out better and better with time.

I hadn’t thought about having a separate “slush” fund to cover variable income/expenses…I was thinking of it more like a “6-month emergency fund,” so maybe I should set one up to make life easier!

Thank you,
Janna

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10 theprofessionalhobo August 14, 2013 at 7:19 am

Hi Janna,
Glad you got a couple of ideas! It really does boil down to creating a system and sticking to it – whatever it is (you seem to have a pretty good system going for you); with a variable income not everything can be automated, and the slush fund/emergency fund is a handy tool to buffer low-income months and stash the extra from high-income months.

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11 @TravelEater August 13, 2013 at 9:44 pm

Hi Nora
Have you found a Canadian bank that waives foreign transaction fees for withdrawing $ at overseas bank accounts? Or credit card?
Thanks!
Johanna

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12 theprofessionalhobo August 14, 2013 at 7:20 am

Hi Johanna,
Nope! But I do believe that HSBC is one of the top choices for traveling Canadians, with its abundance of ATMs around the world (which negates paying withdrawal fees if you can find an HSBC machine).

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13 @TravelEater August 14, 2013 at 10:36 am

Thanks Nora – HSBC has been my conclusion so far too. Although I fund something intriguing on the ING Direct website that I’m going to look into further. Thanks!
Johanna

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14 theprofessionalhobo August 14, 2013 at 5:56 pm

Let me know what you find on ING – I have an account with them and it would be handy to have ATM access too.

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15 @TravelEater September 8, 2013 at 2:49 pm

Hi again Nora

HSBC says they charge fees to their Canadian customers who use HSBC bank machines outside of Canada.

And no luck on ING Direct foreign transaction fee avoidance either.

Still looking ….
Johanna

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16 Sheralyn September 8, 2013 at 4:36 pm

Thanks for posting what you found out!

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17 theprofessionalhobo September 9, 2013 at 9:22 am

Yes, thanks Johanna! I’ve pretty much acquiesced to paying fees; it’s just a matter of keeping them as low as possible. Is it possible that HSBC’s foreign ATM fees are less? (It seems ridiculous that they should charge full foreign ATM fees for their own machines).

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18 @TravelEater September 9, 2013 at 2:33 pm

Yes, slightly less for HSBC’s own customers. But not enough to make it worst switching, in my opinion.
Seems to me there is a wide open opportunity for a bank and credit card company to lure new customers here …. !

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19 theprofessionalhobo September 11, 2013 at 8:54 am

Yes, there’s an opportunity – but I think the Canadian market it just small enough for banks to not be bothered with the segment thereof who travels. Then again, if we start lobbying… 🙂

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