Sense to Save

A savings account as a ‘waiting room’

This is going to be such a “duh” idea, but I hadn’t really thought of it until now, so I’m going to share it with you.

Our emergency savings is in ING Direct, where it earns 3 percent APY.

We have a brick & mortar bank which we use for our debit card purchases, depositing checks, and getting endless rolls of quarters to do laundry.

Our savings account there earns a whopping .3 percent interest. Yeah. Not much.

A few times per month, I electronically transfer some money from our brick & mortar bank to our ING account.

It takes about five to seven business days for the money to be accessible in our ING account. For awhile, that money is just in limbo.

Before I transfer the money, it just sits available in our checking account where it can be spent if I’m not careful.

Since we’re so stinkin’ close to finishing our six-month emergency fund, I really want to just finish it as fast as possible.

Our checking accounts are linked to a savings account, which we can access online. I can put money in that savings account, serving as a holding area or waiting room, until I am ready to transfer it to ING.

I can be more aggressive and put more money in that low-interest savings account knowing that I do have the option of transferring some back to our checking account immediately, if we needed to.

Because once I send it to our real emergency fund, it’s there to stay unless we have a true emergency.

I won’t earn much interest on that money while it’s waiting around. But, it’ll be harder for me to spend if it’s sitting there instead of in my checking account, and I might end up with more to save each month.

2 things: ‘Saving’ money & merchant fees

I’ve recently read some posts from bloggers that made me say, “Interesting! Let’s think about this some more.”

First up is Cleverdude, who challenges us to change the way we think about saving money.

How many times have you visited a department store, found a great clearance, and bought a $100-something for 75 percent off? You might come home and proudly tell your friends, “I saved $75!”

No, you didn’t.

You spent $25, and avoided paying full price on a $100 item.

Unless you took that extra $75 and marched it right over to your savings account, you did not actually save $75.

Continue to seek out those great deals, but remember: Saving money generally doesn’t involve spending it first.

* * *

Next, we head to Northern Cheapskate, where Christiana discusses credit/debit card surcharges at gas stations and convenience stores.

At first, you might be mad because you wanted to use your rewards credit card to earn 1 or 2 or 5 percent cash back on your purchase. The cashier rings up your purchase, and tells you that there will be a $0.50 (or whatever) surcharge if you decide to use a credit or debit card.

Stink! It makes smaller purchases totally not worth it.

But wait a minute. By the store charging a fee for people who choose to use plastic or giving a “pay in cash” discount, they could actually be keeping their costs low for everyone.

Merchants who accept credit cards pay a fee to the credit card companies. It can range from 1.5 to 5 percent of the total purchase, according to this site. So every time someone buys a $1.50 bottle of Coke at their store and pays with plastic, the merchant could be saddled with a $0.02 to $0.08 fee from the credit card company. Doesn’t sound like much, but when you consider most non-gasoline purchases at convenience stations, the totals are usually low. These pennies will certainly add up.

It makes sense for a merchant to want to recoup these costs. One way they can go about it is to charge a surcharge, or “convenience fee” for those who use plastic. Note that this practice is potentially illegal in some states (CA, CO, CT, FL, KS, ME, MA, NY, OK, TX) according to this site.

A retailer can either raise prices of its goods to try to recoup these costs, or it can offer incentives for people who use cash.

Christina linked to a story on CNN.com that states merchants are hit with higher fees for cash-back rewards cards, and lower fees for debit.

Perhaps that’s why the Aldi grocery chain accepts debit but not credit–to keep costs low.

While I really prefer using my debit card instead of cash, maybe I should reconsider the convenience of the card and use cash. Maybe it would be for the greater good. At the very least, it would be one way to stick it to the credit card companies. Hmm, I like that idea!

And for people who are excited about earning cash back on a credit card?

Realize that while you might be getting 3 percent of your purchase back, you could also be paying a surcharge upfront. And, if enough people use those cash back rewards cards, then expect retailers to counter it by raising prices across the board. Kind of negates the cash back incentive, doesn’t it?

A simple week at the drugstores

There’s plenty of ways to earn Extra Care Bucks at CVS this week. Check out The Centsible Sawyer for all the details, including other shopper’s purchases and scenarios.

I kept it really simple this week. On the back of this week’s ad, I saw that when you buy $20 worth of Charmin 12 roll (double rolls) $5.99, Basic Bounty paper towels 8-count $5.49, or certain types of batteries, you get $10 extra care bucks.

There are a few $0.25 off coupons out there for the Charmin and Bounty. I didn’t have any.

In the past, I would have been reluctant to do a deal of this kind, since you have to spend $20+ to get $10 back. Normally, I like to avoid paying out of pocket at all.

But these days, I’m stocking up on toiletries so I won’t have to worry about it next winter when I have an infant to care for.

I bought three packs of toilet paper and a pack of paper towels. That total came to $23.46. Oh, and I also bought one of the monthly deals, a bottle of Huggies baby body wash ($3.49 regular price, had $1 off coupon from today’s paper, and earned $2 ECB back).

I had about $9 in ECB from a previous trip, and my out of pocket total was $16.97.

I earned $12 ECB ($10 from the toilet paper/paper towels deal; $2 from body wash).

If you’re low on TP and have some ECBs to burn, consider stocking up. When I consider the price per roll of toilet paper, I tend to calculate the “single roll” price. The TP I bought today was technically “double rolls” (though really, I should calculate how many squares are in each package to be sure…but that would take awhile).

If you bought four packs of TP and had no coupons or ECBs, you’d pay $23.96 out of pocket plus tax. That would be 48 double rolls, or the equivalent (or so) of 96 single rolls. That’s about $0.249 cents per roll (not a bad price), and when you consider that you get $10 ECB back, it becomes an even better deal.

Since you did have to cough up $23.96 initially, I wouldn’t go so far as to say the $10 earned ECBs made it like you were spending $13.96, thus making it about $0.14 per single roll. Instead, I prefer to calculate the $10 ECB savings on my next CVS purchase, since that’s when I actually get that benefit. I hope that makes sense.

Whew!

I’m transferring my prenatal vitamins prescription to Rite Aid, where I should get a $30 store gift card. The coupon for that has been in several recent store ads, including this week’s.

Once I get that, I’ll get some Crest Pro Night rinse (or toothpaste) which is $2.99 this week (I think) but free after single-check rebate. I guess with the gift card and rebate, it’s double-free. Heh.