Wednesday, July 7, 2010

The Doubling Bank Account

As your doubling account grows from tiny to small to slightly-larger-than-small, you may take a look at the money lying on the nightstand or in the shoebox and be tempted to spend it. What should you do with this guarded treasure? Should you open a bank account to put your money in? The answer is 'it depends.'

While stashing it away in a bank account may seem like a good idea to keep you from diving into it during a moment of weakness, you may be spending more than you are making by placing it into a bank account too early.

Banks pay interest, that is true. But at the current rate of interest at less than 1% here in the States, that is not too tantalizing. In fact, my personal bank pays a whopping .2%!!! So for every $100 I place in the bank, I will make 20 CENTS a year! WTF?!?! And they expect me to keep my money in there?

Not to mention I have to keep $5 minimum in the bank to have the account open. That is 25 YEARS worth of interest for $100 at that rate. Or the equivalent of one years interest if I place $2500 in the account for a year. Um... ok...

THEN! Lets not forget FEES! The bread and butter of the banking industry. If your account is less than $500 in my bank, they charge you a $6 monthly 'low balance' fee.
Theres another 25 years of interest per MONTH I'll be spending. Of course, once I go over $500 I do not get the fee.

As you can see, finding a place to keep your stake while it lays dormant looking for a new trade is not so simple. My advice, give it to someone to hold or just bite the bullet and discipline yourself. If you break down and spend $5 on a Subway sandwich at least you got something for yout $25 years of interest you just spent instead of buying the privilege of your money staying in a bank so they can make 25 TIMES that in interest on a new car loan.

I can't wait until I have enough to start my own bank...

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