Online Banking for Extra Income

I started this blog a couple of weeks ago and am focused on writing about my journey to becoming financially free some time in my 50’s. I don’t know what the future will hold, however I seem to be on the right track thus far. The blog has helped me stay organized on this journey because I am able to go back and see my progress each month. My main focus is writing about investing into high quality dividend paying stocks, but I will also be writing about money saving tips. This section focuses on how to earn more income, or cut back on expenses.

What’s the big deal with online banking? I find it crazy when I hear about people with $20,000 in a savings account that offers a .10% annual percentage yield. APY is a representation of an interest rate and can be either a lending term or a savings term. If you’re saving money, it tells you how much interest you’ll be paid each month. I typically get paid interest from my online bank account at the beginning of each month. Let’s say I deposit $2,000 into my brick and mortar bank that offers an APY of .10%. Each month I would only be receiving about 20 cents on that savings account. Now let’s say I put that money into my GE capital savings bank that offers an APY of .90%. Well now I would be receiving $1.80 each month vs. the paltry 20 cents I was earning at my bank next to my house. In order to figure out what I would receive for an APY I simply multiply that APY by the amount of money in the bank. (For example .0009*2000=1.8) All you have to do is move the decimal place of your APY to the left 3 times and multiply it by how much money you have in your bank to get an estimate of what you’re earning each month.

What is the big deal with earning that extra $1.60? I know it’s not a ton of money; however I am earning 9 times more interest than someone who uses a brick and mortar bank.  Maybe the extra $1.60 with an APY of .90% is not a big deal, but why wouldn't you want to earn more? After all, when you look at bigger amounts deposited for longer periods of time that money will add up quickly. So now let’s say I have $20,000 in a bank that offers .10% APY and another $20,000 in my GE capital Savings bank that earns .90% APY.  Let’s say I never add a single penny to each account and watch it grow for 10 years.

Year	Brick & Mortar bank	GE Capital Savings	Difference
1	$20,020.01	$20,180.74	$160.73
2	$20,040.04	$20,363.12	$323.08
3	$20,060.09	$20,547.15	$487.06
4	$20,080.16	$20,732.84	$652,68
5	$20,100.25	$20,920.20	$799.84
6	$20,120.36	$21,109.26	$988.90
7	$20,140.49	$21,300.03	$1,159.54
8	$20,160.63	$21,492.53	$1,331.90
9	$20,180.80	$21,686.76	$1,505.96
10	$20,200.99	$21,882.75	$1,681.76

                You can see that the difference of 10 years is $1,681.76. Now that’s a lot of free money that you could be earning. I can’t tell you how many friends and family members just keep their money in a savings or checking out that is earning peanuts. My GE capital savings bank is FDIC insured just like any of these other banks you can walk into. And if I ever need to withdraw my funds, it takes just one business day to receive the money. It’s time to start putting your hard earned money to work for you.