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Why you should keep your travel savings in a different bank | Don't Ever Look Back

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Why you should keep your travel savings in a different bank

Why you should keep your travel savings in a different bank

This is a guest post by Emily Starbuck Gerson of Maiden Voyage. Emily is a 20something professional writer and editor based in Austin, Texas. She’s a travel junkie who runs the blog Maiden Voyage in her spare time. You can find her on Twitter at @TheMaidenVoyage.


Target = Danger Zone

I hate to admit it, but I can be an impulsive shopper. Target is a danger zone for me. While I don’t generally do major damage, I’ve found that small impulse purchases can quickly add up and wreck travel savings goals.

My primary checking and savings used to be at the same bank, which meant transfers were instant. If I needed new shoes but didn’t have quite enough in my checking, I could just transfer over $50 from my savings to my checking and go shopping right away.

I needed something to keep me accountable on my travel savings goals, so I opened up an interest-earning savings account at ING Direct, a primarily online-only bank. Because the bank has low overhead, its interest rates are usually better than other banks. I was able to link it up to my Bank of America checking account.

It takes two bank business days for money to transfer between the two accounts. While that may be a pain for some people, I think it’s a major benefit! It means it’s impossible to spontaneously spend the saved money. You have to wait two business days before it arrives in your checking account, removing the temptation to impulsively take little bits here and there.

Travel Savings

Fast track your travel savings with an automatic savings plan!

You can move money manually, but you can also do automatic savings plans, which is a way to fast-track your savings. Most banks allow you to do this online, but I think it’s most beneficial to do it between two different banks so that you have the lag time.

For my automatic savings plan, I chose to have $15 automatically go from my regular checking account to that ING savings account each week. It’s a small enough amount that I don’t notice it leaving my checking account, but it’s enough that whenever I remember to check my savings, I’m always pleasantly surprised to see how it’s added up. It allows you to contribute to your travel goals without even thinking about it.

Whenever I have a trip soon on the horizon, I up my weekly contribution amount to more like $30. That doesn’t mean you can’t still manually add to the account when you want to. Whenever I end up with a little more money in my savings than I need, I manually transfer some money over.

If you want your travel savings to grow but have impulse spending tendencies, open up a savings account at different bank from the bank where you have your checking account. An online-only bank is preferable since their interest rates are higher. Then set up an automatic savings plan so that money for your travel fund will add up when you’re not even thinking about it!

Flickr Photo: j.reed


  1. Posted February 5, 2011 at 11:09 am | Permalink

    Remember to shop around for the highest interest rate for your savings account!

    We’re currently earning about $100 a month in interest (6.51% rate in Australia) which will add significant time onto our travel plans! If anyone has recommendations on which banks have the best rates in the US and elsewhere, please leave them in the comments.

    • Posted February 5, 2011 at 11:10 am | Permalink

      We used ING Direct in Canada – best rates and no bank fees for transfering money around
      Cam recently posted..What is the 8th Wonder of the World

    • Posted February 5, 2011 at 11:12 am | Permalink

      DAMN THAT IS A HIGH INT RATE. The highest we have here isn’t even 1%.

    • Posted February 5, 2011 at 11:19 am | Permalink

      On the flip side, we also have the home loan interest rates to match starting at around 7% and ridiculous house prices.

  2. Posted February 5, 2011 at 11:09 am | Permalink

    This is exactly what we did when we were saving for our RTW trip. We started a joint account and each contributed to it.
    It also became handy while on the road, we kept all of the funds in this joint account (separate bank too) and only transferred money as needed. This allowed us to always know where we were at financially, and also gave us piece of mind because we did not have bank cards for it. Our bank cards were attached to accounts that had very little money in it, meaning that in the event we got robbed or lost our cards, there was limited $$ to lose.
    Cam recently posted..What is the 8th Wonder of the World

    • Posted February 6, 2011 at 10:37 pm | Permalink

      It’s a great idea to keep it separate while you’re on the road as well – it forces you to manage your budget a lot better and minimize wasteful spending.

      We’ve gotta look into other banks for when we’re on the road, our current savings bank uses SMS authentication and the last thing we want to do is pay for international fees on our cell phones when we’re overseas.

  3. Posted February 5, 2011 at 11:11 am | Permalink

    Very good post!!! I actually do the same thing for 2 reasons. Reason #1 is the reason that is stated above. It really does make it more difficult to get access to your money when you want to impulse shop. Reason #2 is so when I am abroad it is safe and secure and not linked to the debit card I will be using on a regular bases. So if my debit card is lost or stolen I don’t have to worry about someone emptying all my savings.
    Jaime recently posted..How to make an extra 1-56800!!!

    • Posted February 6, 2011 at 10:44 pm | Permalink

      It’s great to see so many travelers on the same page – though it makes our job more difficult bringing you all fresh information with Frugal February haha.

  4. Posted February 5, 2011 at 11:16 am | Permalink

    6.5% interest rate? That makes me want to cry. My 35K+ savings account earns about $1.75 in interest every month. Boo. US banks in not very good shape.
    Kim recently posted..RTW Countdown- 11 months

    • Posted February 6, 2011 at 10:47 pm | Permalink

      That must hurt – do you have a mortgage as well? If so, hopefully the lack of interest on your savings is offset by the money you’re saving by not paying 7%+ interest rates on your home loan.

  5. Posted February 5, 2011 at 1:33 pm | Permalink

    Out of sight, out of mind. That’s the same strategy I use and it works like magic!

    • Posted February 6, 2011 at 10:48 pm | Permalink

      Exactly – pay yourself first and treat it like your most important bill each paycheck and you won’t even miss the money!

  6. Posted February 5, 2011 at 2:27 pm | Permalink

    AU and NZ have some of the highest interest rates in the world – if you can open an account there, keep your savings there. In CA the bank is telling me a good rate is about 1%!!

    I have accounts in AU, UK and CA – and can transfer money between them using xe.com. You still pay the bid-ask spread (basically the diff between the buy and sell rates for currency) but there’s no other fees, which means I’ll load up my UK card next time I visit there.
    Claire recently posted..From the pen of…

    • Posted February 6, 2011 at 10:54 pm | Permalink

      Nice work Claire – that’s a great way to get the most out of your savings!

  7. Posted February 5, 2011 at 10:42 pm | Permalink

    Through a trick (or magic) of the German banking system I have a savings account that has the benefit of being difficult to get money out of but still at the same bank. I use online banking for most of my stuff and transfers FROM my main account are easy. I can do those online or at cool machines at the bank 24/7. However to get money out of the savings account, I have to go and ask at the desk. It is simple and straightforward, but it makes me think.
    Andrew recently posted..A Trip to Kleve

    • Posted February 6, 2011 at 10:58 pm | Permalink

      Wow, that’s something we’ve never heard of before and it sounds interesting!

      Personally I don’t think I’d like the hassle of having to physically go into a branch every time we want money out (we’ve got a lot of sub-accounts set up with savings for different purposes) but if you only have one savings account and plan on withdrawing it all in one big batch then it would definitely be a major benefit!

  8. Posted February 7, 2011 at 7:19 am | Permalink

    The UK interest rates are rotten too – it’s not just America. Enjoy your Aussie interest rates while you have them guys!
    Liv recently posted..Departure Countdown Checklist

  9. Posted February 8, 2011 at 9:21 am | Permalink

    In preparing for our trip we really struggled to find a tool other than a spreadsheet to help us save. Now that we’re back we actually started a new website to help others save for their travel goals. Check it out Doughhound.com

  10. Posted February 11, 2011 at 4:10 pm | Permalink

    What a fantastic idea! It never occurred to me that it would be beneficial to use two differnet banks! I DID use two different checking accounts for my travels, but that strictly to minimize my ATM withdrawal fees…
    Aaron recently posted..Yes! YOU Can CouchSurf!

  11. Posted August 2, 2011 at 11:12 pm | Permalink

    Great posts guys. I really need to do the two bank thing or my money would be gone.

    Out of curiosity, which bank did you find had a decent rate which suited you?
    I’ve been looking around but the ‘good’ ones seem to have fees (yuk!)

  12. Posted October 1, 2011 at 11:51 pm | Permalink

    Great advice. I have always maintained a second bank or Post Office account here in Asia. I call it my ‘escape fund’ and religiously transfer all extra cash made into it. I deposit my money box savings there too.

  13. Posted February 24, 2012 at 4:05 am | Permalink

    good to now this info and I will definetly keep it in mind
    Joe Wong recently posted..St Louis | A Gateway to Fun and Culture

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