So far, other than the rate drop, I’ve been happy with the Capital One Online Savings account. It was easy to setup and transfer money. Also, I gained Direct Connect integration with Quicken, which allows me to download directly into Quicken without having to log into the bank’s website separately.

On a related note, I’m really getting tired of Quicken’s strategy of obsoleting their products every few years to force you to upgrade. I’m using Quicken 2006 and I just noticed a message yesterday saying that I wouldn’t be able to download information from financial institutions after April, unless I upgraded to a newer version of Quicken.

My favorite post from the carnival is on giving the gift of personal finance education from Tough Money Love. He has some suggestions for books, magazines, and websites that can help give your loved ones a leg up on personal finance.

To summarize the timeline:
November 18th: Opened the account online, clicking through the link from Costco.com to get the member rate of 3.66% (at the time, though it dropped to 3.55% the next day).
November 19th: The two verification deposits were made to the ING Direct account that I wanted to link to the Capital One account. I verified them on the Capital One site that day. I later received an email that said that the account was linked and the initial deposit would take up to 3 business days.
November 20th: The initial deposit was taken out of the ING Direct account.
November 24th: The initial deposit showed up in the Capital One account (2 business days after coming out of ING Direct).

A couple of notes:
For the first 30 days, if I want to withdraw from Capital One, it will take 10 business days (2 weeks!). After 30 days, you have to wait five business days to withdraw newly deposited funds.
The last remaining issue is to see when the $20 bonus for Costco members is deposited to the account. I believe it’s supposed to be done in 4-6 weeks.

When I opened up my account yesterday, I linked it to my ING Direct account to make my initial deposit. To verify that it’s really my account, Capital One makes two trial deposits and asks me to verify the amounts. The trial deposits took one day to show up in my ING Direct account and I verified them with Capital One today. Capital One says now that the verification is done, my initial deposit will be transferred within three days. So far so good.

One notable change since yesterday: they lowered the rates! It figures that the day after I open an account there, they’d lower the rates. It used to be 3.66% for Costco members depositing over $10,000. Now it’s 3.50%. That’s still pretty good, and I know that rates change frequently. If they had lowered the rates before I decided to open an account there, I think I still would have chosen Capital One. This is partly because their rate history, as shown in the spreadsheet in my previous post, is still pretty good. I try to balance chasing the highest rate with the trouble and risks involved with opening new accounts all the time. I’m still happy with the decision I made for now.

The next steps are to see how long it takes for the initial deposit to show up and whether the Capital One account works via Direct Connect with Quicken as expected. I’ll keep you posted on how that goes.

I was leaning towards Capital One’s Online Savings Account, which is currently yielding 3.66% if you are a Costco member and deposit more than $10,000 with them. However, I couldn’t determine whether they supported Direct Connect. A call to their customer service department didn’t help–they were very courteous and seemed to know what I was asking, but they said they didn’t know the answer and would transfer me to their tech support department. I gave up after waiting on hold for more than 10 minutes.

Fortunately, I found a post on one of my favorite blogs, Consumerism Commentary, that listed recent rates for some popular high yield accounts, along with some notes on what Quicken formats some banks supported. I found that Capital One Online Savings is supposed to support the Direct Connect feature that I was looking for. I’ve linked the the spreadsheet at the bottom of this post.

I began the process of opening a new Capital One Online Savings account today. Part of the process involves answering some questions based on data that they’ve apparently pulled from a credit report, such as the name of your mortgage lender or a previous street address. Next, since I wanted to fund the account with the money that was in my ING Direct account, I had to put in ING Direct’s routing number and my account number. Capital One will put a couple of test deposits into the ING Direct account. Once I verify the amounts, Capital One will link to the ING Direct account and pull the requested amount into my new account. At least that’s what’s supposed to happen. I’ll keep you posted on the progress and let you know if it goes through as smoothly as described. For some reason, I expect there to be some snags, but so far so good.

On top of that, two other restrictions dissuade me from sticking with them:
1. They don’t allow me to link to my Fidelity accounts, even through the associated United Missouri Bank checking accounts. They used to allow this and I do have a link setup to one of my Fidelity accounts, but when I went to add a link to my main Fidelity account, they said it wasn’t possible. I went ahead and tried anyway, treating it like a United Missouri Bank account (this is the bank that Fidelity uses for checks associated with the Fidelity brokerage accounts), but they rejected it. I thought perhaps that they would treat this UMB account just like any other checking account, but for some reason it is treated differently.
2. I can’t update Quicken as easily as I can my other bank and brokerage accounts. ING Direct is the only bank account that I have that requires me to login through their website and download the data (using Quicken’s Web Connect feature). My other banks let me just setup their accounts as part of a one-step account update procedure that automatically downloads the account data (Quicken calls this their Direct Connect feature).

I’m having difficulty determining which online savings accounts allow me to download data directly into Quicken, but I’m leaning towards opening a new account at either Capital One Online Savings (through Costco) for 3.66% rate or perhaps trying out DollarSavingsDirect. I’ll post a followup here once I’ve opened a new account.

In my admittedly totally unscientific test, I did get noticeably better gas mileage, though not quite 30% better. My 2001 Camry used to get between 21-22 mpg. Now, after a couple of tanks of gas with a lighter foot on the pedal, I’ve been getting around 26-27 mpg. I’m shocked it made that much of a difference. I feel kind of stupid for wasting all that gas and money over the years. I figure the savings to be around $350/year for 12,000 miles.

Now I need to make sure that I’m really saving that $350 a year instead of reallocating those savings to more spending on something else.

The tips were:

1. Driving less aggressively
2. Driving slower
3. Using cruise control
4. Driving with the windows up and AC on
5. Checking tire pressure
6. Avoiding excessive idling

The biggest savings came from driving less aggressively (not speeding up quickly and braking hard). They measured an average savings of 31%. I know that I have room to improve in this area and figure that at an average of 12,000 miles/yr on my 2001 Camry, if I got 31% better gas mileage, I’d save over $500 a year. I’m currently getting about 21-22 miles/gallon with my current driving habits, so I’m going to apply these tips and see if I can really get much better mileage over the next couple of weeks. I’ll report the results back here.

Given my short commute, I don’t have a chance to drive at highway speeds much, but for those of you who have longer highway commutes, Edmunds reported a 7% savings from using cruise control and a 12% savings from driving 65mph instead of 75mph.

Another tip that they didn’t examine is keeping your car tuned up. I didn’t think much of that until I recently had my spark plugs changed and got almost 10% better mileage. Even that 10% improvement saves me more than $150/yr.

Just remember, you’re not really saving $500 a year if you end up spending that savings on something else.

1. Spend part of your windfalls. We’ve all heard that we’re supposed to immediately put into savings any irregular or unexpected income such as bonuses. The problem is that if our cash “diet” is too strict, we inevitably end up cheating anyway. We end up giving in and getting that flat panel TV and then fall off the bandwagon and lose our savings discipline. If we give ourselves permission to spend a small part of windfalls we get to immediately enjoy part of the fruits of our labor and yet not feel deprived in saving the bulk of it. It can also give us more incentive to earn extra income, since the feedback is more immediate than something like retirement 30 years down the road.
2. Don’t continually shop for the best deals at the mall, fatwallet.com, etc. I have a lot of friends who are great at finding the best bargains on the latest computer, car, electronic gadget, etc. The problem is that even if you’re saving $300 on a new $1000 computer, you’re still spending $700 on something that you bought mainly because it was a ‘great deal.’ I’m not saying that you shouldn’t seek out a good deal when you really ‘need’ something. The problem is that continuously shopping for good deals can fool us into thinking that we’re saving when we’re really just spending less (which is a big difference). The other problem is that the more we shop, the more we want things. It’s insidious and something we can’t help, so it’s best to avoid shopping if we’re not looking for something that we really need.

Swensen is known for his pioneering use of alternative investments, that is, alternatives to traditional stocks and bonds, such as commodities, private equity, and hedge funds. That’s why it’s so notable that his advice to us individual investors is to invest in index funds.

Fortunately for us, Swensen doesn’t seem to be motivated mainly by money (he made $1.7 million last year, a small fraction of what he could make at a hedge fund) so he’s written a book for us little guys, Unconventional Success, in which he lays out his investment recommendations. For more of what he recommends, check out this post from last year about his interview with NPR last year.