Beware of fees, though!! There are definitely minimum balances to maintain and 6 maximum internet transfers per month, etc.

Another note on moving money around in savings accounts, this one with US Bank: As majeest said, I got a little over-excited one month about meeting so many savings goals that month, and began moving money in chunks so that I’d remember which transfer went with which goal. I thought I was just organizing myself when in reality I was building up transfer fees for my bank. Of course they didn’t charge me for each transfer, like an overdraw, they waited until the end of the month and THEN took away $115 of my savings, $15 each for every transfer over the 6 allowed!!! When I called the bank very upset about my missing money, they had no sympathy and I ended up closing my account in a fit of rage. If I had known I was over the limit by seeing the $15 dollar charge, I would have stopped transferring money right away, but instead I had no idea until the end of the month. Gotta love the fine print!

I’ll add another caveat to what Marc Hedlund said: Don’t get too fidgety with transferring money between accounts. I did that and ended up getting a nasty-gram from ING:

The bottom line is that if withdrawal activity, including transfers to other deposit accounts at ING DIRECT, exceeds the six-per-month limitation more than three times in any twelve-month period, we must take steps to ensure that the excessive activity does not continue and that means closing your account. Unfortunately our hands are tied on this one, Federal law requires that all banks limit the number of withdrawals that can be made from certain types of accounts.

What I’ve done instead is set up fake savings accounts in Quicken, then do a “transfer” from my real ING account to one of them. This way, as my priorities change, I can shuffle cash around from one virtual account to the next without having to worry about anything except my own self-discipline (a sufficiently difficult task on its own).

Of course, this isn’t for everyone. Personally, it doesn’t bother me that I have to take extra steps in Quicken when I go to balance my savings account or to make a withdrawal from it, but I can see how that might grate on others’ nerves.

Banks often set up savings account minimum balances to maximize their “fee revenue” — that is, the amount they charge you for not meeting one of the rules of the account. If you’re not careful, you can lose a lot of money to fees, and you might make the mistake of blaming yourself instead of the bank.

I once set up a Washington Mutual savings account, and they told me the minimum balance was $1,000. I put a little more than that in the account. At some point I needed to withdraw a bit from that account, and it went below the minimum. For months, I would get a $10 “low balance” fee charged against that account, and I’d blame myself for not doing a better job of saving.

Finally I brought the account over $1,000, and waited to see the fee go away the following month. But it didn’t. “Oh, I must have deposited too late in the month,” I thought. The next month, the fee was still there. What the hell? So I called Washington Mutual, and they said, “We raised the minimum balance to $3,000.” Aha. That’s quite a trick! (It would be called “bait and switch” were in not for the miracle of fine-print terms & conditions bill inserts!) Now I have my savings in a bank with no minimum (USAA — in my experience, a great bank).

If you set up separate accounts for your goals, make sure you know exactly what the terms of those accounts are, and set them up with banks that not only have high interest, but also have fee schedules that aren’t going to bite you. If you start hitting fees, blame the bank, not yourself, and take your business elsewhere.