Regardless of the interest rate environment, smart investors compare online savings account rates to identify get the best deals. In a low interest rate environment, it’s particularly important to save at a rate that’s higher than or equivalent to inflation. Some online savings account rates offer five to 10 times or more than average big bank savings account rates!
Although today’s online savings account rates probably won’t help you achieve long-term financial goals like having enough money in retirement, these savings accounts are a good idea for your emergency fund or big ticket purchase goal. Online savings accounts are liquid and, like your familiar neighborhood bank, they are FDIC insured to a maximum USD 250,000 per depositor.
Compare Online Savings Account Rates: Physical vs. Online Banking
If you’re like most bank customers with a checking and savings account, you probably don’t visit the bank all that often. You’re likely to bank online, on your mobile devices, or at an ATM.
Unlike your parents’ or grandparents’ community bank relationship, your ability to secure a home loan, car loan, or personal loan is primarily based on your credit scores. Regardless of how much money you have in a checking account, bad credit will cost more.
That’s why online banking is a good match for you. If your checking account wasn’t in some way attached to a physical bank, you’d probably never decide to visit the bank in person. Fewer banks offer customers a la carte services, such as notarization or letters of reference, so you’ll probably never miss your brick and mortal bank.
Importantly, you’ll also earn higher rates in your online savings account. If you make the radical decision to switch your checking account to an online bank, your fees and maintenance costs are likely to decrease. Saving money is yet another way to increase your savings return.
Compare Online Savings Rates: Increase Your Security
Financial planners recommend an emergency fund for everyone. An emergency fund should contain a minimum of six months’ living expenses that you can use immediately if you lose a job, get sick, or need to pay unanticipated expenses.
Arranging an online savings account for your emergency fund makes good financial sense. Saving for an emergency might inspire you to reach for greater security and higher online savings rates. Your emergency fund must be liquid and accessible, but there’s no need to accept paltry savings rates of 0.20 percent if you can get an attractive online savings rate that’s five times higher.
A higher savings rate can actually encourage you to save more. After you’ve saved six months’ expenses, consider rolling new money into certificates of deposit to earn even higher returns.
Compare Online Savings Rates: Features and Preferences
Comparing online savings rates isn’t difficult, but you must watch out for teaser rates or restrictions. Before making an investment, ask banks about minimum balances, promotional rates, and costs or fees that might reduce the published rate.
Start by identifying online savings accounts with no minimum balance requirement, low/no monthly balance fees, and simple advertised rates. Although online savings account rates are likely to vary somewhat, an extraordinary rate that’s one to two hundred basis points above the competition might be too good to be true.
Read the fine print. If the account paperwork says “The promotional rate can change at any time” or something similar, or the bank won’t allow you to have more than a certain amount in the high yield savings account, keep searching to find the right online savings account rates for you.
Compare Online Savings Account Rates: Popular Online Savings Accounts
Capturing the highest online savings account rates might not be your primary goal. Perhaps you’re looking for a way to earn a higher return on checking and savings or you’d like to consolidate bank and investment accounts at an online bank with consistently competitive rates.
Read online savings account reviews to identify the most popular online banks, but don’t choose on the basis of mass popularity. If you don’t need an online checking and savings account that promotes access to your money, like Ally Bank or Capital One, consider Barclays Bank’s online savings account or Dream Account. These accounts reward you for making deposits.
Compare Online Savings Account Rates: Financial Stability
On the face of things, an online savings account is a place to store your cash at the bank. When considered as a cornerstone of your financial plan, an online savings account can provide an invaluable sense of financial stability and security.
Selecting the best online savings account can put you on the right financial track. Many online banks offer access to sophisticated financial software and tools to help you achieve short, intermediate, and long-term financial goals.
Since your account details are accessible at any time, you can track savings growth and realize savings goals. Saving enough money can actually help you to meet the unexpected or to self-insure against uncertainties in life.