In the last few years consumers have been demanding higher interest rates on their money than some of the next to nothing rates that the major banks have been giving out. In response, banks created online savings accounts which offer much better rates of return, nearing 5% in order to meet this consumer demand. These online savings accounts are becoming much more popular as people are beginning to put their trust in internet based banks and as competition and features are increasing. If you are considering opening up an online savings account, there are a few things you need to do to compare them, because they are not all equal. Be sure to look for the following things when picking out an online savings account.
Interest Rates. One of the most important factors when picking out an online savings account is the interest rate; it determines how much money you will earn on your money. Of course the highest current APY is not the only thing, some of the companies have introductory rates which drop over time, its better to find one that has consistently kept their rates high, as opposed to whichever is just the highest one right now. Look at the history of their interest rates, rather than just what they are right now. If they have stayed near the top compared to the others, they’re probably a decent place to go. When looking at interest rates, be sure to look at APY, because that factors in when interest is compounded and credited, whereas the APR does not.
Low Minimums. Look for an account with a low minimum opening balance. This way you can try out the account and make sure it’s okay to deal with before putting nearly all of your money in it.
Transferring Funds. Most online savings accounts allow you to transfer funds electronically, and that takes about 3 or 4 days. Make sure they allow you to link to your checking account so you can move funds in ant out with ease.
Reliability. Get an account which is FDIC insured, so that you do not lose your money if the bank goes under. Make sure they have a reliable website that is not down all the time. You might need to access your money in a pinch if an emergency happens, and if the website is down, you’ll be in a world of hurt.
Other Features. Make sure you can easily use the website, ask around and see if other users are happy with the sites that they use. You’ll also want to look for a lower minimum balance; you don’t really need to have a very high minimum balance to get a great account. Get an account which gives you an ATM card for additional access to your money, since most do not have check writing abilities.
Perhaps the most important features are the interest rate, the amount of time it takes to transfer, and the ease of use on the website. A debit card or ATM card is also a very nice addition.