Saving money is an important part of a financial plan. You need to save money to buy a house, build an emergency fund, or go on vacation. Where do you put all those dollars? Choosing to stick the cash under your mattress is a very unsafe practice. Instead, you should keep your savings in a bank.
These days, the traditional bank down the street is not your only option. In fact, it may be your least attractive option. While you get hands-on service, the rates are less than stellar. Instead, saving your money in an online bank is a much better option. You get a higher interest rate in most cases, you can easily transfer it from a checking account, and there are many other great benefits. Which online bank should you choose?
HSBC Bank has an online savings account available at HSBCdirect.com or HSBCAdvance.com. They currently have a high interest rate of 1.1% which is 5 times the national average as traditional statement savings accounts. You only need $1 to open an account with no minimum balance required and no monthly fees. You don’t need to have a checking account with HSBC, but if you do, you can transfer between accounts through online banking. You can withdraw money from your account at any ATM, which is a feature not available at many online savings banks. Also, you can mail in deposits or deposit through an HSBC ATM.
Capital One offers an InterestPlus Savings Account that works a little different. You need to have at least $1,000 in your account to earn interest, but you get a higher rate. The current rate is 1.35%. If you keep a balance of $10,000 or more or use a capital one credit card at least once a month, you get an extra 10% of interest added on quarterly. You can transfer money to and from your existing checking account easily whenever you need it. You can open an account with just $1, but you won’t get the great interest rate until you reach $1,000.
Discover Bank also offers 1.35% interest but with a minimum balance of $500, which is better than CapitalOne.com if you have a limited amount of savings. However, you need at least $500 to open the account. You don’t have to maintain a minimum balance unless you want to earn interest. You can deposit money through an electronic funds transfer, over the phone, or through mail. You can withdraw funds through an ACH transfer to your checking account or with a wire transfer. If you are able to maintain $500 a month at least, you will earn a decent rate.
ZionsBank has online-only bank accounts available as well. There are no monthly maintenance fees and they offer a decent rate of 1.11%. If you use an ATM in their nationwide network, you will get surcharge-free usage. If this is your sole account, you don’t have to worry about a lot of fees to get cash. You can transfer money to another account or access your money with an ATM, a teller, or by mail. The minimum balance to open is $100, and you must have a minimum balance to get the 1.11% interest rate. Zions Bank is an established bank with a lot to offer. It is best for those who have an account with them and can take advantage of the other benefits.
eFirstBank has accounts available online including checking and savings accounts. You can access your account online, but they do not have a competitive rate. You must carry a sizable balance in order to get the highest rate at .4%, which is considerably lower than the other online banks. If you have multiple bank accounts with them, it may still be a viable option.
Ally is a fairly new bank. Despite it’s youth, the high rates, no required minimum balance, and no monthly fees adds to its desirability. In fact, you can open an account with $0. Of course, it’s not until you add money that you will start earning interest. The interest is compounded daily to get the most interest possible. You get 24/7 live access to customer service through online chat or over the phone. This is great service, especially for an online bank.
Each of these banks are a member of the FDIC. This means your money will be insured currently up to $250,000. This is a very important feature that should not be overlooked in a bank. The best bank will depend on your individual circumstances. If you don’t live near any of the banks that also offer physical locations, another option may be a better choice. If you already have an account with one, it makes a great companion to get the savings account opened with a higher interest rate, especially if you have a lot of money in savings.