Compare Online Savings Accounts
A savings account is essential to any successful budget and will help you afford larger purchases in the future. Choosing the perfect savings account is critical, and will depend on a number of factors that include your monthly budget and lifestyle. An online savings account allows you to do everything you could do at your local bank branch from the comfort of your home. Understanding the differences between the various online savings accounts available can help in finding the one that is right for you.
Compare Interest Rates
The main criteria most people use to judge how beneficial an online savings account will be when compared to others is the interest rate the account provides. While this may seem like a great metric to use when choosing a savings account, it is only one of several that really matter. There may be other factors that affect this interest rate, and you need to know these to make a fair comparison.
For example, many banks will offer a special introductory interest rate on new accounts for a specified period of time. If you miss these details, you might think that the higher rate offered when you set up the account would continue indefinitely when in fact it was only for the first year. In this case, another account with a slightly lower interest might have been a better choice for you over the long term. These higher introductory interest rate accounts can still be a great way for you to boost your savings for the time period they are offered with the account. You can leave your funds in the account to compound at this higher interest, and then transfer these funds to another high interest savings account when the year is done. Just be sure you know if there are any penalties for closing out the account before making any transfers. To view today's online savings account interest rates, check out our Savings Rate Table above.
Other high interest savings accounts will offer a better interest rate providing a large balance is kept in the account. This can be a great savings tool to use if you are accumulating funds for a longer-term expense since you won’t need to access the money for a while. On the other hand, if you need to withdraw these funds in an emergency, you may lose much of the interest you have earned. Be sure you understand these factors before choosing this type of online savings account.
Compare Fees and Penalties
Two other important factors to consider are the fees and penalties associated with any online savings account you are considering. Some banks charge a monthly fee for administering an account. They may couple this with a higher interest rate on the account, which makes you think it’s a better deal. If these fees lower the actual interest rate being applied to the account, you would have been better with another account at a lower guaranteed interest but lower fees. Keep this in mind when you compare savings accounts.
Compare Online Banking Features
Do you want to use your bank's website to pay your bills? How about the ability to transfer money between accounts? How many months of old bank statements do you want to have access to? What about a history of payments you've made and downloadable images of checks you've issued? These features may be vital to some customers and unimportant to others. During the signup process, be sure to check if the online banking features you desire are mentioned.
One last thing to consider is the bonus that a small handful of banks are now offering for new accounts. This bonus is usually based on an initial deposit into a new account being left in the account for a specific period of time. Online bill pay or a direct deposit for several months are two other common bonus requirements. When you reach the end of the period, the bonus is added to your account in addition to the interest you are earning. This can be a great way to boost your savings and help you reach your saving goals much faster.
Signing Up for an Account
Are you ready to apply for your own online savings account? Compare scores (out of 5 stars), current interest rates, and required minimum deposits with the Banks.org Savings Rate Table above.