3 Things To Look For In An Online Savings Account

Although brick-and-mortar banks are competitive, you can often find more attractive interest rates in online savings accounts. Making the leap from traditional banking comes with some risk, so you should be careful when choosing your bank.

The Jenny Pincher offer these criteria to look for when going bank-hunting online:

* Tough security. See what the bank’s website has to say about its security in promotional materials, and if you don’t like what you see when signing up for an account, consider backing out. Once you’ve signed up, don’t click on emails that lead to links that ask you for your login and password.

* Low minimum balance requirements. A high interest rate may only be the bait to get you to tie an unreasonable amount of your money up. Before you commit, make sure you’ll be able to do without whatever minimum balance is required.

* Positive reputation. Ask around on social networks and do web searches to get a gauge of your bank’s image. If a bank seems unstable or is known for ignoring customers, steer clear.

Criteria for Choosing an Online Savings Account [The Jenny Pincher]


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  1. chizu says:

    I’m going to ask a Philesque question, only because I really want to know the answer to it… (I don’t have one and had considered getting one at one point…)

    What is your choice of Online Savings Account, and why?

    • Cat says:

      Smartypig for various small accounts. I like that there is no minimum balance, I open accounts for specific purposes, and others can add to my savings to reach my goals.

      They used to have decent rates, but not so much now. Still better than most banks or CU’s give you, which is almost nothing.

      If you have a larger savings account, you can do better, though.

      • Nigerian prince looking for business partner says:

        I do the same thing in terms of saving for specific purposes.

        We have several ING Direct accounts that we contribute to each paycheck — house escrow, taxes, vacation, car repair, house repair, and Christmas. There’s no reason why we couldn’t just have one saving’s account and keep track of the amount for the above tasks but we just like seeing everything broken up based on use.

        We have an HSA through another bank but if we ever wound up with better insurance, we’d just open up another account for medical spending.

        • jeffbone says:

          Thanks for the tip regarding ING Direct. I’ve had an account with them for 5 years but didn’t realize that they allowed multiple accounts under one owner. Now that SmartyPig has clearly signaled that they are more interested in getting people to use their gift and debit cards than actually save money over the long term, I think I’ll move all of my SmartyPig “goals” over to a set of ING Direct accounts. Yes, I know there’s only 15 basis points difference in the two…the advantage for me is simplification, not the small difference in returns…

    • Jfielder says:

      I went with FNBO Direct, only because when I signed on a few years ago their rate was just rediculously high. I think it was 4% with a intro rate of 6%. It has since dwindled down to like 0.7%. Pointless. The only thing I wish they did better was faster transfers. If you need lots of money, plan ahead… like a week ahead. You can withdraw a bit from an ATM, for a fee, or overnight transfer, but you’re limited to a few grand on that.

      If I change banks I’ll move to an ING Direct Orange account. It would most likely be very similar.

  2. NeverLetMeDown says:

    *Low Minimum Balance Requirements.

    The problem with reward checking accounts (which offer better rates than online savings, but with some hoops to jump through, such as minimum number of debit card transactions) is usually the opposite. Many of them put low caps (~$10k) on the amount of cash that actually earns the reward rate, so the total difference in interest between that and a regular checking account is very small (~$10/month after-tax), making it hardly worth it.

    • Nigerian prince looking for business partner says:

      For many people, it’s not the marginal difference in interest that’s appealing about online banks.

      It’s the automatic and “forget about it” savings done through them. Banks like ING make it very easy to setup various accounts and sub-accounts for dedicated saving’s accounts.

  3. LoadStar says:

    At this point, the rates for online accounts are only marginally better than those at brick-and-mortar banks. Until the Fed increases the rate, both online and brick & mortar banks will be rather pathetic with their rates. I would say at this stage of the game, it’s not worth moving online, unless you were changing banks anyway.

  4. Bodger says:

    There is a hidden benefit to an online bank savings account: you can’t immediately lay hands on the money. This enforced cooling off period has saved me from my own whims several times.

    Another thing I like is that ING-Direct lets me have as many accounts (really sub-accounts of the main one) that I can create and manipulate as I wish. That means I can have my main savings account, a remodeling account, a holiday account (a few hundred every month so I can escape the asylum occasionally), an auto account (insurance and registration), and a home account (taxes, insurance, and $1K for minor repairs). Each of these has monthly automatic deposits and, messy as it sounds, they save me from having to think too much about finances and ensures that largish recurring sums are always there when needed. The interest (paltry at the moment) is the same no mater how many accounts there are.

    • Oranges w/ Cheese says:

      That could come to bite you in the ass though also –

      But any online bank worth its salt will have a very good user interface where you can, in essence, reach the money immediately. I have my checking and my Savings with USAA and if I wanted to use the money I could do so, pretty much instantaneously.

      • Nigerian prince looking for business partner says:

        How can that bite you in the ass?

        • Oranges w/ Cheese says:

          Not being able to access your money in a time of crisis. It’s great it prevents you from spending on a whim, but its not so hot if it keeps you from an emergency purchase.

      • Bodger says:

        My checking is with a local institution for various reasons and all of my direct deposits go there. Online payments of all sorts are made via the local bank and I seem to average all of a dozen actual written checks per month so they don’t really play any part in my planning. All of my ING transactions take place to or from my local account so depending on the time of day and day of the week it might take up to a few days to move funds. I don’t see where this would ‘bite me’ anywhere on my anatomy — it isn’t as though the savings at ING are the only money I have to my name. If worse came to worst my bank would be ever so glad to advance me any reasonable amount I might need (for bail or whatever) and my credit card limits are high enough to cover anything short of a new Mercedes. I feel much safer having my the bulk of my money safely out of immediate reach at ING and in investments which would probably take even longer to liquidate and spend.

  5. gaya2081 says:

    I am almost finished switching over to a Charles Schwab checking account, no minimum balance, refunded atm fees, free foreign money withdrawal, and interest. As soon as I am done switching I will be opening a savings account.

  6. Vermont2US says:

    The thing I like about brick-and-mortar banks is that they have to hire local people, they pay local property (and other) taxes, and I can talk to a real person face-to-face whenever I want.

    • NeverLetMeDown says:

      Other than getting rolls of quarters a few times a year for laundry, and, once every couple of years, getting a certified check, why would you want to talk to a bank employee face to face?

      • Nigerian prince looking for business partner says:

        It’s more for when things go wrong, it’s a lot easier to have a single advocate at the bank trying to resolve it, than playing phone tag with a call center.

        • Kimaroo - 100% Pure Natural Kitteh says:

          I thought so too when I opened up a checking account with Wamu, which turned into Chase. Every time I went in there to have them help me with a problem, they would send me home and tell me to call their 1800 number.

          I’m with Charles Schwab now, and while they do have an office semi-local to me, I haven’t ever had to go there because their phone reps are so great. They are really helpful and really, astonishingly, nice. On more than one occaision they have gone out of their way to help me personally in a way I didn’t expect.

          And they aren’t charging me $24 a month to service my two checking accounts.

          • tooluser says:

            Bank of America for me. I’ve never been mistreated, never pay a fee, and the local branch has friendly people who do things correctly. They even have someone monitoring the line, and if your transaction is a simple deposit, they will handle it right there for you without having to wait. And this is nothing new, it’s been this way for years.

            I bet it’s owned by the Mob.

      • Vermont2US says:

        How about ‘to get a loan’? Or resolve a problem? Or get a cashier’s check? Or notarize something? Or sell poinsettias to for a school fundraiser? Or exchange a pile of coins for currency? Or exchange currency for a pile of coins? Or exchange foreign currency (I live near Canada)? Need I say more?

  7. Shorebreak says:

    Compare rates at DEPOSITACCOUNTS.COM:


    This site has everything you need to research and choose an online savings account including reviews.

  8. Antigone says:

    These days, they all suck. The Fed’s priority is to keep interest rates at near zero, so there is no motivation to pay savers at all. We are making 0.8% at ING and Ally. We have more savings than ever but we are basically losing money to inflation keeping it in the bank. But the market is so volatile I won’t put our short term/emergency savings in anything but an FDIC insured account.

  9. maximeyocks says:

    I must put my two cents in regarding HSBC. Do not get an account there! The only way I could get my money OUT was to transfer to another bank. I spent several hours on the phone and never even got to a person. They had amazing interest rates back in the day and the bank to bank transfer option was a selling point, but with savings rates so low, I’d prefer to keep my money closer to the chest.

  10. EricS says:

    I’m not sure why this is a list for online-only savings — it applies to any bank, even if you personally don’t use online services.