.
Rising interest rates don’t have to be a bad thing. Money sitting in savings accounts, for instance, is now earning a higher rate of interest. And online savings accounts are paying some of the highest rates around – some as high as 5%.
Stashing your money in online savings accounts is a different experience than visiting your local bricks and mortar bank. Here’s some of what you can expect:
It goes without saying that you’ll want to be really comfortable with the internet before venturing into online accounts. If you’re utilizing online banking with your current bank, however, the experience will probably feel very similar. While you can mail deposits in via snail mail, you’re more likely be moving your money around with clicks of the mouse by linking your online accounts to other bank accounts you already have.
Online savings accounts don’t often come with ATM cards or check writing privileges, which means getting access to your money can take several days. That can be a good thing when it comes to keeping yourself from raiding your accounts for an impromptu shopping trip but when you need access to your money it’s something to keep in mind. You may want to keep a small emergency fund in a more readily accessible account.
Online accounts can be FDIC insured just like more traditional accounts. Make sure your account has that feature for your peace of mind.
As online banks compete for customers, it’s not unusual for them to offer account opening bonuses and teaser rates of interest. Take advantage of these deals for some extra earning power.
As you begin your search for an online account, here are some good places to start:
ING Direct was one of the earliest entries into the online banking scene. You are no doubt familiar with ING from the aggressive advertising they do.
Emigrant Direct and HSBC Direct are relative newcomers that are worth checking out