Online Savings Accounts

Online savings accounts are growing in popularity these days. A lot of people are asking “What is an online savings account, exactly?”
And that’s a fine question. Basically it’s a savings account that you only have access to online, which keeps the bank’s costs down. What does that mean to you? Higher interest rates paid on your deposits. The bank wins because an online savings account costs them significantly less than a standard savings account. You win, because you get more money! Granted, there are a few inconveniences with an online savings account.

For one, it takes a few days to make a withdrawal. You have to link your account to an existing checking account, and tranfser funds via ACH (Automated Clearing House) transfers, which can take up to 5 business days. You’ll probably want to keep a small emergency fund in you standard savings or checking account if you may need cash in a hurry. You’ll definately want to keep the bulk of your savings in your online savings account so you can get the best return possible. The best part of all? All major online savings accounts are fully FDIC insured - which means your deposits are 100% safe as long as the US Treasury has funds.
Some good choices for an online savings account are :

• Emigrant Direct, currently paying 4.25% APY
• INGDirect, currently paying 3.80% APY, with a teaser rate of 4.75% APY until April 16,2006
• HSBC Direct, currently paying 4.80% APY ( teaser rate good through April 30,2006. Unknown rate after that time. ) **

Each of these accounts are fee-free, and have no minimum deposit required.

**Note : HSBC does have standard savings accounts as well, which pay far less than the online savings account. Make sure you don’t open an account at a branch!

Currently, if you don’t feel like multiple transfers when teaser rates end, it looks like Emigrant Direct is the best choice, with their 4.25%APY. For those of you who have never heard of Emigrant Direct, they are a large bank with many regular branches, based out of New York.