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Online Savings Account: With the recent emergence of online banking, many institutions have begun to offer high-interest online savings accounts (anywhere from 2.5 - 4%). |
The reason that these institutions can afford such a high interest rate is because, since all of your banking is done online, they usually don’t have pay the high overhead costs associated with operating a bunch of actual brick-and-mortar bank branches.
After doing some research. I googled for “high yield savings account” and “ING direct” and “HSBC Direct“. I followed promising links (and ads) from the search results. Here are the offers that I was able to find with minimal digging. All of these accounts are FDIC insured and, unless otherwise noted, can link to other bank accounts (your local credit union, for example).
* Washington Mutual offers 3.75% APY on a special savings account that requires a $1 minimum to open. This account must be opened in conjunction with a WaMu Free Checking account. The accounts must be linked. If you close the checking account, you lose the 3.75% rate.
* HSBC Direct offers 3.50% APY, no fees, web interface. $1 minimum to open. Named “best online savings account” by Kiplinger’s Personal Finance. GRS readers have mixed experiences with HSBC Direct. This is a temporary rate through September 15th — after that the rate is variable.
* ShoreBank offers 3.50% APY with no monthly fees and a $1 minimum balance. ShoreBank bills itself as a community development and environmental bank.
* FNBO Direct offers 3.50% APY, with no monthly fees, no minimum balances, and “no strings”. $1 minimum to open.
* E*TRADE Bank offers 3.30% APY, no fees, an automatic savings plan. $1 minimum to open. GRS readers do not like E*Trade, but my cousin loves them.
* WT Direct offers 3.26% APY, no fees. No minimum to open, but your interest rate drops to 0.50% if you don’t have a $10,000 balance after 60 days.
* Savings Square offers 3.05% APY, no fees. $1 minimum to open. Electronic interface only. I’ve had a couple readers tell me setting up an account at Savings Square is a nightmare.
* ING Direct offers 3.00% APY, no fees, an automatic savings plan, web interface. No minimum. GRS readers love ING Direct.
* GMAC Bank offers 3.00% APY, checks, ATM card. $500 minimum. Fees on balancs below $500. GRS readers like GMAC Bank.
* Emigrant Direct offers 2.75% APY, no fees, web interface. No minimum. GRS readers like Emigrant Direct.
* Citibank Direct offers 2.65% APY, no fees. No minimum. To earn this rate, you have to meet certain bill-payment requirements, otherwise your rate is 1.92%. GRS readers do not like Citibank Direct.
* Countrywide Bank offers a variable rate, from 2.65% to 3.55% APY. $1,000 minimum to open. Rate is 2.65% on balances below $10,000.
* Presidential Online Bank offers 2.60% APY, no fees, ATM access, web interface. $5,000 minimum to open. Rate applies to balances up to $35,000. Any portion above this amount earns 2.40%.
* Capital One offers a variable rate, from 2.50% to 3.50% APY, no fees, free checks and ATM card, an automatic savings plan. $1 minimum to open. Rate is 2.50% on balances below $10,000. This is a money market account.