There are various banking choices out there and even more on the internet. The key to finding good online savings account is a good savings rate. A good savings rate refers to the interest rate the bank yields for your savings. Generally the higher the amount you save, the higher the interest rate. Doing online research is important as there are many financial institutions online that you may have never heard of. Some of these institutions have been around for many years and some are brand new to the field. Finding an institution that is FDIC insured means having peace of mind that your assets are being protected by the federal government. If a bank fails in the United States, the FDIC promises to protect any funds deposited therein by consumers. Once you find a few FDIC insured online savings accounts, you need to research a good savings rate.
The savings rate will normally depend on the amount of money being deposited in the savings account. Money Market accounts generally yield a higher percentage than your basic savings or checking account. You will want to compare the annual percentage yield and the annual percentage rate. Two different banks can offer a 5% annual percentage rate and also have different annual percentage yields depending on whether their interest is compounded daily or monthly. The bank with the higher yield would be the better choice.
Another detail to take into consideration when looking for the best online savings account is the fees associated with the accounts. Many financial institutions have hidden fees although they may offer a good savings rate. Some of these fees may be costly and will eventually make the good savings rate lose its appeal in the end. Normally you would want to choose an online savings account with no monthly fees and a good savings rate.
Other considerations are the bank’s requirements as far as minimums are concerned. A good online savings account will allow zero minimums at any given time. It will also allow you to open an account without a checking account requirement. The number of transactions allowed per month is also important. Sometimes there are fees involved if you go over a given number of transactions or your account may be frozen altogether for the duration of the month.
In conclusion, there is fierce online competition among online savings accounts. The banks compete by not only offering good savings rates but also different services and online ease of operations. These are some of the details one should look for when researching online savings accounts.