For most bank customers looking for to get the most out of their savings, online savings accounts are offering some of the best interest rates in the business. The new online savings account model has allowed banks to offer better rates by replacing human bank tellers with automated, Internet-based customer service. On average, online savings accounts are offering an interest rate a full percentage point over the Federal Reserve prime rate, more than traditional brick-and-mortar banks savings accounts. If someone is a diligent money saver, an online savings account is a secure, easy to set up bank account that promotes very competitive interest rates.

The first thing a new bank customer wants to do is compare interest rates at online savings accounts offered by various banks. There are several websites that have interest rate comparison tools, but the continuing industry leader in online banking can produce some of the fiercest competitions, even in this down economy where most banking institutions are in trouble or failing. After the prospective customer has researched each institution, they should also consider practical questions about an online savings account. Can they access their money quickly in an emergency? Is there a minimum opening deposit, or a minimum monthly balance required to earn an online savings account interest rate? Are the websites easy to use and navigate? Are you signing up for a promotional rate or one that is locked in for a year or more?

Once a customer has answered these questions and decided on the best online savings account for them, the next step is to fund the online savings account with an opening deposit. This is usually done through an external checking or savings account either online or at a traditional bank. Typically, once an online transaction has occurred between two financial institutions ongoing savings transfers are very routine transactions, designed to be easy. Several personal finance websites and bloggers recommend putting your finances on ‘autopilot’ by setting up monthly savings transfers like this.

As with traditional banks, the Federal Deposit Insurance Corporation insures all deposits in these online savings accounts for up to $500,000. As economist are predicting that the Federal Reserve will be keeping the prime interest rate at near zero, online savings accounts have been continuing the trend of offering the highest interest rates for most types of savers. Even when the federal rate rises, it is likely that online savings accounts will continue to offer better rates, as these accounts operate without personnel overhead and the banks pass their savings onto their customers. Bank customers considering a new savings account with a better rate should look at what online bank accounts have to offer.