Why Many Americans Are Starting Online Savings Accounts

Convenience and high-interest rates are two significant reasons why many Americans are beginning to make the choice to start an online savings account. There are people who find it difficult to make a savings account work for them because it is often hard to put something away each week or each month. However, online-only accounts have the benefit of automatic transfer. Another advantage people have found is that the online format allows for access anywhere in the world and that online banks are often more flexible in required deposit and balance amounts. Also, customer service is typically a high priority for banks that offer an online savings account.

Though many traditional banks allow online banking, it is not generally as user-friendly as using an online-only account. The reason for this is that an exclusively online savings account tends to have more technological expertise backing the website. As a result, the interface is typically more oriented to ease-of-use. Many people also find it easier to deal with customer service needs when they have a savings account online. In order to compete with traditional banks, many Internet banking institutions have put a strong emphasis on their customer service. Since this type of savings account is online, it is accessible any time day or night. In many cases, the customer service for that financial institution is also available 24 hours a day.

Aside from the excellent service, a very valuable aspect of online savings accounts is that they usually offer considerably higher interest rates than brick-and-mortar institutions. Some online banking solutions are offering rates above 4 percent while most physical institutions have rates at or below 1 percent. Additionally, opening a savings account on the Internet is easier in many ways than opening one at a brick-and-mortar location. One example of this is that an online savings account typically requires a lower deposit and lower minimum balance than a traditional bank.

These types of accounts make an excellent emergency fund. Keeping a separate online savings account reduces the temptation to use money from the savings rather than the checking account. Also, one can easily transfer part of a paycheck to the account automatically; another way to ensure money gets added to a person’s savings. It is becoming a more common occurrence for people to open an online savings account. Some reasons people choose to go this route are that these types of account usually garner higher interest and require less hassle to open. People do not typically need to have a large amount of money to deposit in order to open a savings account online, nor do they need as much money left in the account to keep it open.

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