Online Banking: 13 Choices for Higher Interest Rates and Increased Security

There is a pretty good and current list of the “Best Nationally Available High APY Liquid Accounts” maintained at the Fat Wallet Forums, http://www.fatwallet.com/forums/finance/783099

It’s not comprehensive but it’s the closest I’ve found.

Also, check community banks, some are very competitive and have direct online offerings as well. The decision makers at these smaller banks often set savings rates specifically to compete with larger direct online banks.

@Janette, they are foreign based companies but they (for the U.S. based deposit programs) are not foreign banks. They are FDIC-insured, federally chartered savings banks.

So, i’ve been using online banking at my various banks for over 20 years now. I certainly don’t need to be convinced about that. However, i always bank locally and then use their online services. The ‘sub-account’ features at ING sound pretty interesting (Thanks to Ramit’s proselytizing there!), but how do you end up actually posting your money? Automatic deposit on your paycheck? That’s only one source of income, and it seems that the hipper banks get to online stuff, the more they decide to charge for easy stuff like EFT. Do you mail your checks to ING for deposit? Have you already got an article about this? (If so, sorry! Pointer please?)

This post seems to be clearing some clouds for anyone surveying high yield savings accounts currently. Nice work JD

I recently started banking with Ally. One thing I would like to share is: if you have access to your credit reports or know for sure how your mailing address appears on your reports then remember to enter your address exactly in the similar fashion. Simply shortening “Avenue” to “Ave.” or “Apartment” to “Apt.” etc. may delay your account opening process unneccesarily.

I did this mistake and it took almost close to 25 days to open my account in Ally.

Happy High Savings!!

Regarding the security concerns, do these folks do any online banking, online transactions, etc. I can understand that concern if they do all their banking in person at a branch. We use ING for our emergency fund (savings account and CD ladder) and ING for all our other short term and mid term savings (our escrow accounts, our travel/vacation, holiday gift, home improvement/furniture, etc. accounts) and it is super easy to create different accounts. I set up one auto transfer from my day to day banking account (Wachovia) to my ING emergency fund account and then I have auto transfers from the ING emergency fund to the other ING accounts. I only want to keep track of two transfers a month in my Wachovia account since I balance that account.

As ING’s interest rates have dropped I’ve been thinking about trying to find another high interest on line account but really don’t want to move my money because my set up with ING is perfect.

Yes, ING is covered by FDIC up to the limits.

No props for DollarSavings Direct? APY is at 2.00, 5 year CD is 3%, 16 month is 2.25%. I’ve used them since about January when their rates were at 4% but started to drop rapidly as they received the funds they needed. Been at 2.00 for 2 months now and the UI is easy to use, but the site doesn’t have any extras like calculators etc, but you can find those everywhere.

I don’t see any mention of the fees charged to get your money out of ATMs. If you are only using an online bank there would be a charge to withdraw cash from another bank’s ATM. I know you can get cash back at various stores, but that is not always the best option.

I my quest for ever higher interest rates I have tried both ING and Ally. I found both to have similar features but Ally has won out for now because of the higher interest rate. I originally had GMAC Demand Notes (paying 3.73% as of May 11)but transferred my money out because of it not being FDIC which is important to me. I have found both accounts are very easy to transfer money from one account to another by setting up a link between the accounts.

Good luck and happy, safe saving.

I currently use the Charles Schwab checking account – in response to Diaba’s question – at the end of every month Schwab reimburses you for any ATM fees you incurred in the past 30 days.

Another nice thing is that this is a real checking account – you get a visa debit card, bill pay, and paper checks.

My one major complaint is that I find the Schwab banking website to be somewhat difficult to use – there was certainly a learning curve to figure out all of it’s quirks and once I had everything learned, they redesigned.

I used to use FNBO because their rates used to always top the list. Recently they not even close to the top. I started using Smartypig.com, which is currently at 3.05% APY for a savings account — higher than anything on this list.

@Jay

ING really has a no minimum on CDs. While building a CD ladder last year, I started with CDs as low as $100 (then added to them as they renewed).

I have been using ING Direct since 2003, way before it became popular. After getting over not having a brick and mortar, it’s by far my best experience with banking. I never had to incur sneakiness of a bank trying to profit from the insane fees they charge.

I love ING, but looking at some of the more attractive rates. I would consider switching my savings account if can have subaccounts like at ING. Does Ally do subaccounts?

My daughter, 16, has $500 stashed to buy a US savings bond toward college. This article has me wondering if a high-yield savings or CD would be better. (We’re desperately trying to teach her not to make our mistakes of using credit cards, not saving, etc.) Is there a resource to compare savings types, so we know what will work best? Any advice from readers?

FYI, there’s a mix up on the listed eTrade rates. You have them reversed.
12 month CDs are at 0.70, MM Checking at 0.40 APY.
They are not the best rates in your list (they used to be higher), but I like the total package I have with them incl brokerage. They are very quick on transfers and have good customer service.

Check with your Credit Union. Mine gives me 2% on Money MArket with a $250 minimum and I can get the money immediately at my local branch. Credit Unions are great deal.

I do my online banking with Wells Fargo. I have no idea what the interest rates are (I’m sure they’re under 1%), but I love the interface with their Bill-pay, which I get for free because I signed up for their Complete Advantage checking account and a savings account, and I make one $75 deposit a month to the savings. I swapped to a credit union for a while, which had no-strings-attached free Bill-pay, but I had to stop using it because they weren’t consistent as to when they would pull money out of my account when I sent a bill (corporate clients were different from personal clients, which was different from…etc). Wells Fargo takes the money out the day the bill is sent, no matter who the bill goes to, so my account is always current (I’m sure they’re putting that money in some mega-account until the check clears and slicing off a few pennies of interest, but oh well). The interface is great, however, and that alone probably saves me money because it keeps me from getting confused. If you don’t qualify for free Bill-pay, however, it costs you about $7/month. I did that for a long time, because I had just moved to online billing and I was saving that much in stamps (it was probably $5/month back when I started), but now I qualify for better deals.

Helpful article. I recently had a discussion with one of my friends regarding his online banking account which he links to his brokerage account. After I had a short discussion with him, he changed his brokerage account from a “margin” account to a “cash” account. He didn’t realize this… in a “margin” account your broker registers your securities in his name. Your broker is then free to lend them out to short sellers or as collateral for loans he needs. In this situation, if something goes wrong and your securities can not be located, you become a general claimant with all the others who have “margin” accounts. With a “cash” account, securities by law are registered in your name and there are no issues in broker insolvency.

This chart is not an apples to apples comparison – people need to be careful about using this info. Just one quick example, Everbank’s 3%MMA rate – this is a teaser 3 month rate only and that’s only on the first $50,000 anything above that and you’re only getting 1.64%!!!

They also tier some rates, since I get the impression many of your readers may not have $50,000 to toss into savings they will actually find much lower rates in the smaller tiers.

Read the fine print folks! Calculate the actual effect of teaser rates, you may decide the minimal increase is not worth the hassle for 3 months.