Online banking: Choices for higher interest rates and increased security

In its July 2009 issue, Consumer Reports Money Adviser published a brief overview of the best online banking options according to their research. “Online banking, despite a rocky start, is becoming the rule rather than the exception,” the article says, noting that online banking can net savers better interest rates and increased security.

I’d love to be able to point you to an online version of this article, but none exists. And I’m not about to reproduce large chunks of the text here. (Consumer Reports doesn’t like that.) But I can highlight their main points about online banking, as well as list the results of my own research into online banks.

Some of the article’s main points:

  • Traditional banks that have moved into online banking (such as Bank of America and Wells Fargo) generally offer lower rates and impose higher fees than established online banks like Capital One 360 and HSBC Direct.
  • If you’re worried about bank failures, remember that the FDIC currently insures deposits of up to $250,000. (This limit has been extended through the end of 2013.) You can research the financial safety of online banks (and traditional institutions) using BauerFinancial’s bank safety ratings.
  • The biggest thing that holds people back from online banking is concern over security. Via Twitter yesterday, @thenonconsumer told me, “My husband is very skeptical about using an online bank like ING Direct (now Capital One 360) for savings.” He’s not alone. But according to Consumer Reports Money Adviser, online banking can be safer than traditional methods because there’s less of a paper trail, and your transactions are digitally encrypted.

Here’s a table of current interest rates, updated weekly. Below that is a list of online banking options I originally compiled in four hours of research but these have become out of date and I unfortunately don’t have the ability to update them regularly, so the table will let you see some of the most current rates. You can also see a full list of over 200 banks’ savings rates and an almost-as-long list of certificate of deposit returns by following the links.

I haven’t tried to be comprehensive here (a comprehensive list would be huge), but have based my research on my own interests and the requests of my Twitter followers. I’ve made no attempt to rank these banks. They are listed in alphabetical order. Rates are annual percentage yields (APY). All accounts are FDIC insured.

Online Savings 12-month CD Money market Bill-pay
1.45% 1.05% 0.85%
Notes: No fees, no minimums. Money-market account appears to act as a checking account and has no ATM fee. Ally Bank is the renamed GMAC Bank. Rates as of December 11, 2016.
Savings 12-month CD Checking Bill-pay
0.75% 1.25% 0.75% Free
Notes: No fees. There is a $500 minimum balance for certificate of deposit accounts. You can open the 360 Checking account with no minimum balance, there are no monthly service fees and the APY is for balances from $50,000 up to $100,000. Capital One does not charge for ATM withdrawals or balance inquiries, but the owner of the ATM may. Rates collected within: 10025 (NY). Rates as of December 11, 2016.
Savings 12-month CD Checking Bill-pay
0.01% 0.15% 0.01% Free
Notes: $500 minimum deposit for certificate of deposit and no minimum deposit for checking. Savings Plus, below $10,000 tier. ATM access for checking. Citibank rates may vary by state, rate collected within NY. Rates as of December 11, 2016.
Savings 12-month CD Checking Bill-pay
Notes: No fees. $1000 minimum. No ATM. DollarSavingsDirect is an online banking division of Emigrant Bank. Rates as of December 11, 2016.
Savings 16-month CD Checking Bill-pay
Notes: No fees, no minimums for savings account. $1000 minimum for certificate of deposit. No ATM. Sibling to Dollar Savings Direct. Rates as of December 11, 2016.
Savings 12-month CD Checking Bill-pay
0.01% – 0.05% Free
Notes: Checking Rates as of December 11, 2016.
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