Best Online Savings Account

Most of us can get by with only credit to meet our daily expenses. Whether it is gas money for your car, phone bills, or financing a new home, we deal with it through credit. And that’s good, because no one can really expect a person to have all that cash on hand to purchase a house. Credit makes it easy and convenient to do business or make purchases.

However, while using credit has its benefits, there is some money you just don’t want to take a chance with at all. Maybe you just want to keep a portion of your income for rainy days. Or maybe you want to save for your child’s college tuition. Whatever might be your reason, the fact of the matter is that you should save money and not risk them all on investments.

Until recently, savings accounts in banks were earning an interest of 1% per annum. For those who just want to stash their money somewhere safe, this hardly matters. At least, it’s earning in interest from the bank, better than stashing it away and letting it gather dust under the mattress.

However, since mid-2004, the Federal Reserve experienced a marathon of interest rate hikes, after which short-term rates went up to 4.5%. Suddenly, having a savings account doesn’t seem like a bad idea at all.

Riding on the coattails of interest rate hikes, many virtual banks are now offering online savings accounts for consumers. But to get the best online savings account out there, you need to take an active part in looking. After all, banks would hardly inform you that you could earn more in interest from your best online savings account. They are perfectly content letting your savings account stagnate in a non-interest bearing checking account.

Opening the best online savings account, one that offers you up to 4% in interest, is a cut above the rest of the savings accounts at 1.5% up on offer. 4 percent means you could double – even triple – your savings risk-free.

In offline banks, the highest yields are often reserved for clients who have 5-figure sums in their account. But if you are only starting to save and do not have too much to begin with, you do not have to settle for anemic rates in order to get the highest returns.

Online banks can give you the best online savings accounts with high interest rates and relatively low balance to maintain. To keep the rates on the best online savings accounts high, these banks usually limit the ease and the speed with which you can withdraw funds from your account. This means that there is no check-writing and no ATM either. In order to get your funds, you need to transfer it to a checking account.