The Pro’s and Con’s of an Online Savings Account

Banks offer high yield savings accounts only to valued customers. However, this may be an exception to online savings accounts, where anyone could be a winner, only, with some extra fret.

Online savings accounts typically offer higher interest rates. The reason: the internet allows you to link accounts and manage transfers easier compared with traditional banking. Online savings accounts also generally require very little restrictions. Most do not oblige service fees or any minimum balance requirements. Much more, you can open a high yield savings account with only $1 as your initial. From this you are allowed to link your high yield savings account to your existing checking account and other transactions (which are by the way free of charge). – That simple, the very best online savings accounts allow you to move your money back and forth. – Very convenient right?

Another thing is that a Capital One High Yield Savings Account for example can be supplemented more by a Money Market Fund Account with checks and a debit card. With only a $100 minimum, you can have a better access to your money as compared with having only a free checking account.

Having an online savings account could give you a higher Annual Percentage Yield (AYP), hence more earnings at a very efficient method. (Very few) others even have an automatic savings plan or additional products and services allowing you to buy online, get a mortgage, or pay your bills.

On the other hand, an online savings account could hold you back as some of them impose a fairly prolonged hold time on deposits which could well extend up to 10 long days. Another thing that you might not like with internet savings accounts is that you need to wait another longer time to clear checks and you certainly can’t ask for cashier’s checks when you really need to. And then again, you might find it hard for you to spend your money unless you have a Money Market Fund Account which may still not work to your advantage since the checkbook it offers require a huge minimum of $500 check size. And will it still be necessary to mention that an online savings account may have a bad customer service, may not be backed by FDIC security insurance, or may undergo technical difficulties that could leave you penniless for emergency cash?

Online accounts or conventional banking, high AYP or others, you decide.