As part of financial literacy month, I wanted to cover the topic of online banking a little more. When you’re ready to make the switch to an online bank account, it may seem like a daunting task. Choosing the best online bank account can be a very tricky and subjective process. My goal is to make the switch to online banking as easy as possible for you guys.
Here’s some tips to help you choose a online high yield savings account:
1. Understand what you’re looking for.
Why are you looking to open up a online savings account? Do you wish to automate your finances? Are you tired of paying “convenience” and “usage” fees at your brick-and-mortar bank?
Do you want an online banking account that will simplify your finances? If so, ING Direct has a phenomenal user-friendly platform (check out my ING Direct Review) that will really make online banking a much easier simpler process.
At the end of the day you should understand why you’re looking for an online bank account and what you’re expecting. I personally wanted a bank account that was very low maintenance and offered an easy-to-use platform. I always feared that online banking would be highly technical. One I setup my account with ING I was excited to find out that I could create separate sub-accounts within seconds (got to love your vacation/fun spending accounts).
We all have different financial situations and goals. Understand what you’re looking for so that you open up the online bank account that is right for you.
2. Look into the interest rates.
At the moment, interest rates aren’t the highest. That’s not a secret. What you should look for is a online bank account that offers competitive rates along with superior customer service. I’m still with ING Direct. The interest rates are low across the board. This is why I’ve focused more of my energy on earning more money, as opposed to chasing small interest rate changes. I could cry about the interest rates all that I want, but there’s absolutely nothing I can do about it (aside from investing my money in the stock market).
Make sure that the online bank account you decide to sign up with offers competitive interest rates. You want your hard earned money to earn a decent return. Don’t sweat it if another online bank offers a point of a percentage more. It’s likely not worth the chasing bank rates.
3. Make sure the online bank is insured.
The online bank account must be FDIC insured. This is a must. If the online bank account is offering some ridiculously high interest rate without even being FDIC insured, walk away. It’s simply not worth having your money somewhere that you don’t feel safe. The key here is to setup your finances so that your money management system is really low maintenance. The last thing you need is to be stressed out about the safety of your savings, especially when you hear the phrases “high return” and “low risk” in the same sentence.
4. Look over bank reviews.
Just like when you’re planning your next trip, it’s recommended that you looking over online bank account reviews.
Smarty Pig Review
ING Direct Review
Ally Bank Review
5. Read over the terms/know what you’re getting into.
Understand the minimum balance rules. Look into the money withdrawal and transfer process. I’ve heard friends groan like a hungry Homer Simpson when they found out that it would take them 3-5 business days to access their money. Sorry, but you got nobody to blame but yourself. You don’t have to read into the extensive details of the banking system but you should strive to understand the bare basics about withdrawals and balances.
6. Look for sign up incentives.
Most online bank accounts will throw out incentive offers, such as a $25 sign up bonus. You shouldn’t base your online banking decision on a bonus offer but it doesn’t hurt to have your eyes open for offers that may come your way.
I’m confident that after reading this post you’ll be able to open up a online bank account with ease. Finding the best online banking account for your specific situation can be very time-consuming, and rewarding, so please try to take your time. If you still have any questions then please drop them below. If I can’t help you out then I’m confident that one of the readers can. Good luck.
I'm a 24 year old dude that studied finance in school and now wants to make it fun. Over the past three years I've been helping readers like YOU make more money and keep more cash in your pocket. I've appeared live on Fox Business News and I've been mentioned in the NY Times.
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These are great ideas since we took a chance 6 years ago on ING that could have worked out much differently since we didn’t actually look into other options. Now we use ING as our main checking and short-term savings accounts and Smarty Pig for long-term amounts like the emergency fund and tax account.