Guide on How to Find the Best Online Savings Account
Many people open up a savings account at a brick-and-mortar bank when they’re young and then tend to leave it on “autopilot,” depositing regularly but not realizing they can shop around for online savings account options.
We often hear about online checking, but there are also a lot of online savings offers. If you are careful in choosing the best online savings account for your particular needs, some of these options may actually help you save money faster than offline options.
Offline vs. online bank savings account options is a topic that many don’t really take into consideration. It may seem like there isn’t much of a difference in online saving account interest rates or other benefits, causing people to wonder if it’s worth the time to shop around for the best online savings options.
With the arrival of online-only banks (no physical location overhead) in the last few years, there have come great online savings account opportunities with excellent interest rates and other perks.
In this article, we are going to provide you with some solid tips on what you should look for in a savings account online.
We will also review warning signs to watch out for when searching for an online savings bank as well as include some head-to-head comparisons from some of the best online banks for savings and the return rates they offer.
Once we’re done, you should have all the information you need to find the best savings account online for you.
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Best Online Savings Bank Tips | Top 5 Things to Look for
When first considering opening an online saving account with an online-only bank, you may be a bit wary of not having a physical location to visit; however, there are several well-established and legitimate companies that offer some of the best online savings account options.
The trick is knowing what to look for when you’re searching for online savings.
In this section, we’re going to give you the top 5 things to look for when comparing each best online savings account so that you can find exactly what you’re searching for in an online savings bank.
1. Online Savings Account Tip | Compare Rates of Return
Of course, the number one thing that can make it worth your time to switch to a savings account online is getting a great return on your money.
The APY (annual percentage yield) is typically how this is reflected when you’re comparing each online bank savings account. The higher the number, the more you earn on your online savings.
Some of the best APY numbers are currently in the 0.75% to 1.0% range, with several of the best online banks for savings offering figures even higher (1.05–1.10% or more), like Synchrony Bank and Salem Five Direct. You’ll want to look for the term “high yield savings” when researching the best APY you can find.
Image Source: PopularDirect.com
2. Online Savings Account Tip | Check Minimum Balance & Deposit Requirements
A minimum balance or deposit requirement can go hand in hand with a great rate offered for an online saving account, so you’ll want to see how much you need to deposit and keep in your online savings bank to get the returns you expect.
If you don’t read the fine print, you may find that the option you chose requires a minimum deposit of $100, $2,500 or more and may give you a lower APY if your balance falls below a certain level.
When you see a really high rate of return advertised for an online savings account, there is a very good chance you may have to make a hefty initial deposit to get that great rate, which may or may not be an issue, but it’s good to know what to expect up front.
3. Online Savings Account Tip | Review All the Fees
While you can find a best online savings account that advertises no fees, others can have varying fees for a variety of different things, and they can add up fast. So you will want to research whether an account has any fees and how much they’ll cost you before making your final decision on the best online saving account for your money. You can find a fee comparison for both traditional options as well as the best online savings bank options at ValuePenguin.
Here are a few of the common fees you might find in an online bank savings account:
- Monthly maintenance fee
- Paper statement fee
- Excess withdrawal fee
- Outgoing wire fee
- Overdraft fee
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4. Online Savings Account Tip | Understand Access and Withdrawal Limitations
Even the best savings account online is bound by Federal Regulation D that limits both offline and online savings to 6 automatic or preauthorized transfers each month. Some of the best online savings account providers will allow you to go beyond that limit but will charge you for the extra transactions, like Discover who charges $15 for each additional transaction.
Others will make you wait until the following month, and some may even close your account if you exceed the limit regularly, like Capital One.
How you regularly use your online savings and whether or not you need to make several transactions to and from the account each month is one of the factors that you should consider when choosing the best online saving account for your needs.
5. Online Savings Account Tip | Check Customer & Employee Reviews
You can get some great insight into how easy it is to do business with some of the best online banks for savings by checking out reviews by customers as well as the employees that work at these banks.
A bank’s website might cherry-pick some great client quotes, but when you search for the best online banks for savings on a review website, it might tell a completely different story.
Here are a few options for checking reviews of an online savings bank:
- Glassdoor – see what employees are saying
- My Bank Tracker
- DepositAccounts
- NextAdvisor
- Better Business Bureau
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What to Watch out for in a Best Online Savings Account
There are a few warning signs to look for to make sure you don’t choose a savings account online that doesn’t work well for your needs.
With the international nature of the Internet, you don’t always know who is on the other end of the transaction, especially if it doesn’t have a physical location.
Here are some things you should watch out for when looking for the best online savings opportunities in order to avoid the less-than-stellar companies. This will help you find an online savings bank where you can rest assured that your money is in good hands.
1. Make Sure the Online Savings Account Has FDIC Insurance
The Federal Deposit Insurance Corporation (FDIC) insures each depositor up to at least $250,000 per insured bank. So, the safest online savings account will be from an FDIC-insured bank, where you’ll have peace of mind that your savings will be protected if anything goes wrong.
It’s a big warning sign if an online bank savings account is not insured at all or not insured by the FDIC. Any other type of insurance designation may simply be a marketing tactic by the online savings bank which is not actually backed by a credible institution.
2. Check out Customer Service Responsiveness for an Online Savings Bank
Poor customer support is a huge red flag that you might not be choosing the best online savings account for your money. It pays to take a few moments to call a bank’s online savings customer support or try out the online chat to see how fast you can get important questions answered.
You don’t want to end up with inadequate assistance after choosing to use a company for your savings account online. Directly contacting the banks you’re considering for your online savings account is important so that you’ll know what to expect of their customer support when you really need it.
3. Watch for Excessively Long Holds on Deposits in an Online Savings Account
In today’s world of instant gratification, we’re used to everything happening in a few minutes, especially online transactions. Even if you’re depositing a check into your online saving account that has to clear at another bank, you still expect it to only take a day or two.
Image Source: Pixabay.com
However, some banks may have holds of 7–10 business days on newly deposited funds, so you will want to make sure you review any best online savings banks for typical hold times.
It can be more than just a slight inconvenience if you’re depending upon a bank deposit to use for a mortgage payment or other important bill only to find out that you must wait a week or two to access your money.
This is actually a great question to ask a bank’s customer support (when completing number 2 from above), allowing you to kill two birds with one stone.
4. Watch out for an Excessive Downtime History for an Online Savings Website
Nothing can be more frustrating than needing to access your bank account only to find that the site is down and there is nothing to do but wait. The best online savings account banks will have multiple servers and backups at hand to avoid this kind of situation, but how do you know if the best online savings bank that you’re looking at has a good uptime record?
Two of the best options you can use for checking the past downtime history of an online savings account institution website are currentlydown.com and Twitter. Currentlydown.com stores an outage history for websites which you can research, and if you search for the name of a best online savings bank on Twitter and scroll through the results, you can often see whether or not people have experienced many outages in the past.
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Best Online Savings Account | APY Comparisons
We’ve looked over several sites that list the APY returns for online bank savings account options to find those with the best annual percentage yields.
However, before you go after a higher APY for an online savings account, you’ll want to note any minimum deposit requirements.
For example, the highest rate we found, at Popular Direct, has a $5,000 minimum deposit. Other best online savings offers may not have any minimum deposit but with a slightly lower APY.
Here is a comparison of some of the best online savings account return rates from banks:
- Popular Direct – 1.26% APY
- Incredible Bank – 1.11% APY
- Salem Five Direct – 1.10% APY
- Synchrony Bank – 1.05% APY
- GS Bank – 1.05% APY
- Ally Bank –1.00% APY
- Barclays – 1.00% APY
- Discover – 0.95% APY
How to Find the Best Online Savings Account | Recap
Convenience and better return rates are the two biggest reasons that people seek out an online savings account.
Without the cost of upkeep for physical locations, many of the best online banks for savings can offer better rates than their offline competitors, helping you earn more on your savings.
Of course, not all of these best online savings account banks offer the same security or degree of responsiveness, so you want to be sure to do your homework. Spend some time researching each option to check if they are FDIC-insured, have good customer and employee reviews, and don’t have any excessive downtime history.
There are some great benefits to be had from opening a savings account online, with the obvious being growing your savings faster from the higher yield rates.
The speed and security of Internet banking has definitely improved significantly in the last few years, and, as a result, using online savings and checking accounts are starting to become the norm. By following the tips in this article, you should be able to find the best online savings account for your money.
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