Online savings accounts are a great product as long as you stick with a high-quality bank. You can often get better interest rates, lower fees, and better bonuses than what you would find at a traditional bank. Not all online savings banks are the same, some of them are much better than others. You’ll have to do some comparison shopping and find the best bank to place your money at.

Here are some things to consider when choosing an online savings account:

Interest Rate – This is one of the most important things to factor in, it’s how much money you’re going to make. Right now, online savings account are offering anywhere from 2.75% to 3.75% APY. You’ll want to find a good one that’s toward the higher end of that spectrum. Of course the going rates will change over time, but you’ll want to find an online savings account that has had a history of very competitive interest rates.

Amount Limitations – Some online savings banks have limitations as to how much money you need to open an account. Some also have a minimum amount of money you can have in your account and a maximum amount of money in your account. Make sure that the amount of money you’ll be putting into your online savings account won’t hit any of these amount boundaries.

Customer Service – There are a few online savings accounts which have horrendous customer service, and a few that offer very good customer service. After selecting an online savings bank, search for reviews by people who already have that online savings account and make sure that others have had positive customer service experiences.

Fees – Some of the less competitive online savings banks are offering accounts that had a set of fees for certain types of transfers, going under a certain minimum balance, and other actions. In most cases, it’s not worth considering an online savings bank that has a bunch of fees, because most of the very competitive online savings banks offer great interest rates with no fees to speak of.

Transfer Limitations – A few online savings banks are very restrictive about how much money you can put in and take out of the account each month. Be sure to look at the bank’s transfer limitations to make sure that you hit the boundaries that the bank has. Quite often you’ll have to dig deep inside of the service agreement to find this information.

ATM Card – In most cases you probably won’t need an ATM card, but there are a few instances that you’ll want one. If the money in your online savings account needs to be accessed quickly, say for an emergency fund, you’ll want to get an ATM card.

New Account Bonuses – This shouldn’t be your primary consideration, but if two online savings accounts appear to be equal and if one offers a new account bonus and the other
one does not, you had just as well take the free money if they’re offering it!
This might seem like a bit of work, but it’s definitely worth your while. After doing a bit of research, you’ll find the perfect online savings bank for you.

You might also be interested in reading our reviews of online savings accounts.

This entry was posted on Wednesday, August 13th, 2008 at 8:32 am and is filed under tips. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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