If you asked an individual a decade ago whether or not they would trust their hard earned savings in some account with out a branch that you can only get to on the computer, chances are they would laugh at you. People want to feel that their money is safe and that they can get it if they really need it, so the idea of an online savings account is really counterintuitive to the human thought process. In the last decade, commerce on the internet has exploded. Consumer purchases through the internet are now common place, and very few people think anything of it when buying, selling, and transferring money online. The fears and worries related with doing business online are going away at a rapid pace, which leads us to ask, is it time to move to an online savings account?

Let’s consider the benefits.

Higher Interest Rates – You’ll be lucky if you find anything over 2.00% APY for a savings account in your home town. Bricks and mortar banks have a lot of fixed costs they have to pay for their branches that online savings do not, which enables them to offer a much higher interest rate. With a good online savings account, you can easily earn anywhere from 3.00% APY to 3.75% APY depending on where you open an account.

New Account Bonuses – A lot of online savings banks will offer you a bonus just for signing up for an account. This is true for a lot of bricks and mortar accounts too, but much more frequent in the online savings world because of the very high competition for people’s business. About the best bonus going around right now is the new sign-up bonus for ING Direct. You can get $25.00 if you can get an existing customer to send you an invitation email.

Lower Fees – Many online savings banks, such as ING Direct and Emigrant Direct, offer literally no fees and no minimum balance to speak of. Not all online savings banks have a great fee structure, but a lot of them do. If you shop around you can find an account with no fees to speak of.

Instant Access – When you are dealing with an online savings account, you always have instant access to your account as long as you have an internet connection. Just sign-on and you can transfer, withdraw, or do just about anything with your money.

Banking From Anywhere – With an online savings account, you don’t have to be in a town where your local branch is, rather all you have to do is just sign online and you have instant access to your account.

FDIC Insurance – You know your money is protected because these banks are FDIC insured. If the bank were to go under for whatever reason, you would still have access to your money, which is always reassuring.

Security – Some people fear putting their personal information online because of rampant instances of identity theft, but online savings banks have some of the best internet security around. They use a combination of secure connections, mouse-based pin-entry, site-images, security questions, and more to keep unwanted individuals out of your online savings account.

What about the down sides?

Online savings accounts really have some excellent features, but there are some downsides that one should be aware of.

Not As Immediate – When you withdraw money from an online savings account, it has to be sent back to your checking account through an EFT transfer, which can take 2-3 business days. If you need your money in a pinch, this might be an issue. There are some banks that offer an ATM card with your online savings account so that you can get to your money fast if you need to.

Technical Difficulties – If your internet happens to be down, or if the online savings bank’s website isn’t working, you can’t get to your money. Be sure to sign-up for an online savings account with a history of not having major technical problems.

Lack of Tellers – There’s no branch you can go down and visit, rather you have to call an 800 number if you have a problem with your account. If the online bank you go to doesn’t have great customer service, this could be a problem. Be sure to ask people who have used the account whether or not they have had good customer experiences before signing up for an account.

The Verdict:

Online savings accounts still have a few minor downsides, but they can be largely avoided if you get a good account. When you look at the amazing interest rates offered by online savings banks as well as the low fees, new deposit bonuses, and 24/7 access to your account, there’s no question. Online savings banks are the wave of the future and excellent places to put your money.

Like all of the other larger online savings banks, such as ING Direct, Emigrant Direct, and HSBC Direct, Amboy Direct has no fees and no minimum balance. Currently Amboy Direct offers an fairly competitive rate coming in at 3.05. You can only link the account to one external checking account. Interest is compounded monthly and credited monthly. Amboy does not do a hard credit-pull so your credit score will not be affected. The account is FDIC Insured and is par for the course with the exception of the very great interest rate.

Signup is very hassle free, just about as good as ING Direct’s process. You can apply by mail or on the internet. If you apply online, you’ll have to enter some standard personal information and agree to their terms and conditions. You’ll then have to confirm the amounts the two small trial deposits that they place in your checking account so that they know the account is yours. Your opening deposit will then be withdrawn from your linked account, and you’re good to go. The process only takes about 4 business days.

Be sure not to confuse Amboy Direct’s “eSavings” and “Maximizer” accounts with Amboy Direct’s “Premium Online Savings Account.” If you go directly to the Amboy Direct website, you won’t see the premium savings account advertised. Rather you have to go to http://www.amboydirect.com/premiumsavings/ to see premium online savings account option.

The bank itself, Amboy National Bank, is based in New Jersey and has been around for almost 120 years. Amboy Direct was created in 1990 to offer accounts by mail, and expanded to the web in the last few years.

You can get a $25 signup bonus if you can get an existing member to refer you to the account, which is an added perk. If you know anyone who has an account already, send them an email and they can have a referral link sent to you so that you can get new account bonus.

Overall Amboy’s online savings option is pretty solid, but there are higher interest rates available, the $25 sign-up bonus is tempting though.

Both the Carnival of Personal Finance and the Carnival of Debt Reduction are up.

Here are some choice posts from the Carnival of Personal Finance this week over at Every Day Finance

We recently reviewed a website which was a new twist on the idea of an online savings account. We’ll likely see a bunch of twists and variations on online savings and online checking accounts in the near future by banks in order to differentiate themselves from the rest of the crowd.

One of the banks offering a variation on a typical checking account is FNBO Direct. FNBO is offering what they like to call an “Online BillPay” account to their customers. Essentially it serves to replace a traditional checking account. The idea is that you would use this BillPay account to pay for your normal monthly bills, such as cable, utilities, cell-phone services, and the like, and then you would use a credit-card to pay for all of your other expenses, eliminating the need for a traditional checking account all together.

The interest rate that you’ll earn on any money sitting in your online bill pay account is currently 2.50% APY, which is fairly reasonable in today’s market. ING Direct is offering 1.75% on their Electric Orange Checking account. You can also move funds back and forth between your FNBO Direct Online Savings Account and your FNBO Direct Online BillPay Account seamlessly.

There are some fees to be aware of. Remember that this is a checking account underneath all of the smoke and mirrors. There’s an over-draft fee of $30.00 per each item and an additional $3.00 per day “Daily Overdraft Fee.” There’s a $30.00 stop payment fee and a $25.00 dormant account fee. The fee that’s really worrisome is the $5.00 “BillPay Account” fee. This means you need to pay $5.00 every single month for their BillPay services, this isn’t cheap, but it is a bit lower than what most major banks charge. Wells Fargo, for example, charges $6.95 a month for its BillPay Services.

FNBO Direct is offering a $25.00 bonus to its customers to open one of their new Online BillPay accounts, so it might be worth checking out if you’re looking to move to some sort of electronic checking account. It’s definitely a new take on the online checking account theory, which might actually work out quite well for some. For others that live a cash lifestyle and need frequent access to ATM machines and the use of checks, this account probably isn’t a solution.

SmartyPig has created a new twist on the idea of an online savings account. They’ve created a means for you to save towards specific savings goal, then once you’ve reached that goal you can redeem your funds in the form of a Visa Debit card or gift certificates to a number of online retailers at a discounted rate. For example, you might be able to get $100 worth of Amazon.com gift certificates for $95 of your savings.

The idea began when several entrepreneurs started seeking out savings plans that operated similarly to the 529 College Savings Plan. In theory, the small amount of money taken from each paycheck to save for the kids college education, eventually added up to quite a nice sum of cash. Using that same theory, Smartypig.com was created as a way to save money for vacations, special occasions, or even a nice big screen television.

Once registered on Smartypig, users can set up an account and establish goals for which they are saving. The account is free to set up and use. You provide information about the item or event you are saving for, how much it costs, how much you can afford to spend, and your target date to have all of the money. Smartypig will recommend how much money you should deposit and you conveniently set up an automatic deduction from your bank account. There is a minimum opening deposit of $25 required and a minimum savings goal of $250.  In addition to the money you deposit, Smartypig also enables you to allow your friends and family to help you meet your money goal. Each money transfer will cost a small fee. You can invite them or visitors can search for your account by entering your email address and easily contribute to your account.

The money collected in the Smartypig account will continue to add up and collect interest until your savings goal has met at which time you can opt to retrieve your money via a Smartypig MasterCard or by selecting a gift card from one of many participating retailers. The interest they’re offering is comparably very high in today’s market at 3.90%. The retailers may also offer bonus incentives towards the item for which you are saving.

Smartypig has a lot of the same terms as a bank account and is still carefully monitored to protect against national security concerns and other illegal money practices. When registering, you will need to be a US Citizen and over the age of 18 (unless you open an account with a parent). You will be asked to provide several forms of identification including your drivers license number, social security number, current and previous address information, email address, date of birth, and phone number.

If you are looking for a traditional online savings account, this probably isn’t it. If you are saving up for a specific goal or purchase, such as a new car, or a new flat-screen television, this is definitely the place to go. You’ll get a great rate of return on your money, additional encouragements to save, and bonuses for paying for your purchase with gift-cards.

When I was younger, one of the wealthier businessmen in her small town me a small savings bond as a gifts to use for my college education. When age 18 came around, there was barely enough money in there to purchase one text book. Then I got to thinking, is it really ever a good idea to get a savings bond? Is there any case that it makes sense to get a savings bond versus another sort of savings investment?

For the uninitiated, a savings bond is basically an investment in government debt. You can go over to the IRS’s website and purchase an electronic bond for any value amount over $25.00. The current rate for EE savings bonds is 1.40%. You cannot cash in the bond for a period of less than one year, and if you cash it in before five years, there’s a penalty of 3 months interest. There are other types of bonds with slightly different features and rates, but for the purposes of this article, we’ll talk about EE bonds, which are the commonly purchased by individuals.

There are some tax benefits to federal treasury bonds that should be considered as well. The interest that you earn on savings bonds are exempt from state and local taxes, which is nice. Even with this, you’re still better off to get a certificate of deposit or a high-yield money market savings account that offers around 3% and to just pay the state taxes on it. In my case it doesn’t really matter because there are no state capital gains or income taxes in South Dakota.

In addition, you can make the interest tax exempt if you use the money for education. This is a nice perk, but there are so many better educational savings plans around. Your best bet is to use an educational savings account (ESA), so that you can invest in some solid mutual funds which will average closer to 10%, and still not pay any taxes on the money if its used for educational purchases.

The tax benefits aren’t reason enough to get a treasury bond, but the primary reason to not get them is because the interest rates aren’t competitive. The fixed rate EE bond goes for 1.40% right now, and you can get a good certificate of deposit for around 3.5%. The variable rate bond, the I bond goes for about 2.4% right now, which is even beat by a nearly all of the high-yield money market accounts.

There’s also the problem of liquidity. You can’t cash these in for under one year, and there’s an interest penalty for cashing them out under five years. These aren’t exactly the best term, you could put the money in a high-yield savings account instead and get all of the same interest and more, as well as having your money wholly liquid.

People also have a tendency to lose savings bonds. A lot of people aren’t very organized in their financial lives and just happen to misplace savings bonds they get as gifts and never think about it again. Decades later one of their children will happen to find it once again long after it could have been used for its intended purpose.

Savings bonds are often used as gifts for another. When you give someone cash, they’ll spend it and not think anything of it. Savings bonds are a bit less liquid, so it’s like you are helping them build wealth. If you want to do this, consider giving them a certificate of deposit or high-yield savings account in their name. This way the money will be more flexible, still be a financial gift that isn’t exactly cash, and will make the recipient more money.

When it comes to you and I as individuals, there really aren’t any good situations where it’s smart to get a savings bond. There are better rates found elsewhere, savings bonds are very illiquid, and the tax benefits don’t really pan out and there are better options for financial gifts available.

GMAC (General Motors Acceptance Corporation) is the financial services arm of General Motors. GMAC Bank along with other sister companies are all subdivisions of ResCap Holding. Currently the company has 39,000 employees and revenues of $19.2 billion annually. The company GMAC Bank itself was established in 2001. With all of its sister companies, it’s quite a large organization.

The money market account they offer is very similar to accounts offered by other banks. Currently the bank is offering a 3.00% APY rate of return on money in its savings accounts, which is pretty typical in today’s market. It’s a decent rate, but certainly not the highest. Like most other online savings banks, your money is FDIC insured.

The major benefit of GMAC Bank’s money market savings account is that it offers its account holders a debit card to withdraw money as they need to. In addition, they will refund up to $6.00 a month in ATM fees that other banks charge you for using their ATM, so if you make just a few transactions a month, you can use the card just about anywhere and get free ATM service. GMAC Bank’s account holders get free check writing privileges, and get an initial order of 50 checks for free. This is very beneficial for anyone who wants to use the account as an emergency fund because it makes the money a lot easier to get to.

The fees that GMAC bank has are a bit higher than others. You have to have a minimum balance of $500.00 to avoid a $5.00 monthly service fee, as opposed to most other high-yield savings accounts which have no minimum balance. You will also be charged $10.00 if you make more than six transactions per month, and there are a number of other fees for things such as stop payments, official checks, check copies, wire transfers, and statement copies. If you’re going to make use of any of the fee-based services, you’ll probably want to find another bank with lower fees.

GMAC Bank has had a lot of finacnial problems because of the sub-prime mortgage mess and many question whether or not GMAC’s four consecutive quarterly loses will continue. The FDIC actually ordered GMAC to provide GMAC bank $3 billion in capital to keep it a float. Because of GMAC’s financial problems, you should definitely not put more than $95,000 in the account to make sure that all of your money is insured.

In some cases GMAC Bank is a great place to park your money, in other cases there are better options. If you need fast access to your money, GMAC Bank is a good option since it gives its account holders check writing privileges and a debit card. If you want the absolute highest rate or want to make use of any of the things that GMAC Bank charges a fee for, you’re probably better off finding another online savings bank such as Emigrant Direct or HSBC Direct.

Just a half-decade ago, the term online savings account was known to very few. Online banking was merely in its infancy. Some banks were allowing people to view their accounts online, but that’s about it. ING Direct changed the name of the game when it launched the first online high-yield savings account. They could offer much better rates than everyone else because they didn’t have the overhead of branches, tellers, and the like. ING Direct and other online banks are hoping to replicate the success that they had with their savings account by pioneering a new online-only checking account for its customers. ING Electric Orange Checking is offering a lot of interesting features that most online checking accounts simply do not have.

ING Direct’s Electric Orange Checking Account has one of the highest interest rates among any checking accounts that are out there. With most checking accounts, you can expect to earn zero for interest, not with ING Direct. With Electric Orange, you get a whopping 3.0% APY on the money in your checking account. In comparison, BankRate.com’s average of all interest bearing checking accounts is a mere 0.3%! The interest rate that you’ll receive is anywhere from 1.75% APY to 3.40% APY. Unfortunately you need to have a balance of $100,000 to qualify for the 3.40% rate. Most consumers will find themselves earning 1.75% APY.

In addition to the accruing interest, you will also get free access to ATMs through the AllPoint network. Electric Orange gives you a standard MasterCard debit card. It bills it self as the largest surcharge-free ATM network. You’ll be able to find an AllPoint ATM just about anywhere, as long as you don’t live in rural South Dakota like me! There are over 32,000 AllPoint ATM locations in the United States. With most online checking accounts, you have to pay the $2.00 fee every time you take money out of someone else’s ATM, but with Electric Orange, you can just use an AllPoint ATM and not have to pay a fee.

ING Direct is perhaps the only checking account that doesn’t actually let you use checks, yes, it’s true! ING Direct Electric Orange is a paperless checking account. Even if you ordered checks from somewhere else, you wouldn’t be able to use them! So what good is a checking account without checks? There are some rather unique things that ING Direct does instead. ING offers paper checks as part of their bill pay function, so you can have all of your bills sent to the ING people and they’ll write the checks for you, which is a pretty neat feature to have. Their bill pay service is of course, completely free.

They also have what are called eChecks. Basically, if someone gives you their bank’s routing number and their account number, you can send them money just as a standard check through the electronic funds transfer (EFT) method. This method might seem a little bit different at first, but they work like a charm once you get used to them!

Depositing money can be a bit of a challenge. If you have direct deposit, that works very well, but every now and then you’ll get a random check here and there that needs to be deposited. With Electric Orange, you’ll have to mail in those checks, but that’s about the only inconvenience of the electric Orange Checking account.

In addition to the features above, the ING Direct Electric Orange Checking account has no minimum balance and no fees to be seen.

This account works very well for some, but is certainly not for everyone. If you’re used to writing a lot of checks for your everyday purchases or are given a lot of checks to deposit, this account might not be for you. If you don’t mind using your debit card for your purchases and have an AllPoint ATM handy, this account might be a great way for you to earn some extra interest on the money that would otherwise just be sitting in your checking account.

Currently the account can be opened by existing members who have been with ING Direct’s Orange Savings account for some time, and the account will be open to the public sometime in March.

The competition for your money is greater than ever before. American capitalism has reached its best, and there are all sorts of solid investments which would love to keep your savings or your investments for you. These are not just shysters either. There are many very-solid companies out there who would love to have your savings at their bank. Since there is so much competition out there, they have to do a lot of work to get a new account. Here is how you can take advantage of their competition for your money.

Banks which offer online savings accounts are competing with each other to get your business. There are so many good banks out there, it’s hard to sway a consumer to switch their savings account to another bank, or get them to open an account with a bank in the first place. Instead of wasting advertising revenue on additional internet or television ads, some banks decided to give the advertising money to their potential customers as an incentive to sign up for an account at their bank. For each new account that you open, you can get anywhere from $10 and $25 just to put a few dollars in the account.

Once you have the money in the account, and the deposit bonus made, you can withdraw your money, and be done with it. Most of the time banks will close your accounts if your balance reaches $0.00, and you have your money back and the deposit bonus free and clear.

What banks currently offer deposit bonuses? There are a few different ones, and it changes from time to time. If you find the correct link, ING Direct and Grand Yield Direct will offer you each $25.00. You can do a simple Google search for [“online savings account” “deposit bonus”] , and there are several sites which will tell you about the latest bonuses that online banks are offering to create accounts with them. Sometimes you will have to click on special links or use promotional codes in order to get the deposit bonus, but you’ll just have to look out for them.

In the end, you probably won’t make a whole lot of money, but $50 is $50! That would pay for a very nice date with the wife, or buy you a few new CDs. Doing such will not effect your credit score at all, so that is not a consideration. The banks are probably not going to be very happy when customers do this, but

With a lot of online savings accounts, you are dealing with banks that haven’t been around that long and don’t have a huge track record of success. HSBC Direct is definitely an exception to this trend. It has been operating since 1850 and has over 400 branches throughout New York. It’s headquartered in Wilmington, Delaware and has nearly 43,000 employees. There is no wonder why their slogan is “The World’s Largest Bank.” We know that bigger does not necessarily mean better. HSBC has been around for quite some time, but is their online savings account a great place to put your money? Let’s find out.

Perhaps the most prominent reason people consider HSBC Direct is its very high interest rate. HSBC Direct is even offering a promotional rate of 3.50% APY on any new money until September 15th. The highest banks offer rates of about 3.75% APY. However, they are generally new banks that have not established a strong reputation yet.

The account has no monthly fees and no minimum balance, which is par for the course in the online savings world. Another big benefit of choosing the HSBC Direct online savings account is that you can deposit or withdraw money at any HSBC ATM. If you live in the north east, this might be a big benefit to you. All money deposited in HSBC’s accounts are FDIC insured up to $100,000.

HSBC has a number of security features to keep your money safe from any hacker or person that’s out to get you who wants access to your account. All of the data transferred between your computer and HSBC Direct is encrypted with 128-Bit SSL encryption. In addition, HSBC does an excellent job managing their servers with intrusion detection tools and a series of firewalls to keep your account information safe.

The signup process is pretty typical of online savings accounts. You apply online, give them standard personal information, and then they will ask you questions about your credit report to make sure that you are who you say you are. You don’t have to mail in anything. They’ll send two trial deposits to your checking account that you want to fund your savings account from. You go to a special page and type in those numbers to verify that it is your account.

After you verify your trial deposits, you have to play the waiting game. HSBC Direct will snail mail you two letters from New York. They’ll send you a customer ID and a password in two different letters to allow you to login. This can take nearly two weeks if you live on the west cost! After you get that information, you can login and setup an external transfer so that you can move money between your HSBC Direct account and your checking account. You should receive your HSBC ATM card a few days later. It does take a little bit of waiting to sign up for this account, but it’s not a deal breaker.

Overall the HSBC Direct team provides more than adequate customer service. They offer a toll free support number which is available 24/7. Other bloggers have shared that they have had overall positive experiences when dealing with the customer service team. This is definitely not the case for all online savings accounts.

At the end of the day HSBC Direct’s online savings account is a pretty decent place to put your savings at. Their interest rates have stayed competitive, they have excellent customer service, and you can use your HSBC debit card to deposit and withdraw money.