Using Online Bank Accounts

So you’ve finally checked your bank statement to discover that you’re getting nearly no interest from your savings account. Should you check out online bank accounts or are those risky?

Internet banking isn’t for everyone. I could never tell my mother to open an online account because she wouldn’t know how to withdraw funds and would worry that she couldn’t run down to the corner to take it out. That said, usually your best interest rates are going to be found with large, reliable banks online.

There are two considerations –

  • Are you internet savvy and comfortable saving online? If so, explore away! Websites such as www.bankrate.com will help you compare interest rates when deciding where to invest. You should also check out bankrate’s list of star rankings when determining which firm to trust with your money. All banks aren’t created equal.

If you aren’t internet savvy, it’s better to stay close to home. Check to see if you’re eligible for a credit union. You may be surprised to find very competitive interest rates, which are often better than those at the bank.

  • How quickly can you remove the funds? Remember that a savings account pays a low interest rate because it offers quick liquidity. If you’re saving online but don’t have an easy method to access funds, you may defeat the purpose.

You may also want to check other account types at your bank. Often, banks offer higher interest money market accounts with higher rates as long as you promise not to touch them often.

2011-11-10T06:00:20+00:00