Online banks tend to offer higher annual percentage yields (APYs) than traditional brick-and-mortar banks. Grow your money faster with an online high interest savings account.
The best online savings accounts give you a safe place to keep your money while earning you top rates.
Max-out your savings potential by opening an online high interest savings account. Savings accounts are secure places to park your money and earn interest.
Online banks can offer over 20x higher rates
Take advantage of increased interest rates online banks can offer. Online banks don’t have the expense of maintaining branches like traditional banks do, so they can offer annual percentage yields of 1.70% or more — over 20 times higher than the national average rate of 0.09%.
Keeping $5,000 at a bank that offers a 0.09% APY for 1-year would earn an annual yield of just 50 cents. An APY of 1.70%, on the other hand, would earn about $50.
How to open a bank account online
Once you choose the right online high interest savings account, you’ll need some basic information to open an account:
- Full name
- Date of birth (you must be 18 years of age)
- A Social Security Number
- A valid form of ID: U.S. Driver’s License or State ID
- A valid U.S. address that is not a P.O. BOX
- Must be a U.S. Citizen or Resident Alien
The above information must be gathered for each account owner.
Online banks are safe and secure
Regardless of the type of bank you use, most of your banking is likely done online already. The biggest difference in online banks vs. brick-and-mortar banks is visiting a branch office. If you enjoy face-to-face interaction online only banks fall short. But if you like higher interest rates, online banks far exceed their counterparts.
The biggest similarities in both types of banks is account security. Online banks are committed to protecting your personal and financial information. Safety measures include SSL encryption, firewalls, anti-virus protection, multi-factor authentication, and more. Many online banks allow you to set up activity and balance alerts to help keep you aware of your account activity.
Are online banks FDIC-insured
Not only is your information safe, but your funds at FDIC-member online banks are, too. The Federal Deposit Insurance Corporation insures all your deposits in member-FDIC banks up to the maximum amount allowed by law.
How to make deposits in online banks
Making deposits in an online bank can be a simple process. Here are four options to deposit money in online banks:
» Mobile Check Deposits. Online banks give you the power to deposit checks into your checking or savings account using your smartphone or other mobile device, wherever you are and whenever you want.
» ACH transfer. If you want to deposit cash you would have to do so at a brick-and-mortar bank or credit union and then transfer the funds to your online bank account.
» ATM deposits. Some online banks are able to collect deposits through cash-accepting ATMs. Check with your bank to see if you need to use a particular ATM network, and look for network logos on ATMs located nearby.
» Money orders. Some online banks accept deposits by mail. This means you can purchase a money order with cash and send the money order to your online bank. You may also be able to deposit money orders using your online bank’s mobile deposit app.
» Deposit to a prepaid card. Link a cash accepting prepaid debit card to your online bank account. This allows you to make electronic transfers, just like if you used a brick-and-mortar bank. Look for a prepaid card that allows you to make deposits at retail locations (Walmart, for example).
How to make withdrawals from online banks
Making withdrawals from an online bank can be a simple process — just like making deposits. Here are four options to withdraw money from online banks:
» ATM withdrawals. Online banks allow withdrawals from ATMs the same as brick-in-mortar banks. Many are affiliated with nationwide automated teller networks like Allpoint, Plus or Star. If your financial institution provides this service, you can use your bank card at any network ATM to make a cash withdrawal. Some online banks also reimburse fees for out-of-network ATMs.
» Get Cash Back at a Store. Request cash back at a point-of-sale terminal when checking out at a grocery or convenience store or retailer.
» Transfer Funds Online. Another option to get cash is to transfer money from your online bank account to an account you can access in person like a traditional bank.
» Send a Wire Transfer. A wire transfer is one of the safest ways to send money. They are typically completed the same day they are submitted but most banks charge a hefty fee for same-day wire transfers. If you are sending cash to someone long-distance, wire transfers can be picked-up at locations convenient to them.
» Call your online bank. Many online banks offer 24/7 telephone access to bank representatives who can send a check to you at your request. You might also be able to process wire transfers to different accounts, depending on the bank.
Are online banks free
Most online banks do not charge a monthly service fee. Online banks understand that customers expect to save money and earn higher rates with an online bank. The very draw of online banks is that without branches to maintain and no bank tellers, they can pass the savings on to customers in the form of higher interest rates and no fees.
Where to find an online high interest savings account
Opening and accessing your online account is easy. But finding the right online bank may take a little research. The best online banks have the following features:
- Earn high interest
- Have a user-friendly Mobile App
- Nationwide ATMs
- A 24/7 real-time customer service team available via chat or phone.
- Simple process to transfer funds from other accounts, wire money, use remote deposit capture, or mail a check to make that first deposit.
- No monthly maintenance fees (FREE)