10 Reasons to Open an Online Savings Account

10.27.06 | Online Savings Accounts | 0 Comments | by junger

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As regular readers know, I'm a huge fan of online savings accounts, and even run a forum dedicated to talking about them.

But newbies to these high-yield accounts may not know exactly what they are missing. So here's 10 reasons to open an online savings account.

  1. Ridiculously High Yields Compared to Brick-and-Mortars
    The average savings account APY for brick-and-mortar banks is 0.5%. The highest online savings account currently yields 5.50%. Do I really need to do the math to show you the difference?
  2. No Minimums
    The most popular online savings accounts don't require a minimum, and most can be opened with as little as $1. If you're just starting to save money, this is a great incentive to get going.
  3. No Fees
    Most of these online savings accounts have no fees associated with them. Add that to the no minimums, and you have the ability to have open accounts with no money in them. Why is that important? Read all the way to #9.
  4. Liquid Money
    All it takes to move the money from an online savings account back to a checking account and back is a few mouse clicks. You're not locked into any timetables where your money can't be moved without fees.
  5. Saving Encourages Saving
    Opening my first online savings account changed the way I think about saving. Knowing that my money was actually doing something made me want to put in more and more. Online savings accounts encourage saving money.
  6. FDIC-Insured
    Online savings accounts are not some sketchy online pyramid scheme or questionable investment account. They're completely FDIC-insured, meaning that you are guaranteed to make money and can never lose any.
  7. Completely Online
    As obvious as it sounds, many people can't wrap their head around the fact that you don't have to leave your house to open an online savings account. Everything can be done online. Even though some high-yield online savings accounts are connected to a brick-and-mortar, like HSBC, some have only one or two locations (like ING).
  8. Referral and Sign Up Bonuses
    Many online savings accounts offer sign-up bonuses, and some even offer bonuses for referring new members. ING Direct currently offers $25 free when opening an account with at least $250, and offers members $10 for every new member they refer.
  9. The Competition
    Have your money in an ING account, but HSBC offers a higher APY? No problem - just transfer the money from one account to the other and start making more.
  10. Saving is Important
    The Personal Saving Rate in the United States is horrible - it's actually under 0. Don't be a part of the culture of spending beyond your means - be different. Save your money, but make it work for you.

Want to find out more about online savings accounts? Join in the discussion at Online Savings Forum.

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