“When you choose an online savings account your money, no matter how much you put in there, will go farther if it pays a higher interest rate,” Polishchuk said. “And, it doesn't charge a fee.”
More valuable than interest
The absence of fees may be more important than the amount of interest you earn on your savings. A $10 fee here and a $20 fee there quickly wipes out any earnings and actually eats into your savings.
Online banks typically make it easier to get started with a savings plan. While some traditional banks require you to open an account with a specific minimum amount, online banks usually have no minimum deposit requirement.
Here are some online banks and what they offer in the way of savings products:
Ally Bank: Formerly GMAC Financial, Ally's savings account has no minimum deposit to open and no monthly maintenance fees. It currently is paying 0.84 percent APY.
Capital One 360: This online bank, part of ING Direct, advertises “no fees, no minimum” for its savings accounts. It currently pays 0.75 percent APY.
American Express: The credit card company's online bank features a savings account with “no monthly fees, no minimum balance.” It currently pays a competitive 0.85 percent APY.
USAA Bank: The insurance giant's online bank has a savings account with “no monthly service fees, regardless of your balance.” It also features tiered rates, paying higher interest on larger balances. Current savings account rates range from 0.10 percent to 0.20 percent APY.
EVantage Bank: Perhaps the best online savings account isn't even a savings account. EVantage Bank's Rewards Checking is a free checking account that currently pays 2.0 percent APY on balances up to $10,000. All you are required to do is post and clear 10 Evantage Bank Visa CheckCard sales transactions per cycle and receive all statements electronically. As a bonus, out-of-network ATM fees are refunded, up to $25 per cycle.
Story provided by ConsumerAffairs.