Money saving resolutions for the New Year, online savings accounts
It's now 2008, and we're in a virtual age, so if you or your children are still using regular banks to manage basic savings accounts, it's probably time to move to virtual banking, that is, if you can say goodbye to your friendly local bank teller.
Moving online usually means significantly higher interest rates and easier management, especially for young people away at college or living abroad. Most banks typically offer interest rates around 1-2% for basic savings accounts, but you can earn more than 5% with an online account.
ING Direct offers 4.1% APY, Emigrant Direct's American Dream Savings Account advertises 4.6% APY, ETRADE Financial offers 5.05% APY and coming out on top is AmTrust Direct with 5.11% APY and UFB Direct at 5.22% APY. See www.bankaholic.com for a comparison chart of online savings accounts.
The perk for these online accounts is they have a $1 minimum deposit with no minimum balance fees, making them especially suitable for small savings accounts for teenagers and students.
Comments
Note that online savings accounts are FICO insured, so even if the bank goes bankrupt (like ETrade) or disappears (a common concern for most online banks), you won't lose your money.
Online savings account rates are finally heading back up after all the Fed rate cuts. Money-rates.com is showing 3.95% as the highest rate today, but I think they will be back up to 5% by end of 2008.