You can stash your cash in a jar or you can put it in an online savings account paying above industry average yields.
Plenty of consumers are saving extra money these days, deciding that a life of reckless abandon has gotten them nowhere except possibly broke. A new austerity has arrived, but does that mean people are stuffing extra cash under their mattresses? Absolutely not.
Interest Rates
While some people are snapping up foreclosed homes and others are investing in jewelry, gold and other precious metals, lots of people are playing it safe and stashing their money away in banks. Savings account interest rates are abysmal with many commercial banks paying 0.5% or less on balances.
Fortunately, there are a handful of online financial institutions who are paying more than the going rate, offering returns worth exploring. The American Bankers Association says the trend is in the internet’s favor with more consumers preferring to bank online.
The following list of FDIC insured banks is current as of December 2009:
Ally Bank – As part of GMAC, the automotive financing company, Ally Bank is aggressively courting new customers. Choose either a money market or traditional savings account and receive 1.5% on your balances. Perform all of your banking transactions online; make up to six transactions per month without incurring fees.
ING Direct – This Delaware chartered bank is part of much larger Dutch financial institution. Earn 1.3% on your savings account balances or lock in a twelve-month certificate of deposit (CD) earning you 2%. Disclosure: I currently have several accounts with ING Direct.
American Express – Your FDIC insured savings account earns 1.5% interest with American Express. Offering a number of different CD options, the longer you commit the higher your rate. 60 month CDs currently earn customers a generous 2.95% return.
EverBank – Unlike some brick and mortar banks which love to offer low rate savings accounts, EverBank offers higher yielding checking accounts, CDs, and money market accounts only. Earn 2.51% the first three months of your new money market account, dropping to a competitive 1.77% thereafter. Other options can yield greater earnings; explore those today.
Capital One – This subsidiary of one of the largest credit card providers in the country is a commercial bank. Offering 1.6% interest on your savings, Capital One tags on a 10% bonus for customers on a quarterly basis. InterestPlus Savings requires a $2500 minimum balance, but $15,000 in order to receive the bonus.
Zions Bank – Based in Utah with offices and automatic teller machines in ten Western states, Zion Bank offers several online only products including savings accounts paying 1.3% interest and a money market account paying the same rate. Get 1% interest on your 12-month CD.
HBSC Direct – A division of HBSC Bank, HBSC Direct offers 1.35% interest on their standard savings account, with customers needing only to deposit $1 to get started. Unlike some banks which require customers open up a linked checking account, HSBC has no such stipulation. You can link your account with those you have at other financial institutions.
Research Thoroughly
As always, shop and compare savings accounts and be watchful for hidden fees and other restrictions which can make what seems to be a good deal look very bad. Online banking is safe and convenient, but deal only with those institutions which are FDIC insured.
Resources
The Wall Street Journal: Savings Accounts Beckon Investors With Better Rates
Los Angeles Times: More consumers prefer to bank online, says American Bankers Assn.
SmartMoney: ING’s Fate: From Bank Deposits to Marathons
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