Online Banking: Earn More With an Online Savings Account

When it comes to being financially savvy, having a savings account is a must. Now of course we all know what a savings account is, but to get a better awareness of how it all works lets cover the basics first. In the United States banks serve as our financial foundation. By having banks, our government insures that communities are provided with economic stability and security. Banks offer a variety of services to the community, one of which includes savings accounts. A savings account is a special account set aside by someone who perhaps wants to save up to purchase something in the near future, or to simply save. By opening a savings account you allow the amount of money you deposit into this account to gain a percentage of interest paid by that bank, in return for borrowing your money to conduct bank services and expenditures. 

Online banks operate similar to regular banks, with the exception of only being online of course. They follow the same FDIC rules and regulations, so you can be sure your finances are safe. Many online banks offer a variety of services as well, aside from having a savings account, many offer checking accounts as well as bill pay, fund transfers, account aggregation and a variety of others. Going about setting up an account is easy. First you will decide which bank is right for you and sign up. The process for opening a savings account usually will take about a week to complete, you will provide your current banking information to the online bank of your choice and they will then usually deposit a few cents into the account you want to link to your online account, and you will then need to verify those deposit amounts. Once complete the sign up process is finished and you can begin depositing money into your new online account.

It is no secret that many people who do business with their local banks, don't have a savings account. But why? Well, the truth is that many people feel that it is pointless to have their money in a savings when they are earning virtually nothing on interest. Yes, it is true, unfortunately many of our banks offer a very low interest for savings accounts. For example, two of the largest banks in the United States are Bank of America and Wells Fargo, and both offer about a 0.05% annual percent yield for savings accounts. So with rates like these saving money is pretty much hopeless right? Well, maybe not. This is where online banks come into play. Online banks have a uniqueness about them in that they are only able to be accessed online, and this is a very important reason why you should consider saving your money online, instead of at a regular bank. By conducting business strictly online, these banks bypass the extra expenses for having buildings, and therefore, can afford to pay significantly higher interest rates to you. For example, some online banks such as FNBO Direct, Ally and Emigrant Direct all offer an APY of about 1.10% for savings accounts, which to most people would still seem like nothing, however when compared to an APY of 0.05% at your local bank, which would you choose?