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Updated Online Savings Account Rates

By Erik Folgate

I am a big proponent of online high-yield sa vings accounts, because they offer much better savings rates than most traditional savings accounts, and they are a little harder to access. You might think ease of access is a good thing, but it’s not a good thing if it’s too easy to tap into your emergency fund or short-term savings. I agree that easy access to the money when you need it most is important, but online savings accounts help take away the urge to spend that money on things you don’t need. Given the recent plunge in the stock market and the financial meltdown, the online savings rates have declined quite a bit. The good ole’ days of getting a 5% savings rate is long gone, so here is are the updated rates of the top four online savings accounts.

  • FNBO Direct offers 2.60% APY, with no monthly fees, no minimum balances, and “no strings”. $1 minimum to open. Named best online savings account by Kiplinger’s Personal Finance magazine, December 2008.
  • HSBC Direct offers 2.25% APY, no fees. $1 minimum to open. Named “best online savings account” by Kiplinger’s Personal Finance in 2006.
  • E*TRADE Bank offers 2.15% APY, no fees, an automatic savings plan. $1 minimum to open. I am thinking about switching to this one, because I like their brokerage account.
  • ING Direct offers 1.85% APY, no fees, an automatic savings plan, web interface. No minimum. GRS readers love ING Direct. This is the bank that I currently have a savings account with, but I am thinking about switching to E-trade, because I like the stocks, ETF’s, and mutual funds that E-trade offers.

Like I said, I am not satisfied with my Sharebuilder brokerage account. They don’t offer any mutual funds or index funds other than a few of their ING funds, and their individual stock offerings are limited as well. ING Direct has a great online savings account, but I don’t like having accounts spread out among different banks. I like it all in one place. My checking account has been at Bank of America for the past 6 years, but I am getting ready to close that account and support a local credit union. I like the idea of members owning interest in the credit union, rather than a bank trying to keep its shareholders happy. Plus, Bank of America’s stock price is looking really scary right now, and the thought of it being nationalized scares me.

Post your thoughts and questions about online savings accounts you’ve used or currently use, and do you have any suggestions about where to park my checking account?

Erik Folgate
Erik and his wife, Lindzee, live in Orlando, Florida with a baby boy on the way. Erik works as an account manager for a marketing company, and considers counseling friends, family and the readers of Money Crashers his personal ministry to others. Erik became passionate about personal finance and helping others make wise financial decisions after racking up over $20k in credit card and student loan debt within the first two years of college.

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  • Linda J

    Just thought I would let you know that I received an email from FNBO today dropping the interest rate to 2.40%. Good luck finding a decent rate for anything.

  • http://wisefinish.com Wise Finish

    When you make the switch to your local credit union (which I highly recommend), I would also advise you to check out their interest rates on their checking accounts – some in my area offer very high rates of interest on your checking account if you have an active account (i.e. you are using your debit card, have direct deposit, etc)

  • CJ

    I just received notification that my etrade savings account will be transferred to Discover Bank at the beginning of March, so forget them.

  • Michelle

    I have an online savings account with HSBC and they decreased my % every quarter until it was nothing. Don’t bother with them.

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