Looking for a place to stash your cash savings?
I spend a lot of time talking about the need to have your money in a high-interest or high yield online savings account.
I thought it was time I put together a list of the top high yield online savings accounts. Here you go:
This is by no means a complete list of the accounts out there. It’s just the one’s I’ve had some experience with.
I will link to this post from the home page and periodically update this listing with new accounts that I find and all the rate changes that take place.
The rates are constantly changing, so don’t focus on that too much.
One thing to note though is that any of these accounts would be great compared to the savings accounts held at traditional brick and mortar type institutions. Don’t forget that all of these high yield online savings accounts are FDIC insured, unlike peer lending or the stock market.
There are many of these accounts now available across the web. All contain different features, both positive and negative. But most, if not all, are FDIC insured, contain no fees, and pay an interest rate significantly better than traditional savings accounts.
You should definitely find one that’s right for you and get started saving. And don’t just consider this list. These are just some of my favorites.
Ally Bank – Ally Bank is one of the newest faces in the online banking world. Although, they are really just a re-brand. They used to be GMAC bank. Either way, they offer some pretty nice services aimed at treating their customers responsibly (you’ve seen the commercials). They have both a savings and an interest checking account. They also offer some of the best CDs available today. Not just because of rates, but because of their flexibility. They have a no penalty CD and a one-time rate adjustment CD. They are FDIC insured and charge no ridiculous fees.
I’ve been banking with 360 Savings by Capital One for several years now and I’ve been completely happy with the savings account. So much so that I made them my primary bank, opening up a checking account there and also doing some investing using ShareBuilder.
Lending Club – As an alternative to savings accounts, Lending Club offers an investing / savings option. If you’re not familiar, Lending Club is a peer-to-peer lending program. As we stated in our Lending Club review, the peer-to-peer model allows borrowers to access loans at better rates than they could get through traditional banks because they are borrowing from individual investors. And that’s where you come in. You can be an individual investor with Lending Club and earn by investing in small fractions of hundreds to thousands of loans and thereby diversifying your money. You have a portfolio of loans and earn interest on the payments borrowers make to you. Lending Club handles the application process and screening borrowers.
Why We Need High Yield Online Savings Accounts
I love the online savings account. It has so many uses. Mainly it will simply help you start saving more of your money. When I first started getting passionate about my finances and making changes with managing my money, one of the first things I did was open up an online savings account. Here’s why I did and some of the benefits to having one. Hopefully this list will convince you to open one up of your own.
Put Your Savings Behind a Wall – Since these high yield online savings accounts are usually online-only, getting to your funds isn’t as easy as say a regular savings account, where you can walk into the bank, or move the money in a second to a checking account using an online feature. Online banks don’t have physical locations. To get your savings in and out of these account, you’ll typically need to transfer your money to another bank and then make a withdrawal and or use the ATM. I know this sounds like a negative. But it isn’t. Your savings is money you should only need for emergencies or for a short-term savings goal. It wouldn’t kill you to have a 2-3 day barrier to getting your money (learn why this takes so long). I’ve found that this barrier often dissuades me from spending money that I shouldn’t, or keeps me from raiding the emergency fund for something frivolous. So you see, this faux-wall to your savings actually helps you to save more in the long run.
No Fees or Minimums to Worry About – Let’s face it. The big guys on the banking block have run the show for far too long. A big bank checking and savings account can cost you hundreds in fees every year. There’s no reason you should put up with ridiculous fees and minimums from banks, just so you can lend them your money. They should be paying you. But they can’t because they are fat and bloated and need your money and fees to cover their fat cat expenses. Don’t play that game any longer. Move to an online bank where you can enjoy a fee-free environment.
High Interest / High Yield – If you do like I did for so long and keep your savings in a regular savings account, you will earn a very small amount of interest on your savings. Typically this is something like 0.10%. That stinks. That won’t even allow you to keep up with inflation. Boo. With a high interest online savings account, you can earn much more. Look at the rate chart above to see the current annual percentage yield on these accounts. These rates also fluctuate with the LIBOR rate,so when interest rates start to rise again, you’ll see these rates shoot back up. I remember when the rates were something like 5.00%. Wow!