Online savings accounts often offer a higher interest rate on savings accounts and Certificates of Deposit. Additionally it often works as a way to help you truly consider a large purchase and protect your savings since it does take a few days to transfer the money from your online savings account to your local account. An online account can be a good savings tool, but you need to make sure that you are choosing a trustworthy bank and that you are protecting your money.
Here's How:
First you should begin by looking online for good interest rates on savings accounts. You should look for rates that are above what you can get locally. If you can get a comparable or better rate locally it doesn’t make sense to bank online, because it is easier to resolve issues and problems in person. You may want to focus on banks that you recognize the name of, such as ING.
Second once you have found good rates you should check to see if the FDIC insures the bank. The bank should clearly state that on their website, but you should take the time to verify that they are FDIC by visiting the bank find section of the FDIC website. You will need the name that the bank is operating under and the location of the branch. This information should be available on their website, and if it is not, then you should avoid banking with them. If the bank is FDIC insure you should move on to the next step. If not, then you need to begin looking for a new bank.
Third you need to carefully explore the website. It should be easy to use, and have contact information for you to speak to a customer service representative. It does not hurt to call the number to make sure that it is still active. You may should be able to transfer money easily to other banks, and be able to navigate the entire website. If you find yourself going in circles, you may want to consider other options.
Fourth you need to consider the fees involved with banking with this bank. Most online banks charge no fees. If they do have a fee it should be very low. Online banking has a very low overhead, especially if the bank does not have many brick and mortar locations. They can and should pass the savings on operating costs onto you. You should not have to pay a fee to transfer money, although they may limit the number of transfers you can make a month.
Fifth, once you have found a bank with a good interest rate, low fees, and that is FDIC insured, then you are good to open up the account. Just be sure to keep your account number, and passwords somewhere other than your computer, in case you have a computer failure. This is a great tool to help you save money more effectively.
Tips:
Ask friends for online bank recommendations. Often they have referral programs that can make both of you money, plus you will be getting a recommendation from someone who actually banks with them.
Take advantage of the difficulty of transferring money back to your savings account to help you really stick to your budget. This extra step can help you to curb impulse spending.
Keep an eye on your account. It is important to regular balance your account and to keep track of your balance. Banks can make mistakes, and you should know how much you should have in the account so you can dispute any discrepancies.
Watch the url to make sure that it reflects the same name as your bank. Often scammers will set up sites that look like a well known bank and try to collect information from consumers. The url is one easy way to catch this type of scam.
What You Need
- An Internet connection and a computer
