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Having liquid funds in an account that is guaranteed not to lose any principal is always a smart idea. The problem is that many people are still unsure of what online accounts are and are still relatively scared since they cannot physically walk into a building to transact upon the accounts. Unfortunately, these people are missing out on quite a bit of interest compared to the local banks. I wrote Isn’t it time you start looking to online banks to boost savings? a while ago to help explain that most of the “online” banks were simply new divisions of some of the oldest institutions areound that were trying to reach new markets.
I love my online savings account. I direct deposit money from my paycheck into that account; but I may close the one I have. Their rate has gone down significantly from when I opened it.
They are offering me a good CD rate though.
PennySeeds: Direct depositing is a great strategy because it forces you to save 🙂
What is the rate of your savings account? Hopefully, the ones above have a better rate for you to consider. I think HSBC actually have a 3.75% promotion going on right now.
Here’s a list from bankrate.com as of tonight. HSBC is only at 3.00% APY, but there are a few higher-paying accounts even though they aren’t the greatest banks.
Eric: Great list! I saw the $3.00 when I was researching too but I see the 3.75% ads everywhere the last 2 days so they might have a limited time promotion going on?
I just hope that everyone starts competing for our money so we get better rates!
I found what you might be referring to. It is a 3.75% promo rate until March 16, 2009 but only for Canadian residents. Check out hsbcdirect.ca
Eric: Thanks for the explanation 🙂 It make sense for me to see the ad everywhere since I’m visiting my parents up here in Toronto!!
It’s nice to see that they are getting a good rate since Canada has traditionally had a lower interest rate for savings accounts.
I signed up for an ING Direct savings account this autumn and so far, so good. One of my favorite features is an automatic transfer feature. I have it set up to automatically deduct money from my online checking account (at another bank) twice a month. I can change the parameters anytime I want, and it saves me the trouble of having to ask the HR folks at work to split up my direct deposits between accounts. Instead, everything gets deposited in my checking account, and I suck the money out of there into my ING savings account. Two months ago they were offering 4% APY on one-year CDs, so I bought a few. It was effortless since the money was coming from within the same bank.
MF: I’ve really heard many great things about ING Direct. The only thing seems to be that they aren’t offering as high an interest as the other online ones but we are only talking about less than 0.3% a year so it’s worth it for some.
On a second note, I’m glad that you are using the automatic savings feature! That’s a great way to save!
I’ve noticed that online savings accounts have higher interest rates than anything local so thanks for backing up what I was already thinking.
Magali: Oh online versions definitely have higher yields (even from the same bank) and the great thing is that it’s much easier to manage and transfer funds to and from different accounts and different institutions.
Anyone know if what rate Wamu (or should I say JP Morgan Chase) is offering?
Does anyone have insight into DollarSavingsDirect?
Chiko: They actually have a neat little utility on their website so go check it out. After you put in your zip code, it will have a whole table of rates.
Jules: Dollars Savings Direct seems to be a spun-off of Emigrant Direct and it is currently offering a 16 month CD for 4.00%. It’s FDIC insured so the principle should be safe.
We have had an online account with GMAC for over almost two years now, and although the rate has dropped a bit from when we originally signed up, it’s nice to see the interest amount add up over time! We do an auto-debit every two weeks and it’s helped a lot with our savings / debt-reduction plan.
Boring! Although there is plenty of security in an FDIC savings account the prospects of good returns are slim. What I propose is a structured investment. At first glance it looks like any other investment but the fun part of this is that it follows the stock market. The BEST part is that it is insured by the FDIC so you cannot lose your initial investment! See the prospect of great returns with the security of a savings account.
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