Online Savings Account

Online savings accounts can offer a higher yield than a traditional savings account. The difference is that you make all of your withdrawals and deposits online. You can also do them by mail or with an ATM card.

For example, if you need to make a withdrawal, you go online and transfer the money into the bank account you used when you opened the account. Most online accounts will also provide you with an ATM card. You can make all of your withdrawals in this manner.

You can make deposits in three ways:

• You can send money in the mail with a deposit slip making sure that you write the account number on the check.
• You can go online and transfer money from an account, like a checking account, into the online savings account. Transfers generally take one to two days.
• Just like with a brick and mortar bank, you can get an ATM and make your deposit at an ATM machine.

When you complete the online savings account form, you’ll have to provide the following information on the online application: bank account and routing numbers; driver’s license number; tax ID or social security number; joint applicant information; green card or passport information if you are a non-US citizen.

Why an Online Savings Account?

There are few factors that you might be wondering about regarding online accounts.

Security: Is your money safe in an online account? As with all banks, your money is insured by the Federal Insurance Deposit Corporation (FDIC). This means that if the bank goes under, you will receive your deposited funds up to $250,000 per account, per bank.

Yield: One of the most important reasons you might select an online saving account is the yield is higher than brick and mortar savings accounts. That is because it is less costly to operate an online operation than brick and mortar branches. An example of a high yield online savings account would be one that offers a 1.40% annual percentage rate with neither monthly fees nor a minimum balance. An equivalent brick and mortar account might yield 1.10%.

As with anything relating to banking carefully research for the right online savings account. The reason is that there are so many different institutions offering online accounts. In addition to that there are many different online accounts even within institutions. A little more research can result in a higher annual percentage rate.