How to choose the best online savings account?
63With hundreds of options available for online savings account, it looks like a huge task to find the best online savings account. Some people still stick to traditional way of banking whereas the new generation is taking full advantage of the internet by using internet banking.
When it comes to finding the best online savings account, there are a lot of factors which come into play. In earlier days, people use to see only one thing which was interest rate. But since the interest rates have fallen so much and there is not much difference of interest rates in most of the savings accounts, it doesn't seem right to decide upon a savings account based solely on this factor.
Therefore, it is time to look at other factors apart from interest rates while deciding upon the best online savings account. A few factors which I would use to choose my online savings account are given below.
- Safety of account - First and foremost, you need to make sure that the bank is FDIC insured. It is not even taking a look at the features of the savings account if the bank is not FDIC insured. Period. You can check whether or not a bank is FDIC insured by going to FDIC website and looking it up in FDIC's bank find tool. It’s pretty simple.
- Interest rates - I know that I said above that you should not choose the online savings account just on the basis of interest rate. This should be the first factor while looking for the online account but certainly not the only factor. While online savings rates can fluctuate dramatically over time, certain banks are consistently amongst the best (or worst) of breed. If you check the history of interest rate changes and compare them you can find out banks which are in upper bracket. For example, EverDirect, HSBC Direct and Dollar Savings Direct have been in upper bracket while ING Direct consistently comes at the bottom. But again this is not the only factor.
- Minimum Balance requirement - Keeping a minimum balance requirement is a way for these banks to earn money from people. Once you fall below this limit, you need to pay penalty. Most banks don’t have this requirement therefore there is no reason to choose a bank which has it.
- Online banking safety - This should not be a big factor since all banks use similar and most secure systems to make sure there is no online theft. They know that they cannot afford to fall behind in this matter otherwise they will loose their customers pretty quickly.
- Online interface - Most people are bowled over by the slick online interface which these accounts provide. They have great features like online transfers to other accounts, different types of account views, analysis on your account etc.
- Customer Service - Mostly there is never a need to call up a customer service number in these online accounts. But once in a while when you have the need, you should have a person whom you could talk to, not an automated machine. So, a 24 by 7 availability of customer service is a must.
- ATM access - ATM access is an important point. Some online banking accounts reimburse up to $6 when you use ATM machines of other banks, some offer free ATM access with their partner network. You should find out the ATM access channels before applying for the account.
After going through all the points above, I can say that there is no account which can be termed as a universal best online savings account. Each individual has his own preferences and needs and he can use the above mentioned factors to decide which one suits him best.
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