Savings accounts are operated by a commercial bank or mutual savings bank, and are backed by the FDIC up to the limits indicated. Money in savings accounts earn interest over time, helping to grow your wealth. The amount of interest savings accounts earn is dependent upon the type of savings account and the establishment where you save your money. Interest rates are also dependent upon the economy’s current condition.
In 2007, the national savings account interest rates for bank accounts is about 2%. Many people prefer to save their money in organizations that offer high yield savings accounts. Primarily, online banks are able to provide higher rates of interest for savings accounts.
Online Savings Accounts Yield Higher Interest Rates
Because an online bank does not have the operational overhead that a physical bank has, they are able to pass along those savings to consumers by offering higher interest rates on savings accounts. Most online savings accounts will also be free, with no minimum deposits to maintain and no fees for depositing or withdrawing money.
While some people may have reservations about using an online bank, you can ensure the bank is as reputable as your local bank simply by checking to see if the bank is FDIC Insured. If the bank is FDIC insured (usually up to $100,000 for individual savings accounts), you will receive the same protection from the online bank as you would from your neighborhood banking establishment.
How Online Savings Accounts Work
If you’ve never had an online bank account, it might seem confusing at first. How do you deposit money to an account held with an online company? How do you take money out when you need it?
Most online savings account providers operate by connecting your online accounts with your existing bank accounts- which provides a few benefits. First, you don’t have to close your existing accounts in order to take advantage of high yield savings accounts. Secondly, with connected accounts, you can easily make transfers from your physical checking or savings accounts into your online account with a phone call or a few mouse clicks! Most online banks also allow you to set up automatic deposit options, and either have your paycheck deposited into the account automatically, or have a transfer from your existing bank accounts into your online savings account done at regular intervals.
Taking your money out of an online account works the same way- most banks allow you to transfer the money from your online savings directly to your existing checking or savings account. Some online providers offer ATM cards that can be used to access cash instantly from any ATM, while still others might provide you with checks connected to your online account.
High Yield Savings Account Providers
Finding an online savings account with high interest rates is quite easy. There are numerous providers- some operate completely online, while others have both a physical, brick and mortar bank and have added an online component.
ING Direct: offers high yield savings accounts, interest bearing checking accounts and investment opportunities.
HSBC Direct: you do not need an existing account with HSBC to use their savings accounts or other investment products. HSBC accounts include an ATM card for easy withdrawals and deposits from any HSBC bank branch.
Citibank Direct e-Savings: offers a money market account that can be linked to your checking account. Offers online bill pay services and other Citibank online features.
Emigrant Direct: offers savings accounts with no minimum balance requirements and easy transfers from your existing bank accounts to your new online savings account.
By: Debbie Dragon
Thursday, January 8, 2009
Checking And Savings Accounts
Checking Accounts are operated mainly for making purchases and for paying bills. Savings accounts on the other hand, help you save money for your future. Though many banks lure you with attractive offers and freebies, you have to be careful not to choose the account merely on the basis of the benefits offered on the joining of the account.
There are different types of checking accounts. Basic, Free, Express, Lifeline, Interest-bearing, etc., are some of them. Different accounts offer different services. Therefore it is very essential that you first understand the service you require through your checking account and then opt for the right one.
For example, a Basic checking account does not offer any interest for your deposit. In other words, by choosing this account, you will avail only the services such as the payment of the bills and some debit card transactions. You may issue a certain number of checks and if you cross the limit, you will be charged an extra fee per check. Also some banks insist that you keep a minimum balance in order to supplant the monthly maintenance charges.
A Free checking account offers the service almost free of cost. There are no criteria such as the minimum balance or the restricted issues of checks. There are no service charges regardless of the number and nature of your transactions. However, you will be charged a reasonable penalty if your check gets bounced.
Interest-bearing accounts offer a very low interest, which is paid monthly. Mostly the banks require a minimum balance to operate the account; the failure of it will result in $10 service fee per month.
Express check accounts are for those who wish to avoid stepping into the banks. The service includes ATM, telephone, PC banking facilities, and unlimited check facilities. Though there is no monthly fee, the customer may often end up paying a huge service charge owing to the extra transactions made through these facilities.
Lifeline account is an economy account offered to low-income groups. The facilities include a certain number of transactions with a monthly fee ranging from zero to $6. The fees, minimum amount, and other terms of this account are normally set by the law, not by the individual banks.
Saving accounts are known for their interest rates, offered in various forms. Saving account is a ‘risk-free’ investment option for those who do not want to get into the adventurous game of mutual funds or shares.
There are different saving options- short term and long term. Certificate of Deposit will be a good option for those who intend for long-term deposits. They offer higher interest rates, but charge penalties for early withdrawals. Compound-interest saving accounts offer more advantages than simple-interest savings accounts. In compound interest savings, the interest accrued in each financial term is added to the previous principal, and the sum of the two will be counted as the principal for the next year. So every year, the amount will accrue exponentially.
Whatever the type of the account is, it is essential that you understand the basics of the services. While choosing a checking account, you may focus on the services that you require whereas for opening a savings account, you may think of the benefits, especially the interest.
By: Bill Riley
There are different types of checking accounts. Basic, Free, Express, Lifeline, Interest-bearing, etc., are some of them. Different accounts offer different services. Therefore it is very essential that you first understand the service you require through your checking account and then opt for the right one.
For example, a Basic checking account does not offer any interest for your deposit. In other words, by choosing this account, you will avail only the services such as the payment of the bills and some debit card transactions. You may issue a certain number of checks and if you cross the limit, you will be charged an extra fee per check. Also some banks insist that you keep a minimum balance in order to supplant the monthly maintenance charges.
A Free checking account offers the service almost free of cost. There are no criteria such as the minimum balance or the restricted issues of checks. There are no service charges regardless of the number and nature of your transactions. However, you will be charged a reasonable penalty if your check gets bounced.
Interest-bearing accounts offer a very low interest, which is paid monthly. Mostly the banks require a minimum balance to operate the account; the failure of it will result in $10 service fee per month.
Express check accounts are for those who wish to avoid stepping into the banks. The service includes ATM, telephone, PC banking facilities, and unlimited check facilities. Though there is no monthly fee, the customer may often end up paying a huge service charge owing to the extra transactions made through these facilities.
Lifeline account is an economy account offered to low-income groups. The facilities include a certain number of transactions with a monthly fee ranging from zero to $6. The fees, minimum amount, and other terms of this account are normally set by the law, not by the individual banks.
Saving accounts are known for their interest rates, offered in various forms. Saving account is a ‘risk-free’ investment option for those who do not want to get into the adventurous game of mutual funds or shares.
There are different saving options- short term and long term. Certificate of Deposit will be a good option for those who intend for long-term deposits. They offer higher interest rates, but charge penalties for early withdrawals. Compound-interest saving accounts offer more advantages than simple-interest savings accounts. In compound interest savings, the interest accrued in each financial term is added to the previous principal, and the sum of the two will be counted as the principal for the next year. So every year, the amount will accrue exponentially.
Whatever the type of the account is, it is essential that you understand the basics of the services. While choosing a checking account, you may focus on the services that you require whereas for opening a savings account, you may think of the benefits, especially the interest.
By: Bill Riley
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