1. I love my high yield savings account. Even though it is yielding less since all the Fed rate cuts. But it’s still yielding better than a traditional account — and all my other investments right now. Plus, it is a great place for an emergency fund. It’s almost beating inflation, and in these times, preserving principal is one of the important things.

    Miranda’s last blog post..Can You REALLY Live a Cash Only Lifestyle?

    • @ Miranda – Ha, you just made me realize that my ING savings has been doing so much better than my 401(k) the past year! Ouch!

      @ Peter – The brick and mortars seem to no longer have interest in your money. Everything is fees now and minimum balances. It’s just not worth keeping money there.

  2. Great reminders! It’s amazing how much more interest you can make in one of these online accounts, the brick and mortar banks near us have interest rates near zero and while the online banks aren’t amazing right now, they’re certainly better than the banks with physical branches.

    Peter’s last blog post..Dealing With A Job Loss: What To Do When You’re Laid Off

  3. We have our emergency fund in an online HSBC Direct account and collect much more interest than we do at our local bank. Most people don’t realize the money they are leaving on the table by leaving savings at local banks.

    Good thoughts!

    Grant Baldwin’s last blog post..5 Reasons Why People Give Up

    • @ Grant – I’ve been using an online bank for years and take for granted that not everyone uses one. I think some are still scared to put their money online. But with a reputable bank you have no problems. And like you said, you’re leaving money on the table by not using one.

  4. Do you still have savings in a bank as well? Can you take out the savings as easily as with a bank? I may be thinking of taking some of my bank savings and starting one of these accounts.

    • @ Craig – I do still have a regular savings that I keep a minimum in. More than anything it acts as overdraft for my checking. It is easy to transfer the money. It does take a few days though so just keep that in mind. Definitely look into opening one though.

      @ Joe – Getting rich is a combination of everything you mentioned. An online high yield savings account is one small piece of the overall picture. And the interest does add up over time.

      @ Christopher – ING is great! Other banks are starting to catch on as well. Now that investment firms are becoming banks we may see better offers. You always have to look at the fine print. I’ll see an offer that looks really great then see at the bottom that I need $25,000 to open it up. Doesn’t really help then.

  5. Great post FFB.

    I would just like to point out that you won’t get “Bill Gates rich” with ANY bank account. That’s not the point of savings accounts, but so many people think it is, or that they can get rich by saving. Getting rich requires investing, whether it is in stocks, bonds, real estate or some other form of appreciating asset.

  6. FFB,
    I agree with you that all the brick and mortar banks have been handing out some terrible rates. I looked at my local banks cd rates and they weren’t bad but you had to have at least $1000 down and in some cases $5000 to open certain cds.

    I also agree with using ING Direct. Their business model is truely unqie.

    Christopher Holdheide’s last blog post..How To Setup Your File Cabinet For Tax Season

  7. I think “high-yield” is a relative term these days, but still that’s relatively higher than you’ll see by just letting it sit there! 😉

  8. Hm – I typed but apparently have forgotten about the submit button! 😉 Yea, the high yield account is worth it even in tough times like we’re seeing now! It may seem like chicken scratch from years prior, but it’s better than stuffing it in a mattress for sure!

    • @ Hank – My spam folder doesn’t seem to like you! The interest is light and day compared to brick and mortar. And the fact that you can open most of these accounts with little or no money is great for people starting off their savings.

      @ Patrick – It can be tough trying to remember how many accounts I have and where. But they are worth it!

  9. Definitely! I even have a couple high yield savings accounts! 🙂

    I really should close a few of them – it makes tax time that much more difficult!

    Patrick’s last blog post..The Hidden Benefit of a Depressed Housing Market – Lower Property Taxes

  10. I agree wholeheartedly with 2 of your reasons. 1) It’s a great location for emergency fund and 2) you can’t access it like an ATM…it makes you behave! I have an ING account and am very pleased with my decision.

    Ken’s last blog post..His Money? Her Money? What Gives?

  11. Since my ING accounts are both savings AND checking, the risk of me pulling it out of the ATM (or transfer online) is still there. I think the key is having self-control.

    Carla’s last blog post..Blogroll – 1/29/2009

    • @ Carla – Self control is always key! If a person is having trouble with that and is in a situation like you (with electric orange, if I’m correct) then they could open a high-yield account with a different bank.

  12. I love my ING account. I love the ease with which you can set up additional accounts, too. It’s a great way to save for specific goals.

    SimplyForties’s last blog post..Weekly Roundup – January 15, 2009

  13. Hope you don’t mind a question.

    The thing that confuses me about high-yield accounts is…why are the NON-high-yield accounts even offered? It seems like there must be SOME reason for people to choose them, but I can’t figure out how they are safer than the high-yield accounts.

    A couple years ago, I closed my Citibank Money Market account when it had gone down to approximately 1% APY, switching to Citibank’s e-savings account for about 4.5%. Now that e-savings acct is down to 1.01%, but their new offering, the Ultimate Savings account, is 2.4%. The minimum deposit is only $100, no monthly maintenance, no checking acct required.

    Why would the “ultimate” account would have fewer restrictions than the e-savings acct AND the .25% APY “day to day” savings? I just find it odd.

    • @ Jade – I think many people either don’t know about the higher-yield accounts or they still don’t trust an online account. It’s too bad because they miss out on better savings. I can see why have a brick and mortar still makes some sense. For instance, we use ours as overdraft protection for our checking. But that’s it, Any other savings goes into ING.

      Remember, banks would rather you put your money into lower yielding accounts so they get a better return on the money.

  14. Bank Fiesta says:

    Another tip is to move the portion of your savings that you will not use for a period of time to CDs, usually helps if it is an online bank that offers decent online CD rates like ING.

    Thanks, BankFiesta the Community for banking.

    Bank Fiesta’s last blog post..Citi Cash Returns Card Review

  15. I love on-line banks and have been using them for quite sometime now. I span cyberspace regularly to get the best going rates. I have banked with ING, Emigrant, Countrywide, and GMAC. I was very fortunate to lock in CD’s when rates were 5.25 with ING I believe. Ohhh the good ‘ol days. No you won’t get rich fast, but you are much better off with an on-line account than traditional banks. There is tiny lull time in being able to access your money, but really overall, these banks make it easy to do business. GMAC bank seems to be the ticket right at the moment offering better rates than the above mentioned competitors.

  16. All great points. I especially like the sub-account feature at ING, so I can automatically direct and keep track of different savings goals for emergencies, vacations, etc. Love being able to access statements and tax forms online, as well.

    Many online banks are beginning to offer online checking accounts, too. What are your thoughts on those? I’m giving serious thought to switching to online-only banking in the future.
    .-= Jim ´s last blog ..5 Easy Ways To Save Money =-.

    • I have an ING Electric Orange checking account. I like that I can transfer money from my savings online then take it out at an ATM (you have to have discipline for this though). There are a bunch of other great features too but I haven’t fully used the account yet, its still new.

      I’m still not ready to go online fully though.

  17. Thanks for the post, very informative, I didn’t know you can get better interest online.

  18. I’ve been using online checking accounts since 1999, and every time I decide to use a brick and mortar for whatever reason (sudden loss of internet access, special deal, etc) I end up going right back to my online account. Thanks for giving me a set of reasons to give people when they look at me like I’m crazy for using an online account.

    • You jumped in when they first started coming out! These days you have to be open to great accounts that aren’t brick and mortar.

      Glad I could help!

  19. I started an ING account a couple of years ago to just put away a little money every couple off weeks and I was able to save more than $10,000 in two years. I first started with $50 every week and then it just grew. I did the automatic transfer and I never saw the money. When I realized that I could live with more taken out I did.

    • That’s how it worked for us! Once I realized that the money going into the account wasn’t making a big difference on my spending ability I was able to add more. If I didn’t have the automatic savings I probably would have ended up spending the money.

  20. I “heart” my online savings accounts. I use Ally bank though because they have the best “net” CD rates, too (“net” because there is only a 60-day early withdrawal penalty). And you can link your savings right to a CD – it’s very easy. My one login now has 2 savings accounts and 4 CDs. They let you change the nickname of the account, too, so I have my “student loan” CD and other named accounts. They offer the same benefits as ING and customer service is great too. And right on the front page you see your interest piling up.

    I also think the slight delay is access to money for an emergency fund is a fantastic way to make sure you’re actually facing an emergency before spending the money. It’s worked very well for me.

  21. Tommy Douuglas says:

    You are correct about interest percent on savings mine is at.07.

  22. Brett | Investing Part Time says:

    I realize this is an older article, but it’s really helpful! I have been using an online savings and checking account, but the interest rates nowadays are unfortunately pretty pitiful. ING direct I think is between 1-2%, but really the amount is trivial since it’s such a low rate to begin with. I have found that using Schwab for their online hi-yield checking account is pretty helpful, because they also refund all ATM fees, in effect letting you withdraw from anywhere.

  23. I’ve been using ING for years and I love it. Though, reading through the comments, looks as though I do have some great options. I love learning new ways to save and better ways to make money while saving. Thanks for the great post and the helpful comments too!

  24. Thank this is very helpfull. I need to analyze my options.

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