How to Find, Choose and Open an Online Savings Account

Online savings accounts are one of the newest, safest and best ways to make your money work for you.

What Are Online Savings Accounts?

Online savings accounts are high-yield, FDIC-insured bank accounts that are managed and accessed over the Internet. They can’t be found in stores or at your local bank — they’re entirely online.

For years, brick-and-mortar banks have been robbing you of your savings. They’ve consistently delivered low-yielding savings accounts because there hasn’t been any competition.

Then came ING.

ING Direct, one of the pioneers of online savings accounts, re-invented banking for today’s consumer. Their CEO, Arkadi Kuhlmann, says that they’re looking out for the customer by removing fees and passing along the savings.

When I first found out about online savings accounts, I signed up. And they completely changed my money outlook.

How Can I Get Started Saving Online?

Congratulations! Opening an online savings account is a great first step to saving money.

If you’re on the fence about saving online, know that today’s competition makes it a great time to get started. To help you get over the hump, consider these 10 reasons to open an online savings account.

It doesn’t take much to start saving online.

What Do I Need to Know?

There are 5 important things to look for in an online savings account.

Know what you’re getting into before you open an account. Many accounts are similar, but make sure you get the basics covered.

You should also be aware of some of the pitfalls of online savings accounts. They’re a great tool, but they could be even better.

Don’t be worried about opening an account, though. It’s totally safe (assuming you’re using an FDIC-insured bank) and totally secure.

Which Account Should I Open?

Consider 10 of the best online savings accounts currently available. The list changes all the time, so shop around and find the best rate.

If you’re looking at the right time, some accounts offer sign-up bonuses. Others offer promotional rates for new savers.

Businesses can get in on the saving too — ING, for example, has a high-yield business online savings account.

I Opened an Account — Now What?

Feed you account and watch your savings grow!

You can link your banking account to your new savings account and transfer money (up to 6 ACH transfers per month).

You’ll probably have to confirm a couple of small deposits into your regular checking account, and then you can get started.

Consider setting up automatic deposits to your account to build your savings. You’ll be forcing yourself to save money and your savings will snowball.

You’re money is working for you like it never has before. It’s making money and won’t stop.

A Word of Caution

Now that your online savings account is open, get excited about saving! But don’t worry day-to-day about getting the highest rate available.

Sometimes it’s appropriate to transfer your money to a new online savings account, but being a rate chaser has its drawbacks. You could end up spending more time moving around your money than watching it grow.

The Next Savings Step

First off, a big congratulations on opening an online savings account! It’s a great first step on your savings journey.

When you’re ready to get going, start saving money other ways. There are at least 10 ways to immediately start saving money … and then 10 more ways.…

How Online Savings Accounts Changed My Money Outlook

Before the wife and I started paying bills together (a few months before our wedding), I never really cared much about my money. My parents were still (mostly) helping me out, but once I got a full-time job, I was pretty much on my own.

We started out keeping a budget to track what we spent, which was great. But we didn’t really know how else to make our money worthwhile (besides spend it). Then I met my online savings account.

OK, I jumped a few steps, but after we met with a financial advisor, we were introduced to the little orange ball — ING Direct. A high-yield online savings account sounded great.

I must admit I was a bit skeptical at first, but after adding some money and watching the interest grow, I became obsessed. I would log into my online savings account every morning and at least a few more times each day, just to see the pennies and nickels our money was making. Plus the fact that ING gave us an extra $25 just for the hell of it — who would turn down free money?

Seeing the money work in the online savings account got me out of the mindset that having a lot of money in my checking account was a good thing. After we got married, we had a nice little influx of money in our Bank of America account — which wasn’t doing anything.

I came around to the idea that every penny we take in over a month should be going somewhere — whether it’s to pay our bills, invest in our Roth IRAs or in my 401k, or into the savings account. Money sitting in a checking account isn’t doing anything for you — even if your bank loves you for it.

I’ve just signed up with HSBC, who is offering a 5.05% APY, and plan to move most of our ING money, currently getting 4.35% APY, into there. But the ING referral system is great — once again, free money — so I’ll obviously keep that around.

Basically, when you sign up with ING and deposit $250, you get an extra $25. If you use one of the links in this blog post, I make $10 referring you.