High Interest Rate Savings Account Online | A Good Place for Non-Emergency Cash
A high interest savings account online is a smart way to manage money saved for a rainy day when (as best you can tell) the skies are clear and the outlook relatively sunny. I go a little overboard with online accounts in all honesty… they’re so easy to manage when you have the right software, it behooves you to have a couple of online accounts in order to take advantage of the different offers at any one time. Obviously the bulk of your cash reserve savings will be in one account or the other, but I can’t tell you how many times I’ve been thankful to have a few extra hundred dollars in that second high interest rate savings account online.
How Can These Online Banks Offer Interest Rates That Are So Much Better?
Banks are able to offer a high interest rate savings account online because of the economies of scale afforded by being on the internet. Because these online banks are able to attract and service a large number of customers without the overhead costs associated with brick and mortar facilities they are able to make high interest rate savings account offers. Banking is very much a numbers game, the probabilities of which I won’t bore you with. What you should know is that online banks have a significant numbers advantage relative to your local banks which allows them to pay MUCH higher rates than your local S&L.
Rates Are Low Today But Online Banks Still Offers Better Yields
Given that rates in general right now are pretty low (and look to remain that way for the foreseeable future) having saving accounts for yourself and perhaps your children does not seem like all that sexy an idea. On the other hand it’s never a bad time to learn the basic skills needed to move and manage money quickly between a local bank and a high interest rate savings account online.
- Things to consider when choosing an online bank offer:
- Does your local bank offer free electronic money transfers?
- Is the online bank FDIC insured?
- Does your online bank output data to home personal financial software like Quicken or Microsoft Money?
- How easy is their website to use, understand, and navigate?
No One Is Going to Retire on Savings Account Earnings
No one is going to use a saving account (online or otherwise) for a wealth building or retirement income fund, but it still pays to know how to move money quickly and cheaply between accounts and to get at least some earnings return on deposits. On the other hand think seriously about opening an online account. Again, I can’t emphasize enough how much having extra cash socked away in an online has helped me get through the sudden cash shortfalls that inevitably come up with trying to time many payments. The high interest rate accounts offered online are a good place to hold any cash over and above emergency check clearing funds, and provide quick, cheap liquidity in those times when cash management timing just doesn’t quite line up for you.
