Online banks offer some of the highest rates in the banking world but many individuals are still nervous or skeptical about sending their money over the Internet.  Yet today, opening an online savings account or a money market account online can not only get you a significantly higher rate, but it can come with a lot of convenience and control.

Higher Rates

Online banks on average offer rates that are between 1-2% higher than offline banks.  They are able to do this because they don't have the cost of branches and branch employees to support.  They operate lean and can afford to pass the savings onto their depositors.  Even amongst online banks there is quite a range of rates which reflect their desire for your money as well as their total offering. 

For savings account, some have very high intro rates for a guaranteed period of time which step down to a lower rate after the intro period.  Opening an online savings account at one of these makes is equivalent to opening a short term CD, but the money is liquid.

Other banks have high rates but also high deposit requirements.  There are several banks that offer high rates with minimal deposit requirements.  These types of offers have become more and more frequent on the Web as banks battle for your cash.

In addition some banks offer check writing and debit card as part of their online account while others require you to access the money solely through electronic transfers.

You can see all Savings Account rates, balance requirements, and features on the BestCashCow Savings Rate Page.

Is Your Money Safe?

All of the online banks listed on the BestCashCow Rate table are FDIC insured, meaning that the Federal Reserve guarantees your money up to $100,000.  Because they are FDIC insured, they have to file regular reports to the Federal Reserve demonstrating that they are financially sound. 

In addition, many of the high paying online banks have been around for some time or are part of larger, better known parent organizations.  Large, well known banks like HSBC (one of the largest banks in the world), Citibank, Emigrant, GMAC, Countrywide, and ING, have rolled out online offerings with higher rates than their offline divisions. 

If you are unsure about a bank, you can always look up its FDIC certification to make sure that it is legitimate.  In addition, BestCashCow provides a place where users can comment on their experience which bank, allowing you to ask questions and read about others experiences with account opening, customer service, transfers, and more.

Is it Convenient?

In general you deposit and withdraw your money from an online savings account using electronic transfers.  Some of them allow you to use a credit card to deposit money and you can always send a check, but electronic transfers are generally the easiest.  You connect your online savings account to another account that you have at your main bank - usually a checking account - and then you can transfer money back and forth.  An electronic transfer takes about 2-3 days to be complete so if you need to withdraw money you'll need to wait 2-3 days.  The exact method of doing this varies by bank but in general it is relatively easy-to-do. 

Customer Service

Almost all the online banks have phone numbers you can call if you have a problem.  You can also send them an email.

Bottom Line

There is no longer a reason to keep your money in an offline bank that pays sub-par interest.  The easiest way to gain an extra percentage point or two (or even three) is to consider opening an online savings account.  They offer high rates, safety, and convenience to those willing to make the jump to cyberspace.

Additional Information:

• The top online Savings Accounts
• The top online Certificates of Deposit (CDs)
• More

Do you plan to open an online savings account soon?  If not tell us why by commenting below this article.