Online Savings or Money Market Accounts
By Sol Nasisi
Savings or money market accounts from online banks have become increasingly popular over the past ten years for the higher rates they generally offer. Because these online banks do not have expensive branch networks to maintain, they usually pass some of their savings back to depositors in the form of higher rates.
Unlike certificates of deposit or time deposits, money in savings and money market accounts accrue interest on a daily rate that can change from day to day. It is important to check back on BestCashCow regularly to be sure that your savings accounts continue to earn the most competitive rates, no matter what the rate environment is.
BestCashCow data has shown that online savings account rates have remained relatively stable over the past 18 months and the average online savings account rate is now equivalent to a three year CD.
· Higher interest rate
· Often, top notch online functionality
· Easy money transfer capabilities to and from a primary checking account
· Liquidity. Depositors can withdraw their money at any time.
· A variable interest rate. Although online banks have not lowered rates significantly in the past 18 months, they can lower them at any time.
· Interaction is only via phone or Internet. While you cannot walk into a branch and talk to a customer service representative if you have a problem, many of the leading, high profile online banks provide virtually instant phone access at all hours to a representative. However, interaction with some of the smaller online banks can be more difficult.
· You cannot get money cash or cashier's checks instantly as you can in a branch bank, and matters where you need to rely on the US Postal system can lead to significant delays and obstacles.
· No opportunity to build a relationship with a banker should you need a loan or additional services in the future.
All bank accounts listed on BestCashCow are FDIC insured. The Federal government provides insurance to a maximum amount of $250,000 per individual per institution (or $500,000 for joint account holders). All deposits (CDs, Checking, Savings Accounts) held in the same type of ownership at a single financial institution are only insured to $250,000. However, funds held in different types of ownership (Individual, Joint, Trust, Retirement) may fall under separate FDIC insurance provisions. Please visit the FDIC's website to determine your coverage limits based on your circumstances. BestCashCow.com recommends that you deposit savings in only FDIC insured institutions and that you do not exceed FDIC coverage limits.
To see how this account compares to other similar types of investments, please view the BestCashCow income guide. View it here.