moneytalks

Most of us have our checking and savings accounts through our regular, brick and mortar banks. But is this really the best place to keep your money? Banking online has become more and more popular the past couple of years, largely due to the higher interest savings accounts they offer. I know with my local bank I’m getting interest at a whopping 1% or lower. This tends to be the norm when you walk into a bank and open a savings account. But there is an alternative, online banks are offering traditional savings account interest rates that compare with CD rates, plus you keep your money liquid, not tied up in an account you can’t get at. Here are some current rates right now, ETRADE is offering a 3.30% savings account, WaMu is offering the same while FNBOdirect is giving their costumers 3.50%. Plus there are many more out there if you look. And pretty much all that I’ve ever seen offer this with no minimum deposit. Lets break down the difference I’m talking about. Lets say that you have $5,000 in your savings account, with 1% (my brick and mortar bank gives less than that) you’ll earn about $4 a month, thats around $48 a year. Now if you’ve put into an account giving you 3.30% return on your $5,000 you’d be looking at nearly $14 a month which is about $170 a year. That’s about 12X your money! To me there is no comparison, traditional banks just don’t stack up to what online banks are offering.

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