High-profile data breaches have heightened concerns about privacy online, especially for sensitive financial information.
Customers are no longer limited by location — new online savings accounts expand consumer options beyond the banks with branches on your street.
Is it worth changing from your current bank for higher interest online savings accounts?
Because they have no tellers, ATMs or brick-and-mortar stores, online banks can often afford to offer higher annual percentage yields (APYs) to their customers. While traditional banks offer APYs as low as .01%, some online banks offer higher APYs. Higher APYs help you save money faster and keep pace with inflation.
FDIC-Backed Online Accounts Offer Security
At physical banks and community banks, it can be easier to build a relationship with your banker because you see them in person. If down the road you need to take out a business loan or open a money market account, you can work with someone you trust.
But online banks can be just as secure as their brick-and-mortar counterparts. Many are owned by large, established entities. Others are extensions of traditional banks for users outside of their physical network.
The Federal Deposit Insurance Corp (FDIC) was created to protect customers. Banks earn profit by taking the money in their customers’ accounts and investing it in the stock market or loaning it out to other customers; a sudden run of customers who want to withdraw their balances might put a bank into jeopardy. Savings accounts at banks regulated by the FDIC are insured by the government for amounts up to $250,000, creating a safe, protected place to keep your money. All reputable online banks are members of FDIC.
For extra peace of mind, seek out accounts with maximum online protection from hackers: two-step authentication, SSL encryption and anti-virus and anti-malware software.
Access 24/7 Convenience With Mobile Options
Most banks now offer smartphone apps that allow you to easily find your information, check your balance and make deposits with a picture of your check. To make the savings process easier, you can set up your checking account to automatically transfer a certain percentage of your direct deposit paycheck. Some online savings accounts also offer check-writing as an added bonus.
However, online banks do make it difficult to deposit cash. Your limited options include money orders, or select ATMs that offer this feature.
How To Open A Savings Account Online
With free search and comparison tools like Fiona, you can find online banks with offers that fit your needs. Filter offers by your zip code and ideal balance, then compare high yield accounts side by side to find one that best suits your goals.
Within Fiona’s search engine you can quickly navigate to account setup at the bank of your choosing. You’ll need information from an official government ID (like a passport or driver’s license) and your Social Security number.
With the right online bank, your savings will be just as protected as the physical bank in your neighborhood. Compare different options to make sure your bank is a member of FDIC and is working to protect your data and money from hackers.