Which Online High-Yield Savings Account is Best?

[Sean]

The rates on this page are current as of 23 June 2008. For more information about these banks, please see the nearly 650 comments that follow this list.
I’ve heard a lot about online high-yield savings accounts, but I’ve never bothered to look into them. It occurred to me today that it’s ridiculous to keep my “web money” in a no-yield checking account at Wells Fargo. As my blog revenue grows, I’m throwing away money by not having my savings someplace that pays.


I did some research. I googled for “high yield savings account” and “ING direct” and “HSBC Direct“. I followed promising links (and ads) from the search results. Here are the offers that I was able to find with minimal digging. All of these accounts are FDIC insured and, unless otherwise noted, can link to other bank accounts (your local credit union, for example).

• HSBC Direct offers 3.50% APY, no fees, web interface. $1 minimum to open. Named “best online savings account” by Kiplinger’s Personal Finance. GRS readers have mixed experiences with HSBC Direct. This is a temporary rate through August 15th — after that the rate is variable.
• Washington Mutual offers 3.30% APY on a special savings account that requires a $1 minimum to open. This account must be opened in conjunction with a WaMu Free Checking account. The accounts must be linked. If you close the checking account, you lose the 3.30% rate.
• FNBO Direct offers 3.25% APY, but there’s very little information available about the account without signing up. $1 minimum to open.
• E*TRADE Bank offers 3.15% APY, no fees, an automatic savings plan. $1 minimum to open. GRS readers do not like E*Trade, but my cousin loves them.
• Savings Square offers 3.05% APY, no fees. $1 minimum to open. Electronic interface only. I’ve had a couple readers tell me setting up an account at Savings Square is a nightmare.
• ING Direct offers 3.00% APY, no fees, an automatic savings plan, web interface. No minimum. GRS readers love ING Direct.
• GMAC Bank offers 3.00% APY, checks, ATM card. $500 minimum. Fees on balancs below $500. GRS readers like GMAC Bank.
• Countrywide Bank offers a variable rate, from 3.00% to 3.65% APY. $1,000 minimum to open. Rate is 3.00% on balances below $10,000.
• Emigrant Direct offers 2.75% APY, no fees, web interface. No minimum. GRS readers like Emigrant Direct.
• Citibank Direct offers 2.65% APY, no fees. No minimum. To earn this rate, you have to meet certain bill-payment requirements, otherwise your rate is 1.92%. GRS readers do not like Citibank Direct.
• Presidential Online Bank offers 2.60% APY, no fees, ATM access, web interface. $5,000 minimum to open. Rate applies to balances up to $35,000. Any portion above this amount earns 2.40%.
• Capital One offers a variable rate, from 2.50% to 3.50% APY, no fees, free checks and ATM card, an automatic savings plan. $1 minimum to open. Rate is 2.50% on balances below $10,000. This is a money market account.
• AmTrust Direct offers 2.25% APY, “no monthly service fee or minimum balance fees”. $1 minimum. This is a money market account.
• WT Direct offers 3.26% APY, no fees. No minimum to open, but your interest rate drops to 0.50% if you don’t have a $10,000 balance after 60 days.

NEW! Ben pointed me to Provident Direct, which is currently offering 3.50% APY with no fees and no minimum balance. The account takes $1 to open. Ben likes the account so far — has anyone else used them? Once I get a little more feedback, I’ll add them to the main list.


The QuickTransfer feature at E*Trade looks awesome. I love the idea of being able to have one interface to manage all my accounts at all my financial institutions. Has anyone used this? Do other banks offer similar features?
A reader sent in a story about online banks last November, but that discussion was specifically about customer service. I’d like to hear from people who use one (or more) of these banks and can tell me more about the features. Which one should I choose and why?

Canadian readers should check out this article about Canadian high-interest savings accounts.

Update: Since originally posting this, I’ve opened an account with ING Direct. It’s true that they’re usually at the bottom of the rates offered, but they offer easy access, excellent customer service, and — most importantly — I don’t have to play games in order to earn the rate. If you want the highest rate, look elsewhere. If you want a good rate without gimmicks, ING Direct is a fine choice.

Source: http://www.getrichslowly.org/blog/20...count-is-best/

[Bob]

ING is a great choice. i was wondering why you didn't mention it but then i got to the bottom.

the problem with all of the other places is they offer you 3.50% interest... but you have to have 100k in the account