The majority of banks offer online management for at least some of their savings accounts today, and often the best way to start is by looking at the options presented by the bank already being used. There are few basic types of available savings accounts, listed below, which are offered online by most banks.
Even High Yield Accounts now have Low APYs
Wherever one chooses to look, the effects of recent economic events can be found. Online accounts are no exception to this rule, and what used to be high yield accounts with APYs of 5% or even 6% are now regarded as being good at between 1% and 2%.
If an APY seems too good to be true, it is worth checking out whether this is actually an introductory offer rate. These rates usually only apply for a certain period and will then drop, often drastically, to the standard rates.
The basic savings account can usually be opened with a relatively small initial deposit. There is typically no minimum balance and funds can be accessed as and when needed, although some accounts may have a limit on how many withdrawals can be made within a calendar month before charges will be applied.
Although rates are a little higher than those of ordinary checking accounts, they are low in comparison to other types.
Regular Savings Account
Very much the same as a basic account in most respects, rates are a touch higher and a regular monthly deposit is required. With these accounts, failing to make a deposit may result in penalty charges or occasionally even account closure.
Regular savings accounts may also require a minimum first deposit to be opened, although this varies between institutions.
Money Market Accounts
MMAs, or Money Market Accounts, usually yield higher rates than the basic savings and the rates will vary as economic changes occur. MMAs often require specific initial deposits, as well as carrying minimum balance requirements. Actual amounts vary between banks, as do the penalties applied if the minimum balance is not kept.
Access to funds is usually available and many accounts do include a check book, although both withdrawals and numbers of checks written per month may be limited.
Very similar to regular accounts, their rates are usually a little higher, although not as high as on fixed term accounts. A specified period of notice, varying between accounts and banks, has to be given before a withdrawal can be made.
Certificate of Deposit
CD accounts are taken out for a pre-determined amount of time, typically for periods of between six months and a maximum of ten years. They offer higher, often fixed interest rates as a result of the money normally being locked away with no withdrawals being possible until the term is completed.
Withdrawals are possible on some CDs, but as a rule, penalty charges will be applied. Minimum deposits and balances vary from one bank to another.
Again available in instant access or fixed term variations, children’s savings accounts usually offer reasonably good rates. It is often possible to keep part of the savings accrued tax free, with the other part being taxed at a reduced child’s tax rate.
These accounts can often be started with very low investments, although the longer terms may require slightly higher deposits.