If you asked an individual a decade ago whether or not they would trust their hard earned savings in some account with out a branch that you can only get to on the computer, chances are they would laugh at you. People want to feel that their money is safe and that they can get it if they really need it, so the idea of an online savings account is really counterintuitive to the human thought process. In the last decade, commerce on the internet has exploded. Consumer purchases through the internet are now common place, and very few people think anything of it when buying, selling, and transferring money online. The fears and worries related with doing business online are going away at a rapid pace, which leads us to ask, is it time to move to an online savings account?

Letâ€™s consider the benefits.

Higher Interest Rates â€“ Youâ€™ll be lucky if you find anything over 2.00% APY for a savings account in your home town. Bricks and mortar banks have a lot of fixed costs they have to pay for their branches that online savings do not, which enables them to offer a much higher interest rate. With a good online savings account, you can easily earn anywhere from 3.00% APY to 3.75% APY depending on where you open an account.

New Account Bonuses â€“ A lot of online savings banks will offer you a bonus just for signing up for an account. This is true for a lot of bricks and mortar accounts too, but much more frequent in the online savings world because of the very high competition for peopleâ€™s business. About the best bonus going around right now is the new sign-up bonus for ING Direct. You can get $25.00 if you can get an existing customer to send you an invitation email.

Lower Fees â€“ Many online savings banks, such as ING Direct and Emigrant Direct, offer literally no fees and no minimum balance to speak of. Not all online savings banks have a great fee structure, but a lot of them do. If you shop around you can find an account with no fees to speak of.

Instant Access â€“ When you are dealing with an online savings account, you always have instant access to your account as long as you have an internet connection. Just sign-on and you can transfer, withdraw, or do just about anything with your money.

Banking From Anywhere â€“ With an online savings account, you donâ€™t have to be in a town where your local branch is, rather all you have to do is just sign online and you have instant access to your account.

FDIC Insurance â€“ You know your money is protected because these banks are FDIC insured. If the bank were to go under for whatever reason, you would still have access to your money, which is always reassuring.

Security â€“ Some people fear putting their personal information online because of rampant instances of identity theft, but online savings banks have some of the best internet security around. They use a combination of secure connections, mouse-based pin-entry, site-images, security questions, and more to keep unwanted individuals out of your online savings account.

What about the down sides?

Online savings accounts really have some excellent features, but there are some downsides that one should be aware of.

Not As Immediate â€“ When you withdraw money from an online savings account, it has to be sent back to your checking account through an EFT transfer, which can take 2-3 business days. If you need your money in a pinch, this might be an issue. There are some banks that offer an ATM card with your online savings account so that you can get to your money fast if you need to.

Technical Difficulties â€“ If your internet happens to be down, or if the online savings bankâ€™s website isnâ€™t working, you canâ€™t get to your money. Be sure to sign-up for an online savings account with a history of not having major technical problems.

Lack of Tellers â€“ Thereâ€™s no branch you can go down and visit, rather you have to call an 800 number if you have a problem with your account. If the online bank you go to doesnâ€™t have great customer service, this could be a problem. Be sure to ask people who have used the account whether or not they have had good customer experiences before signing up for an account.

The Verdict:



Online savings accounts still have a few minor downsides, but they can be largely avoided if you get a good account. When you look at the amazing interest rates offered by online savings banks as well as the low fees, new deposit bonuses, and 24/7 access to your account, thereâ€™s no question. Online savings banks are the wave of the future and excellent places to put your money.