First of all, you should understand what yield means.  Yield is your annual rate of return on an investment or savings account.  It is written as a percentage.  In this article I’m talking about high yield online savings accounts which have specific features.  Most are based on amounts of $10,000 or higher, most have a very short-term guarantee period higher interest paid (3-6 months), and many have fees associated with them.

Don’t just let the interest rate offered be the deciding factor in your decision to deposit with an online company.  Make sure you check them out.  Learn how long they have been in business.  Check the FDIC website to make sure they are a legitimate bank and you are insured for the funds you deposit.  If they require you to have a checking account package to get the higher rate on your savings, what is the minimum balance requirement.  If they charge fees for the account, make sure the rate you are getting offsets that fee and you are really coming out ahead.

As recently as 12 months ago you could get a high yield online savings account for a rate up to 5.00% from many companies.  We have all seen the crash that happened since then.  There is a great site for you to check bank rates .  I saw rates there for as high 1.63% with no minimum balance requirement.  Your bank most likely can’t come close to that in this environment for a deposit account.

With savings account interest rates so low, it is more important than ever to find a good savings rate.  Higher savings rates lead to higher account balances which can lead to fee waivers on related accounts and many other benefits.  It might take a little research, but it is still possible for you to find a good rate on a high yield online savings account.  Rates won’t stay this low forever, but shopping for the best you can get right now will make your future easier in the long run.

Your daily transactions are harder to keep track of with the switch to debit cards, ATM machines and limited use of checks.  Most people don’t even have personal checks anymore.  Unless you carry a written register with you at all times, it can be very difficult to keep track of where you used your debit card for each purchase.  This is a great reason to bank online.  You can check your account balance, transactions (almost up-to-the-minute,) fees, print your statement, get copies of checks that have cleared and transfer money from between accounts with a few easy steps.  It is easy to check your balance often so you don’t have a deduction that surprises you and messes up the balance you think you have in your account.

Signing up for online banking can seem complicated but most banks are more than happy to spend the time with you to set it up in the branch.  Many of the things you can do on the bank website are services they might charge you for in person.

The following transactions can all be performed online:  opening extra accounts, electronic bill payment, loan applications, bank statements, investments, wire transfers, account balancing, ordering checks, past statement printing and usually 7 years of transaction history all at your fingertips.  If you have credit cards or a mortgage with your bank, you can pay it with a transfer from your checking account instead of standing in line at the branch, waiting for a teller.  So many other services are also available.

Another fantastic benefit?  You can download your budget and banking information into personal accounting software such as Quicken or Quick Books.  This provides you with great financial management support and allows you to follow all of your finances in one location no matter how many banks you may use for your personal needs.

Always make sure you have a firewall on your account for online banking and your security , plus you scan often for viruses and Trojan software that can put you at risk.  You should also change your password often and if you use a public computer make sure it doesn’t record your sign on information.  In the end, if you educate yourself about how to bank online and take just a few steps to protect yourself and learn the process, you can save yourself time and money by banking online.

More and more of us use debit cards for purchases now instead of checks. The funds come out of your account quicker than they used to because funds now move electronically instead of a paper check being presented for payment at your bank. Daily transactions are harder to keep track of now. Unless you carry a paper register with your debit card to write down each purchase during the day, they can get ahead of you but they are listed within minutes online, so checking daily or every few days gives you the opportunity to balance your account without waiting for the statement to come.

Many of the services you get in the bank are available thru banking online which saves you time (no standing in line for a teller) and money. You can check your account balance and see all of your transactions (almost up-to-the-minute,) fees, print your statement, get copies of checks that have cleared and transfer money between accounts with a few easy steps. It is easy to check your balance often so you don’t have a deduction that surprises you and messes up the balance you think you have in your account. Most banks charge a fee for these services if you do them at the branch and they can all be performed online. Obviously you need to find the best online banks to deal with.

More features while banking online? Opening accounts, electronic bill payment, loan applications, bank statements copies (7 years back,) wire transfers, account balancing, ordering checks and many other services. A great financial planning benefit is the ability to download your budget and banking information into personal accounting software such as Quicken or Quick Books. This provides you with great financial management support and allows you to follow all of your finances in one location no matter how many banks you may use for your personal needs.

If you have difficulty at the bank website getting signed up, go to the branch. Most companies are happy to help you with the initial sign up and will walk you thru the website so you have a better idea of how it works. In the end, if you educate yourself about how to do it and take just a few important steps to protect yourself, you can save yourself valuable time and money by banking online.

Online banks generally make money with various fees for transactions. So you want to make sure you understand the fee schedule of the bank that you choose. These days the banks online are extremely competitive when it comes to pursuing new business and new accounts. Incentives to open new online savings accounts vary from personal gifts to higher interest rates.

Keep in mind that while your account balances will be accessible 24 hours of the day transfers between accounts and withdrawals may require a few days to occur. For many people these delays can be a nuisance however, for many people it offers a built-in discipline for reckless spending.

If you have never opened an online savings account it would probably behoove you to start off with an account to help you experience the differences in a traditional bank account.

Remember that your online savings account is exactly that, a savings account. Generally speaking with online savings account there are limits to the amount of withdrawals you can make in a given month. If you find yourself having to make withdrawals beyond account limits you probably need an online checking account instead of an online savings account.

New online savings accounts generally have holds placed on the accounts. This can be frustrating, but it is part of the process of establishing your account online.

The Best Sources For Online Savings Account Rates

Presently interest rates are very low for savings accounts. However, inflation is low as well. Seeking out a high yield online savings account will maintain your buying power versus inflation. Everyone needs an emergency savings cushion and the present market conditions allow you to make significant gains versus inflation. Savings is never easy for anyone but conditioning yourself to a few basic fundamentals of saving money can help. Pay yourself first. Set up an automatic withdrawal if possible from your paychecks and deposit them directly into your online savings account. Here are a few onlien banks that can help with your financial goals.

ING DIRECT – High Yield Savings with the Orange Savings Account. offers up to 1.65% APY, on their Electric Orange interest checking account on high balances. They feature a web interface, free bill pay, free ATMs at 35,000+ locations and an online application and is truly a leader in the industry.

HSBC Direct offers 1.45% APY, no fees, web interface. $1 minimum to open. Named “best online savings account” by Kiplinger’s Personal Finance in 2006.

WTDirect Savings Account offers a variable rate currently at 1.66% APY on all balances for first 60 days. Beyond that, accounts >$10,000 continue at the variable 1.66% and lower balances are adjusted to a lower variable rate. No Fees. FDIC Insured. No minimum deposit to open the account and no checking account required in order to get the high rate.