Online High Interest Savings Account Basics

Free market economies tend to thrive in situations fueled by healthy competition. It does not matter what the business is but consumers fare better when there is a power struggle for their patronage. The banking industry is part of this reality and depositors should know that online high interest savings accounts is a component of a healthy financial strategy.

Banks and savings accounts have existed for centuries as a place for consumers to place their extra money so they did not risk leaving spare cash hanging around their home. The industry has gone through an evolutionary process including government assurances, new types of investment options and technological advances.

Online high interest savings accounts have their initial roots dating back to the 1980’s when many institutions started realizing how the advances in computer technology could help their business grow. Their hunches were correct and it is estimated that by 2010 their will be over 55 million American families using online banking.

If you are interested in opening an online high interest savings account there is some basic information you need to know. Some key points of interest are:

  • Many online high interest savings accounts are offered by “virtual banks” meaning there is no physical bank branch you can visit
  • Because online banks do not have to worry about the overhead of maintaining a physical location, their online savings accounts tend to offer higher interest rates then their locally based competition
  • In order to access your money from an online high interest savings accounts, you need to electronically connect the account to a traditional checking account
  • At this point, virtual banks have no automated teller machines supporting there branches, therefore deposits into the account either need to be done by mail or through electronic transfers
  • A customer can open an online high interest savings account any time of day or night

Selecting an online high interest savings account should follow the same steps as opening any other bank account. Shop around for the highest interest rate, make sure the minimum requirements of deposit will be met, and investigate if the bank is backed by the FDIC. Once you choose, all you will need to do is follow the easy instructions provided by the virtual bank.

About the Author

These articles are written by the in-house GOBankingRates team.