Savings Accounts Explained
The idea of a savings account is having the ability to earn a return on your money rather than just having it sitting in your bank account doing nothing. The APY rates you will get these days on savings accounts are going to be quite low what they used to be due to the ultra-low interest rate world we are currently living in. However, they are still a great way to get some sort of return on your money that will be sitting in your account gathering dust otherwise.
These types of accounts are going to be an ideal fit for people who have emergency funds or who are trying to save for a specific purchase, such as a house. You are able to link your savings accounts with your checking account, setting up automatic monthly transfers into the savings account if you wish to do so.
When it comes to online banking, you can quickly see all of the different savings account options that are currently available. This allows you to quickly compare the APY rates, fees, and other account perks with one another. You also have a lot more flexibility in terms of managing your money and keeping a track of your finances in real-time. This article will take you through everything you need to know about online savings accounts.
Can I open a savings account online?
All major banks will now have an online presence. People want the flexibility to be able to manage their finances with the tap of a few buttons rather than having to go into a physical bank branch. There is not much you can’t do with online banking.
Most banks will have a range of different savings accounts that you can open online. You can take a look to see which option is the best fit for your situation. The process of creating this new account doesn’t take much time at all, allowing you to get started saving very quickly.
What are the different types of online savings accounts?
There are a few different types of savings accounts that you will likely come across when assessing the different options. Each will be tailored towards a particular set of needs, having its own set of pros and cons. It is a good idea to be aware of these different options, so you can choose one that is a good fit for your needs. Here are some of the most popular types of savings account you will see:
Regular Savings Accounts
There are the standard types of savings accounts you will find. They will be a good fit for both short-term and long-term savings. They will usually have a standard APY and will be commonly found. The APY rates will usually be lower for a regular savings account when compared to more specialized options. You will usually have the ability to make withdrawals from this account without facing any fees, up to a certain number of monthly transactions.
High-Yield Savings Account
If you are looking to get the best APY rates possible, then high-yield savings accounts will be worthwhile checking out. You will get a greater APY rate than a regular savings account. In return for the higher rates, you will normally have less access to your money with this type of savings account, with money transfers between accounts usually taking a few days rather than a few hours with a regular savings account.
Money Market Accounts
These types of savings accounts combine many of the aspects of a checking amount with those of a regular savings account. The APY rate will often be better than those offered in the regular savings account and you will also have the option to use a debit card with your account funds. There will usually be a monthly fee charged for these types of accounts, with a higher minimum required deposit also usually being in place.
Certificate of Deposit (CD) Accounts
CDs are a way for you to earn a return on your money that will be fixed for a certain period of time. You are agreeing to leave the money in this account until the CD matures. Some CDs will have term lengths of just three months, while others might take ten years to mature.
You will be able to lock in an APY rate for the entire period, with this rate usually being better than most other types of savings accounts. Early withdrawal penalties are usually in place, as well as a tiered APY rate system depending on how much you deposit and the length of time you are committing these funds.
Pros & Cons of using an online savings account
The advantages of using an online savings account are obvious. You can quickly see all of the different options that are available in one place. You can also quickly compare them with other banks. If you were to do this in a non-online environment, it would take you a huge amount of time. Instead, you can complete this process in a short space of time when doing so online.
You are able to easily shop around for the best APY rates or a particular type of savings product that fit your eye. This allows you to earn a return on the money that is sitting in the bank. You have a great range of different types of savings accounts to choose from, so most people will be able to find something suitable to their needs.
Online banking itself has endless advantages. Most notably, you have the ability to efficiently conduct important banking processes from the convenience of your mobile phone or computer. You can also keep an eye on all transactions in real-time, making sure that nothing untoward is happening.
There are not too many drawbacks associated with using online savings accounts. Some people who are not very tech-savvy might prefer to conduct their banking in-person. The APY rates are also no the biggest in the current interest rate environment. However, if the money is going to be sitting in the bank regardless, then you might as well be earning some sort of return on it.
Choosing the right type of online savings account
It is important that you research the various savings account types to see which will be the best fit for your needs. It is vital that you only consider banks that have built up a strong reputation for treating their customers properly.
Once you figure out the type of savings account you need, you can shop around for the best rates. This can be easily done through LendStart, as you will find expert reviews of all of the leading providers of online savings accounts. This will save you a lot of time and hassle.
Getting started with an online savings account doesn’t take too much time. Once you identify the category of savings account that will be the best option for you, then you can start looking for the bank that provides the best terms for this account type. Lendstart helps a ton during this process, giving you a comprehensive insight into all core aspects of these options.