One of the key components to financial security is to have an emergency fund. While the emergency fund can look a few different ways, there are some places that are better than others to store this readily available, highly liquid cash. For the record, a credit card with a high limit and physical cash are not found on the list of good ways to save for an emergency.
While a person may choose cash value life insurance, CD’s, or short-term bond funds to grow their emergency fund, many of these types of accounts come with some serious drawbacks that make them less likely to be a liquid investment. Instead, most people opt for a simple savings, or money market, account. Sacrificing a small piece of their rate of return in exchange for ease of access and fewer restrictions is worthwhile. Here are some of the best online savings accounts out there.
Capital One 360
Different from the Capital One online savings, the Capital One 360 account offers a few more perks along with its .75% APY. There are no minimums, no fees, and the account allows you to create various sub accounts. So if you want to designate a portion of your money to “Vacation” or “New Car Purchase” you can categorize it right there on the website. No need for another program.
Discover Bank
Discover Card has been a staple in many people’s wallets for years. Now the company would like to bring you over as a banking customer as well by offering .85% APY on all balances with Discover Bank. No minimums, no fees, and all the perks of online banking that the others offer. If you already have a Discover Card, this one is a no-brainer to link everything together.
Ally Bank
Ally Bank, the one that you see advertising their “Raise Your Rate CD,” offers competitive savings accounts across the board. Their online savings has no minimum deposit to open, no monthly maintenance fees, and you can use their remote check deposit feature to get your money into the account quicker. Did I mention they come in at .87% APY?
Related:Ally Bank Review
CIT Bank
Another great earner at .95% APY. While it may seem like a drawback that you must maintain a daily balance of over $25,000 to earn the highest interest rate, balances of $100 – $25,000 still earn .90% interest. This account comes with the backing of over 100 years of banking experience.
While there are still uses for brick and mortar banks, such as your checking account, securing a loan, safe deposit boxes, and the like, online banking is the way to go for your savings needs. Banks have tremendous overhead with all their staff, utilities, and property taxes so they cannot offer competitive rates (with the exception of some local credit unions, but those deals are hit or miss). Instead, an online bank will be able to give you the same access to your money, but 10 times the interest rate (more or less).
Keep in mind that these interest rates usually adjust every two or four weeks. While the changes should not be drastic, the rates could go down. But your money is secure with the FDIC guarantee on all accounts listed here.
Where do you store your savings? Are you happy with the interest rate?
