With savings and money market rates suffering, investors are looking for alternatives. One possibility is with Online Banking like those from ING Direct and Emigrant Direct. While I am not endorsing these products, after doing a little research, I thought I’d share some thoughts:

  • The obvious reason why they can afford to offer higher rates is because they don’t have to pay for brick and mortar locations.
  • The major benefit is the FDIC insurance. The standard deposit insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.
  • There are other options on the web besides ING Direct. A few are EverBank, HSBC, Emigrant Direct, Capital One (offers checks and ATM too), Zions Bank, etc.
  • You can search to see which online banks are paying the highest current rates at Money-Rates.com.
  • You can get a credit rating of these online banks at Bankrate.com. Proceed with caution. These ratings may or may not be reliable. Remember that before the 2008 market drop AIG has great ratings.
  • Some online banks like ING and Emigrant pay the interest at end of month, while others like HSBC pays one month after funds are received.
  • Some banks like HSBC account can be established entirely electronically, but there may be a 3 – 5 day delay in availability of funds when transferred back to the bank.
  • One of the best ways to use these funds can be as an Emergency Funds. If you don’t have an Emergency Fund, you can read why they are important on a previous blog of mine entitled The Savings Grace of an Emergency Fund.
  • If you are interested in learning more about online banking, you can watch a video about how ING Direct’s online banking works here.
In conclusion, whether or not online banking is right for you, that depends. If you have a lot of money, like an emergency fund, or if you are a small business owner with your cushion savings in a bank account earning low or no interest, you might consider looking into whether an online bank account is right for you.

Rich Feight, CFP
Rich Feight, CFP

Hi, I'm Rich Feight I'm a fee-only Certified Financial Planner, successful business owner, and self-made millionaire that knows how to beat the system and become wealthy. I have a lot of clients that have done it too. I'm also pretty good at finding that ever-elusive work/life balance so many of us strive for. Lucky for you I have an abundant mindset and give all my knowledge away on my blog. So if you want to know what it takes to become a millionaire, follow me.

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