The State of Online Savings Accounts

The single most asked question of people who have financial websites is where should one open an online savings account. Until recently, choosing a good high yield savings account was a pretty straight forward process. There were a few banks here and there that offered them, and all you had to do is compare them based on their interest rate, quality of service and fees, but there are just so many online savings accounts available, that it's hard to keep track of who's on top.

Until recently, there were only a few banks that actually had decent savings rates, and they were Emigrant Direct, HSBC, Citi-Esavings, and E-Loan. Citibank dropped their savings rate down to 4.75%, so they're no longer in line with the leaders. In addition, two new companies have been offering rates of 5.3%, and they are Grand Yield Direct, and I GO Banking.

HSBC Recently announced that they are offering a promotional interest rate of 6% for any new money until the beginning of May. This is a nice perk, but not really enough to get anyone who already has an account to move there. If you don't have an account, HSBC seems as if it would be the place to go right now. In may, the rate will go back down to its standard 5.05%.

Currently Emigrant is offering 5.05%. ING Direct is offering 4.5%. HSBC is offering 5.05% after the promotional period. Virtual Bank is offering 4.6%. IGO Banking and Grand Yield Direct are offering 5.30% APY at the top.

It might seem like Grand Yield Direct and IGO Banking are the place to put your money online, but this might not be the case. Both of their signup processes are very horrendous, and they are both very new online banks. The money is FDIC insured, but I wouldn't want to be on the losing end of any growing pains that those two companies have. In addition, many new companies open up and offer high rates to attract new accounts, but soon after they drop them and get inline with most everyone else.