Should You Open an Online Savings Account?

May 7th 2016

How Do I Open an Online Savings Account?

One of the surest signs of maturity is properly taking care of your finances. This means paying the bills on time, not taking on too much credit card debt and saving money for a rainy day. Unfortunately, saving money is an uncommon practice in the US, particularly among the younger generations. In a society that is geared toward instant gratification and a constant barrage of easy financing options, it is easy to simply not save any money. However, this is a mistake that can eventually come back to bite you. Life can take you in unexpected directions, and you never know when having a nest egg saved up will come in handy.

There are certainly reasons why people choose not to open or use savings accounts. It can take up a lot of time finding the right bank and the right branch, and once you do, you still have to physically go into the bank and verify your identity and other financial information before actually opening the account. Long lines, inconvenient branch locations and virtually nonexistent interest rates can all contribute to apathy toward opening a savings account.

Fortunately, there is an alternative that can make it much easier for you to open a savings account in a way that actually provides better value than a traditional savings account. Online savings accounts have many, if not all, of the same benefits as a traditional account without many of the hassles. Online savings accounts are becoming increasingly popular, especially among the younger generations and those who travel frequently.

Easy to Set Up

Unlike a traditional bank account, online bank accounts do not require you to physically walk into a branch location. This is because the vast majority of them do not have physical branches for you to walk into. To set up an account, you’ll typically need to verify your information through email or fax, which can be done from the comfort of your own home.

Better Interest Rates

Many online savings accounts have noticeably better interest rates than their brick and mortar counterparts. Although the interest rates are still not that great, the extra percentage or two that you can get from an online savings account can unquestionably add up over time.

In addition to better interest rates on savings accounts, online accounts offer you more options than many traditional banks. For example, you can choose to have your money saved in a money market or CD, which will yield a higher interest rate than traditional savings accounts.

Easy to Use

Instead of needing to find a branch that you can use to deposit and withdraw money, online savings accounts allow you to control your finances through the Internet. Since virtually everyone has a smartphone and computer these days, managing your bank account online is logical and completely manageable. One of the side benefits of not having physical branches is that the costs associated with running a traditional bank are reduced. These cost savings are sometimes passed on to the bank depositor in the form of reduced fees for services and higher interest rates on savings accounts.

Access to Money Anywhere

One of the best benefits of opening an online savings account is that your money is available from anywhere in the world. All you have to do is find an ATM or a participating partner bank with a physical location, and you can easily withdraw or deposit funds into your account.

Popular Options

As time goes on, there are more and more online savings account options available for consumers. However, the most popular ones remain those that have brand recognition, as well as the ability to offer a competitive number of services and a high enough interest rate. Some of the most popular online banks include American Express, Barclays, Ally Bank and Capital One 360.

The benefits of a savings account should be clear. Hopefully, these resources will provide a solid starting point for those looking to take responsibility for their personal finances.

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