Banks and consumers often refer to online savings accounts as high yield savings accounts. Online banking provides customers across the nation access to the same high yield rates, regardless of location or membership. For those wary of online banks, physical banks offer traditional options that yield higher interest than a regular savings account, mainly money markets and certificates of deposits.
Numerous banks provide high yield savings accounts online that offer higher interest rates than physical bank locations. Bankrate explains that online banks can do this because they save on operating costs that “brick and mortar” banks incur. You can open up online savings accounts, money market accounts and certificates of deposit through many of these online banks. Occasionally banks that double as credit card providers, such as Capital One, American Express and Discover, offer higher yields than competitors.
Online high yield savings accounts offer higher interest rates, typically without fees. You can easily transfer money between the account and your regular bank account as many times as you want per month. They also do not restrict how often you can transfer or withdraw your money.
High yield savings accounts often offer a higher savings rate regardless of the amount you initially deposit, and you are not required to keep minimum balances. Your account receives the same insurance provided by the FDIC to traditional banks.
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