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Best High Yield Online Savings Accounts in 2021 • Benzinga

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Best High Yield Online Savings Accounts in 2021 • Benzinga

| Business News Today | Fox News


Higher interest. Lower fees. Why not love an online savings account?

Online-only banks, as the name suggests, have no physical location and only exist online.

They also really created a lot of competition for regular banks.

In fact, with the rise of new technologies, traditional brick-and-mortar banks may eventually disappear. If you consider the popularity of peer-to-peer lending programs like Lending Club, Prosper, or Upstart, which attract investors looking for 21st century lending models, it makes sense that traditional banks have started to become obsolete.

Bitcoin and cryptocurrencies could completely replace traditional banks. Once Bitcoin is able to process and settle hundreds of transactions per second, it could provide a more efficient, secure, and profitable banking structure.

Considering all of these reasons, it might be worth looking into an online savings account right now.

What is an online savings account?

Again, an online savings account is a savings account that only exists online. Usually, high yield online savings accounts make an APY savings account more attractive. The difference can be huge (think 0.5% APY for a traditional savings account vs. 1.5% APY for an online savings account).

In a nutshell, online banks can charge less fees, require no minimum balances, and offer great rates as they don’t have the overhead costs of salaries, maintenance, and real estate costs like variety. traditional physical banks.

Why do i need a savings account?

Building a savings account is a great way to develop a healthy mindset about money. There’s something very satisfying about seeing small deposits in a savings account grow over time, and some banks even encourage goal setting through mobile apps and online banking.

Here are some options for your savings:

  • Save for your child’s college education.
  • Save for a down payment on a home.
  • Save for an item you’ve always wanted.
  • Emergency fund savings (between three and six months of savings is recommended).

Advantages and disadvantages of an online savings account

The pros and cons of online savings account may seem obvious, but it is always best to read the fine print in any situation. (For example, traditionally fees are lower or nonexistent for online savings accounts, but it’s definitely a good idea to be 100% sure.)

Advantages:

  • They offer higher rates
  • They charge lower fees
  • New technology enables great banking options on your device
  • ATM networks are extensive

The inconvenients:

  • You have to pay a fee for access to ATMs in some cases with affiliated physical banks
  • Depositing funds can actually be heavier than depositing at a traditional bank.
  • Customer service is not readily available.
  • Sometimes the APY account is an introductory rate (again, read the fine print).
  • Online banking may fail or may not be FDIC insured. Do your homework.

How to find an online savings account

Once you’ve set your goals, you’ll want to decide which account is best for you. You’ll need to consider the APY, your customer service needs, service charges and fees, and whether the online bank has FDIC insurance.

For more information about APY, see What is APY?

How Online Savings Accounts Work

Once you have officially chosen a bank, you will need to complete an application. The app will ask you for your address, personal and business phone numbers, date of birth, and social security number or tax ID number. You will also need to create a security question and password.

You can link your online savings account to your online or traditional checking account. Indeed, to open the account, an opening deposit must come from your current account. If you are applying the old fashioned way (on paper), you can include a check with your paper application.

Then from there you can deposit money into your account. The part you don’t see is that the bank will then lend your money in the form of personal and business loans to other people. (The bank ultimately pays you interest when it lends your money.)

Best Online Savings Accounts

Take a look at some of the best high yield online savings accounts.

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