Online Financial Finds for the Holiday Season
As the year draws to a close, it’s the season for diminishing returns when it comes to your interest-bearing accounts. As a result, we’ve made a list of some up-and-coming online offerings that will keep you from dwelling on the dreary economic climate. Our findings may not qualify as a cup of financial cheer, but they sure beat a lump of coal in your stock(ing) portfolio
Internet-Only Banks: High APYs on Interest Bearing Checking and Savings Accounts
In general, online account interest rates are higher than their brick-and-mortar counterparts, especially for interest bearing checking and savings accounts. In many cases, the rates offered by a standalone Internet-only bank are even higher. A recent online study done found that for interest-bearing checking accounts, online banks pay an average of 2.06% interest, while the physical bank branches only pay an average of 0.24% interest. The result? Americans are increasingly opting in when it comes to online banking. According to NetBanker.com, 64 million U.S. households will either be banking online or using online bill pay by 2012.
Regardless of whether you’re a seasoned online banker or a Web banking newbie, the two Internet-only banks listed below are worth looking into, if only for the high interest rates offered with their checking and savings accounts. Both banks are also FDIC-insured, which means they are equipped with the same safety net as traditional banks.
iGObanking – By far one of the best Internet-only banks in terms of checking and savings account interest rates, iGObanking.com offers checking, savings, CD and IRA accounts. Currently, their interest bearing checking account rate is at 3.80% APY – the highest of any bank we found. They also offer a high savings account interest rate – 3.28% APY. To open either a checking or a savings account with iGObanking, all you’ll need is a dollar. This also applies to the minimum account balance that is required in order for your money to earn interest. There are no monthly fees, either. The only thing you’ll need to watch out for in terms of banking fees is a $30 NSF fee if your account is overdrawn. Also, you’re on your own if you use ATMs – iGObanking doesn’t own any ATMs and they don’t reimburse you for the fees you’re charged if you use someone else’s.
Bank of Internet – This website has been around for almost a decade and offers some great rates. For checking accounts, BankofInternet.com offers a rate of 3.40% APY. However, you’ll need to come up with $500 in order to open the account. In addition, you’ll be required to pay a $7.50 monthly fee unless you maintain a balance of at least $5,000. Unlike iGObanking, this bank does offer monthly ATM reimbursements, but it’s limited to $8 per month. On the savings account front, Bank of Internet’s rate is decent but could be better at 2.00% APY, and opening a savings account requires an initial deposit of $100. Once you open the account, however, there are no monthly fees or minimum balance required. If you’re thinking of opening a savings account through this bank, a better bet might be their money market savings account, which offers a rate of 3.46% APY and requires the same initial deposit – $100 – as the lower interest rate savings account.
In addition to iGObanking and Bank of Internet, NationalInterBank.com almost made this list, but the site didn’t fully measure up because of its abysmal checking account interest rates. However, this list would be incomplete without mentioning the site’s NIB Green Savings Account. Like the other two Internet-only banks, National Inter Bank is FDIC-insured, and this particular savings account offers a 3.86% APY with no monthly fees; in addition, it only requires a $1 initial deposit and ongoing minimum balance.
Online Banking Accessories
Like a bracelet or a belt that goes great with your outfit, these tools perfectly accessorize the world of online finance yet are versatile enough to complement brick-and-mortar banking. Use these free online tools to make all of your banking experiences easier, more convenient – even fun!
BankSwitcher – As it says on this website’s homepage, “BankSwitcher makes switching banks easier.” In a nutshell, this is the purpose of BankSwitcher.com. This online tool organizes and streamlines the process of switching banks in order to save you time and frustration. To use it, you must first give the site your necessary banking information. Based on the information you provide, the site generates a Switching Checklist that displays all of the deposit and billing transactions that you’ll need to switch, as well as the specific instructions and forms you’ll need in order to successfully disentangle your finances from your old bank. The more automated bill pay and deposit accounts that you have set up with your soon-to-be-former bank, the more useful you’ll find the BankSwitcher tool when it comes time to cancel them and switch.
SmartyPig – A spinoff of the traditional savings account, SmartyPig.com can best be described as a savings account website with financial goal stipulations. Put another way, it is goal-based savings. In order to set up a savings account on this site, which is FDIC-insured and has a 3.90% APY interest payout, you first need to determine a specific financial goal you would like to strive for. Once you’ve figured out what it is you’ll be saving for (a wedding, vacation, college fund, etc.), you also need to come up with a deadline for your savings goal. Opening an account with SmartyPig also means that you can maintain a balance of at least $250 and can set up a recurring monthly contribution of at least $25 from another bank account. On top of the monthly deposit automatically transferred from your separate bank account, you can add additional funds to your SmartyPig account or have friends and family contribute to it. Once you reach your financial savings goal, there are three options for receiving your account funds. You can choose to have your funds paid to you as a MasterCard debit card that can be used as cash, a gift card from one of the retailers that SmartyPig partners with, or as a direct deposit into a checking or separate savings account. In addition to SmartyPig’s high interest rate and creative concept, the great thing about this account is that it caters to both go-getters and slackers alike. For those who decide to throw in the towel before reaching their savings goal, there’s no monetary penalty for withdrawing funds early. (Disclaimer: However, you may find yourself penalized with guilt for disappointing SmartyPig.)
Obopay – First launched in 2005, this mobile payment service is used for sending and receiving money via your cell phone. The process for signing up is simple and straightforward: go to the Obopay.com site to set up an account and then add money to it using a credit card, debit card or bank account. After you’ve set up your account, you’re able to send or receive money via any U.S. cell phone number. If you send money, the person you are sending funds to does not need an Obopay account in order to receive it. You’re also able to withdraw funds as well as deposit them into your Obopay account. If you choose to withdraw money, you’ll be able to directly deposit it into your bank account. In addition, you can use Obopay funds to make a purchase directly from your phone (ring tones, movie tickets, etc.) It costs you a quarter every time you send money, but everything else on the site is free to use, including receiving or withdrawing money.
Now that you’ve had some food for thought about these online financial tools, feel free to put them to work so that you can eat, drink and be merry this holiday season.
