At 1.10% APY, Discover Bank’s online savings account trumps its competitors, but not by much at such low rates.

Cash is having a difficult time finding a home that would foster growth. So-called “high-yield” savings accounts are offering such depressing yields that they are looking no better there than under a mattress.

Currently, Discover Bank is offering the highest APY among online savings accounts open to new customers (SFGI Direct is not accepting new customers at the moment). Compared to the other savings accounts though, it may not be much higher – so any savings account will do just fine.

With no monthly fees or minimum balances required, they offer a peace-of-mind that’s difficult to find anywhere else.

BankAPY (as of 9/2/11)Minimum balance to earn APY
SFGI Direct1.11%$0
Discover Bank1.10%$0
Capital One1.01%$0
Sallie Mae Bank1.01%$0
ING Direct1.00%$0
American Express Bank1.00%$0
Wesfield Bank1.00%$0

Save Nevertheless

Rates at popular online banks have predictably slipped as they now know that interested will remain at suppressed levels through 2013, as revealed by the Federal Reserve after its August board meeting.

However, the lack of a significant upside is no excuse for consumers to not save their money and spend it.

The logic has been evident from the actions of institutional investors and regular consumers. Last month, BNY Mellon decided to start charging customers, with $50 million or more, to simply store their cash.

Financial research firm Market Rates Insight reported that total deposits at FDIC-insured institutions have amounted to an all-time high $9.8 trillion, up $343 billion in the first of 2011.

Read: CD Rates Report August 2011: Yields to Be Low Until 2013

At the moment, safety and preservation are on the minds of many consumers who don’t know what to expect as the economy appears to be spiraling into another recession – after having just shown signs of recovery from the last financial crisis.

Despite the paltry interest rates, online savings accounts continue to be the ideal places for the average consumer to keep liquid cash – in case any financial emergencies should arise.

Are you putting your cash into deposit accounts or taking greater risks in hopes of higher returns?

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