As I mentioned a moment ago, that Money article really got me thinking about being able to make my own financial decisions again. After all, every drop in the bucket adds up, and if you're just starting out (or starting to rebuild), it's worth it to research your options. I'm very pleased to have seen Ms. Bigda describe online savings accounts as the best choice for folks in the "just starting to save" fold. (But of course I am! I have an online savings account, and I've been thrilled with it. And who doesn't like to hear they made the right decision themselves?)
Online savings accounts are paying as much as 4.75% depending on who you go with. According to the article, Emigrant Direct, the online version of New York's Emigrant Savings Bank, is paying 4.25%. I just spotted an ad on Yahoo! for Citibank's new e-Savings account, where you can get 4.50% APY with the special offer (code CSAL).
Then there's my personal favorite, ING Direct. A subsidiary of Dutch bank ING, they are offering an introductory rate of 4.75% through 15 April. I chose to open an ING account last summer after seeing tons of print ads and great reviews of ING in various business publications. My initial deposit was made because they were running a special where you got $25 deposited to an account opened with any dollar amount. I created an account with $25 and immediately doubled my investment. My account earned 3% interest, but every few months the interest rate has gone up. (Right now it's in the high 4% range during the special mentioned above.)
Initially I was concerned about the security of online accounts, but as mentioned in the Money article, you're protected by the FDIC for investments up to $100,000 as long as your online bank displays the FDIC logo on their site. I can access everything 24/7 and I can perform transfers (in or out of the account) as often I like. According to Bigda's suggestion, you can even open accounts with several online banks and move your money based on the highest interest rate. (That's a little too much work for me, personally, but if rates start to dip, you'll see me doing it.)
One blatant plug from hard-working Workerette to another...if you'd like to open an account at ING, let me know. They have a referral program where we can both get some free money. Email me at melonie (at) smallbizmentor.com if you want the details, or leave a comment here!
Happy saving!
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