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by Answerbag Staff on December 29th, 2009

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Why are online savings accounts good?

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  • by Russell Huebsch on December 29th, 2009

    Answerbag Experts

    Great Answer

    Professionally Researched. (What's this?)

    Online banking is becoming more widespread. In June 2009, a survey by Gartner Group found that almost half of all U.S. citizens use online banking. Online savings accounts with these banks are usually more profitable and convenient.

    Benefits

    Online savings accounts usually offer the best interest rate of all savings accounts, especially from banks that do not have a "brick and mortar" presence. Five percent interest is not unheard from an online savings account.

    Considerations

    Most online savings accounts are even more beneficial to young or new investors, because they require little money to start and easily managed from any computer.

    Disadvantages

    Strictly online banks offer no banking services if their website experiences difficulties. Land-based bank's online account features are usually limited because banks still deal mostly with accounts opened at branch locations.

    Tips

    Read reviews and research any online savings account before signing up. Most online savings accounts are FDIC insured, but consumers should still avoid the hassles of a financially troubled bank. Also, make sure the account does not include a surcharge for keeping below a certain balance.

    Warning

    Consumers with an online account should set their password to at least eight characters. Hackers can brute force a five-digit password in 10 seconds, but eight digits can take 115 days.

    Source:

    DepositAccounts.com: Online Savings Accounts

    Bankaholic.com: Benefits of Online Savings Accounts

    AmericanBankingNews.com: Online Savings Account Guide

    More Information:

    MyBankTracker.com; 5 Online Banking Scams Every Consumer Should Know 5

    CNet: Online banking is booming

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