Online Savings Account and Regular Savings Accounts
Way back when you’d open a savings account at a brick and mortar branch of a bank or a credit union. Savings account rates were 5.25% and regulated by the government, savings rates didn’t change at all. There wasn’t much to think about when opening a savings account as long as the financial institution had deposits insured by the FDIC (for banks) or the NCUA (for credit unions).
Just recently or at least over the past 10 to 15 years another type of savings account has come along and revolutionized how we open, maintain and shop or the best savings account rates. The Online savings account, also known as an Interest savings account, is like a savings account but vastly different.
An online savings account can be opened online. Most banks and credit unions offer an online savings account that usually has a higher interest rate than a regular savings account.
Banks and credit unions are able to offer a better savings rate on an online account because all transactions are done online. You basically don’t interact with a teller.
The financial institution is able to offer higher savings rates because they don’t have to pay someone to physically be at a branch and help you open an account and maintain the account. Once your savings account is open you link the account to an external account and transfer money into and out of the account.
When you’re searching for an Internet savings account one of the first things you’re going to look at is the savings rate. The time is article was written the best savings rates on online savings accounts are around 1.25%.
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