Online banks are a good bet for extra return on cash. You can find checking accounts with 2% to 3% yields, well above the average bank yield of 0.94%.
That's way above what you get at Bank of America (0.01%) or Citibank (0.1%). Likewise, you can get a yield as high as 2.05% on your savings, a lot better than the bank average of 1.37%.
Online banks tend to charge lower fees than money-center financial institutions, which are slamming consumers with higher monthly maintenance charges, not to mention ever-rising fees for overdrafts, balance transfers and overseas transactions.
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An online bank may also be a good choice if you travel a lot or tend to stray from your bank's ATM network. Most reimburse you for using another bank's ATMs, at least up to a certain dollar amount.
We asked Informa Research Services to scour its database to find the best deals at online banks. Using their analysis as a starting point, we did our own digging and came up with the following list of favorites. Banks can change their rates at will, so double-check the details before you dive in.
You can compare rates on bank accounts, certificates of deposit, mortgages and other products at Bankrate.com. If you find a rate you like but aren't familiar with the bank, make sure it's covered by the Federal Deposit Insurance Corp.
BEST FOR LOW-MINIMUM CHECKING: KeyDirect
You don't need to worry about a minimum balance to earn interest on a KeyDirect checking account. A balance of less than $2,500 earns 1.25%, and a $5,000 balance gets a still-competitive 1.75%. High rollers with balances of more than $100,000 earn 2%. But watch the monthly maintenance charges. While KeyDirect will waive the fee for the first three months for new account holders, a monthly charge of $15 kicks in after that unless you keep a combined balance of $10,000.
Amount to open account: $50
Minimum to earn interest: None
Savings rate: 1.4%
Minimum to avoid maintenance fees: Combined balance of $10,000; otherwise, monthly charge is $15
Reimbursement for ATM withdrawals: $12 a month
BEST FOR HIGH-MINIMUM CHECKING: EverBank
EverBank is offering a 3% yield on new checking accounts. The catch: The bank promises that rate for only three months, after which it could default to the current rate. For those with accounts holding less than $10,000, the current rate is 1.52% for the first year. However, EverBank pledges to keep its yields in the top 5% of those surveyed by Bankrate.com.
Amount to open account: $1,500
Minimum to earn interest: None
Savings rate: 2%
Minimum to avoid maintenance fees: None, unless you use online bill-paying. If you do, you must maintain a balance of $5,000 or else pay an $8.95 fee.
Reimbursement for ATM withdrawals: $6 a month if you maintain a $5,000 balance
BEST FOR SAVINGS: Ally Bank
Ally Bank, the former GMAC Financial Services, is offering high savings rates to lure business. It also has no-penalty CDs, which allow you to withdraw money without paying a fee. It doesn't offer checking accounts, but you can withdraw money from savings at the ATM.
Amount to open account: No minimum
Minimum to earn interest: None
Savings rate: 2.05%
Minimum to avoid maintenance fees: None
Reimbursement for ATM withdrawals: $6 a month
BEST FOR LOW FEES (TIE): ING Direct
You don't need to read the fine print at ING -- there are no maintenance fees, period, for its checking accounts. ING currently has an Electric Orange account that provides a yield of 1.65% to those holding $100,000 or more in it. An account with $50,000 to $100,000 gets 1.6% -- but balances of less than $50,000 earn only 0.25%. You get a bonus of $25 for opening an Electric Orange account and using the debit card.
Amount to open account: No minimum
Minimum to earn interest: None
Savings rate: 1.5%
Minimum to avoid maintenance fees: None
Reimbursement for ATM withdrawals: None, but it has more than 32,000 ATMs in its network (see below)
BEST FOR LOW FEES (TIE): Salem Five Direct
Salem requires no minimum balance for its high-interest eOne account, and you aren't on the hook for any maintenance fees, either. Plus, you'll earn 1.4% on balances of less than $50,000. If you sign up for direct deposit, you get a one-time $25 bonus.
Amount to open account: $100
Minimum to earn interest: None
Savings rate: 1.4%
Minimum to avoid maintenance fees: None
Reimbursement for ATM withdrawals: $15 per month
BEST FOR ATM NETWORK: ING Direct
ING Direct is a member of the Allpoint network, which has 32,000 ATMs, and you don't pay any fees for using Allpoint ATMs. If you go outside the network, ING won't charge a fee, though other banks might. And it doesn't reimburse for other banks' fees.
Amount to open account: No minimum
Minimum to earn interest: None
Savings rate: 1.5%
Minimum to avoid maintenance fees: None
Reimbursement for ATM withdrawals: None, but it has more than 32,000 ATMs in its network
BEST FOR ATM REFUNDS: Salem Five Direct
Salem will reimburse you up to $15 a month for the ATM fees of other banks.
Amount to open account: $100
Minimum to earn interest: None
Savings rate: 1.4%
Minimum to avoid maintenance fees: None
Reimbursement for ATM withdrawals: $15 per month
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