Monday, February 25, 2008

Where to Bank Online?

One of the main reasons we decided to start putting together a blog for people was because of the idea that you could make your money work harder for you, hence milking it. One of the best ways to do that obviously, is to put your money into a high interest bearing account so that the snowball effect of compound interest will, eventually, accumulate more than what you spend.

The easiest place to start something like this is online. NOTE: Any rates we discuss are active at or near the time of writing, please be mindful of the dates. Lets take a quick look at some of the major players:

ING Direct
They have a wonderful marketing campaign and very secure clean online banking interface. Their rates have dropped since the Fed has dropped rates across the board but what can you do to prevent that? Here are the rates for the different tiers they offer for an online checking account:

Balance....................................... APY*..
$0 - $49,999.99.......................... 2.25%
$49,999.99 - $50,000.00 .............3.75%
$100,000.00 + ............................4.00%

Now I am sure you are thinking, I will never have $100,000 in my checking account to get access to that percentage rate. Well you never know and you can still use it as a bench mark for other online banks. ING does not have a minimum to start an account, has a debit Card, free ATM access (32,000 select locations), free electric checks, automatic protection from overdraft, and is of course FDIC insured. ING has also recently merged with Sharebuilder but the accounts are not connected (yet?). There is also no real convenient way to deposit checks. Read more here.

Schwab Bank High Yield Investor Checking
Schwab has had some changes as of late. I found their online banking to have a huge interest rate and I was very tempted to try them out, but was left with a bad taste in my mouth as they required a $3,000 minimum to deposit. Now I see as I write this article, the minimum has gone away and the interest rate has dropped from a little over 5% to the now 3.01% for all sums in any account. The other features that are inherent with ING, are also shown here, for example, no ATM fees, free online checks/bill pay, etc. There is no way to deposit (like with ING) with them however unless you mail in a check or if you have direct deposit. So your paycheck is ok but if you get a check from someone else you'll be mailing it in. Read more here.

Bank of America Online Banking
BofA is known to be the largest bank in the US and it just might be. They have more locations that I know of and seem to doing very well for themselves, regardless of the financial crunch out there. I make this statement about BofA and not the first two because they are more of and esatablished brick and mortar, lending type of bank. Not to mention the huge bailout that they are attempting with Countrywide. That is another story however, we have quite a bit to say about that in a later post.

Over all, the online banking experience was a bit of a disappointment, with respect to interest rates in the other checking accounts. They have virtually none for checking accounts and for savings, if you maintain $300 or $25 deposit every month, theres no charge with an APY of 0.20%. Wow. That is compounded daily and paid monthly. They nickel and dime you for not maintaining minimums. They do comply with Check 21 (as do all financial institutions, effective October 28, 2004) where you can, supposedly, scan both sides of your check and send it in to be processed/deposited. BofA's website was lackluster in toting that as a feature however. Not sure if they are running into problems with that. Either way, they are just a regular bank and have virutally no interest rates on their checking platforms. Read more here.

That's about all for now, check back soon for another slew of online bank reviews. $

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