Can Online Savings Account Really Double 2021 Dollar Interest

Are you looking for the best interest rates available during this 2021 economic downturn? Are you considering an online savings account? Have you reviewed the interest rates available?

Learning how to save money can be challenging when you first start. You can start saving money by putting extra change into a piggy bank. Then increasing to dollars in the bank, and so on.

The best way to save, is the way that you understand and can accomplish the easiest. I have found if you learn how to save a little at first, you will not struggle with saving a lot later on. Basically, if continue the practice and learn the rules, you will become a successful safer.

If you are like me you are probable looking for ways to increase your passive income. Likewise you may be comparing the savings interest attached to various facilities for both online savings accounts and checking accounts with online access.

Affiliate Marketing Disclaimer: This article contains Amazon affiliate links. Financial Disclaimer: This article contains strategies that I use personally, but should not be taken as a prescribed method of use for you.

Nonetheless, I researched both online savings account and checking accounts rates to determine the best offers. As I share my findings with you, even more so, make sure to do your research also.

These are the informational points that I found to be the most important in helping me make my decision.

The online savings account defined
Limitations of online savings accounts
Benefits of online savings accounts
Differences in dollars and benefits of online savings account
Savings account regulations and differences
Bank and credit union interest rates review

What is an online savings account?

By definition, an online savings account (OSA) is a bank account that does not have a brick and mortar building. Additionally, online savings accounts are completely digital, cashless accounts and usually do not offer any form of human interaction for support from a bank representative.

How is an online savings account different from online access to your brick and mortar savings accounts?

In comparison with a brick and mortar account that allows online access, a completely online savings account has the following limits.

It does not allow immediate contact of a bank representative.
It does not provide immediate contact with a credit union account representative.
It limits your ability to acquire cash, because there is no ATM access without additional accounts that are linked to an ATM.
Cash deposits are limited unless you deposit into another bank account and transfer the money into your online savings account or through an ATM deposit.

These accounts are intriguing and may arouse your curiosity, however, they have limits and I believe they should be approached with caution, especially if you normally deal in cash.

2021 Benefits Of Online Savings accounts

What are the benefits of having an online savings account?

There are a number of benefits to having a savings accounts, some financial reviewers believe OSAs increase the benefits of passive cash, in addition, the list below is just a few.

1. Cash bundling: You are able to bundle additional dollars that are left over at the end of the month. You also have the ability to increase passive income, with the above average interest income.

2. Acquire Wealth: You have the potential of increasing your net worth, wealth and leave money to your grandchildren.

3. Rainy Day Funds: You have the ability to create and fund incidentals. When you are able to self-fund incidentals instead of borrow money to fund them, you increase your wealth.

These are some of the benefits of a savings account. However, according to Financebuzz, online accounts are able to offer additional interest because they do not pay fees such as building maintenance inside or out, and there are no real estate fees. Therefore, they pass these savings on to their customers.

Real Dollar Difference In Online Savings Accounts

What are the real dollar differences between online savings account and brick and mortar savings accounts?

The real dollar benefits that come from using OSAs during this economic down turn, is using the power of your wisdom to increase your passive income. If you have no wisdom in this area, read and learn what and how others are using online savings accounts like investment accounts. These are some absolute requirements before opening an online savings account.

1. Reliable and Reputable: Research to ensure that the facility is a reliable and reputable company, not an associate company, etc. For example American Express, their Online Savings Account offers the following perks.

Reputable: Over 170 years of experience in customer services
Above Average Interest: High Yield Savings Interest of 0.50% (APY) as of (2/20/21)
Higher Interest Cd’s: Certificate of Deposit Interest of 0.55% (APY) as (02/20/21)
Freebies: No minimum balance + No fees
Human Help: Customer Service Support by phone 24/7
FDIC or NCAU: Depositor Insurance of $250,000.00
Easy Money Movement: Nine withdrawals or transfers per statement cycle

2. Easily Accessible: Makes sure the financial institution is easily accessible. In the case of American Express, they are accessible by phone, website and P.O. Box mailing address.

3. Terms and Conditions: No matter what your age I strongly suggest that you review the terms and conditions for what happens to your money incase of death or severe sickness.

Savings Account Regulations and Differences

What is the difference between the types of savings accounts?

Basically there are three different types of savings accounts. However, they may have different names if you are researching a bank versus a credit union.

A personal or regular savings account is an account other than a checking that allows you to save money for long terms. Regular or personal savings accounts usually have a higher interest rate than checking accounts. They also have withdrawal limits described in Regulation D, that are not attached to checking accounts. Basically, regulation D limits the number of withdrawal transactions to six within a month.

Likewise a high yield or money market savings account is an account that allows you save money but requires a much high minimum deposit and holding balance. Most high yield accounts require a minimum balance of $2,500.00 at all times.

Also, you may want to investigate the savings rates on a certificate of deposit (CD). Moreover a CD usually offers a high interest rate with additional restrictions. Nonetheless, a certificate of deposit also has a minimum deposit, usually $500.00 and they require the money be untouched for a declared amount of time. Consequently, most CDs have an early withdraw penalty attached to the account.

Your AYP affects Your Dollar Interest

What is the AYP and how does it affect my savings accounts?

The annual percent yield is “the percent of interest accrued over the course of a year with compounding” that is added into the account. Compounding interest means that the amount of earned interest has set period of time for the additional money to be added to your current balance. The more often interest is compounded, the more your balance grows.

In addition, as you review financial facilities, you may see the letters APR. The annual percentage rate usually applies to credit cards or loans. Why is this important? It is important because you want to always take plenty of time when you are considering the movement of money.

Therefore, always compare APY to APY and APR to APR. I always use an interest calculator to calculate my interest. I also make sure that I have a very solid idea of what my return should be before I lockup my money into a savings account.

Best Bank or Credit Union Interest Rates For February 2021

Which bank or credit union is offering the best online savings interest rates?

I completed a review of a Reddit article and discussion about a few top interest bearing facilities. Using the information from the reviews, I investigated their top eight suggestions and a few of my own in the review below. I looked for a physical location, human access by phone to a representative, FDIC membership and deposit requirements.

Once I determined that the facility is a reputable bank or credit union that offers high interest accounts, I am more comfortable opening an online savings account. I believe the five below offer the best bang for my buck.

Coming in first in my research review, and offering the best online savings rate is Digital Federal Credit Union. DFCU offers a 6.17 (APY) up to the first $1000.00, with their primary savings account as of 2/18/21. This credit union has 23 locations throughout Maine and New Hampshire. Their offers includes a joining feed.

The main office DFCU is located in Marlborough, MA. They are accessible by phone, Covid-19 restrictions require an appointment for on-site visitation. Check the website for additional information.

In second and third places are American Express and Goldman Sachs banks both offer .50 (AYP) with no minimum deposit. They are both insured by the FDIC and both have highly respectable reputations. According to the Goldman Sachs interest calculator, a $500.00 initial deposit with a reoccurring $20.00 monthly deposit, could bring as much as $3.00 interest return per month.

Landing in fourth place is Capital One with a .40 AYP for online savings accounts. Additionally, Capital One offers the .40 (AYP) on their 360 Performance Savings which fluctuates from .50 to .40 AYP. Also, Capital One and Costco joined together with Monitor Bank to offer a 1.50% online savings account. This account seems to have a lot of potential especially for Costco members. However, there are crucial restrictions in using this online savings account. Review their full disclosure at savingsaccount.monitorbankrates.com.

Credit Union Checking Account Interest Rates

Which credit union is offering the best checking account interest rates with online access?

Why would credit unions offer such high interest checking accounts? My guess is that they understand the regulations on savings accounts but believe that everyone should have a chance to earn high interest rates on all of their money.

Coming in first on my research is Chief Financial Credit Union with a 5.00 (APY) checking account as of 2/20/21. This credit union has 5 locations throughout Michigan. Their main office is located in Pontiac, MI.

They are accessible by phone, Covid-19 restrictions require an appointment for on-site visitation. The account balance restrictions require a minimum daily average of $5000.00 to qualify for the 5.00 APY. Check the website for additional information.

Coming in second is Genisys Credit Union with a 4.07 (AYP) Genius Checking account and rewards points, as of 2/20/21. There are a few other requirements such as 10 monthly debit card uses, average daily balance of $7,500.00 per month, and eStatements. Check the website for additional information.

Bottom line Best Online Interest Rates For Your Dollar

Which bank or credit union offers the best online savings rate for your dollars?

The bottom line on increasing your passive income means you have to take the time to review and investigate where you are going to place your money. I believe the facilities stated above offer the best online savings rates available for February 2021 with the least amount of restrictions. These rates are more than double the current national online savings rates of most banks which ranges between 1% and 7% AYP.

How can you apply some of the savings strategies stated in this article?

I strongly suggest that you mentally determine how you will use one of these facilities to increase your passive cash. I usually review (read out loud) all the things that I must do. Then I read them a couple more times and start creating a vision in my mind of how I can manage a certain strategy. Next, I put all necessary dates and actions in my phone calendar, and go for it. I have learned the only way to work the kinks out of a process is to start working the process.

If necessary write your strategy out on paper, then start working on the strategy. One of the responders in the Reddit article stated that he manages 10 different accounts. Currently, I manage four, and I am studying how others manage more than four, so that I can add another account.

Conclusion

We began by discussing the challenges of learning how to save money. I suggest starting with saving extra change, then moving to dollar bills. Then I stated some information I found concerning online savings accounts including the definition. Next, I showed some of the differences between various types of savings accounts.

After that, I explained some of the benefits of having an online savings account and some minimal requirement to investigate if you are seriously checking into an online account. I moved forward into a review of current bank savings interest rates and checking interest rates.

Finally, I suggested that you write out your plan of how you can use and manage your accounts. Then use your knowledge to teach your grandchildren how to save money, and make the world a better place.

References

American Express Personal Savings Review https://financebuzz.com/american-express-personal-savings-review
Board of Governors of The Federal Reserve System: Regulation D https://www.federalreserve.gov/supervisionreg/regdcg.htm
How online savings accounts work https://financebuzz.com/how-does-online-savings-account-work#:~:text=An%20online%20savings%20account%20is%20a%20savings%20account,the%20number%20of%20withdrawals%20each%20month%20to%20six.
How to start a savings account: what you need to know about savings accounts https://www.capitalone.com/bank/money-management/banking-basics/savings-account-definition/
https://www.americanexpress.com/en-us/banking/online-savings/account/