Online High-Yield Savings Accounts.

[Liberi Fatali]

Does anyone do this? I'm looking to move my tax refund (about $6200 this year) into a savings account and earn some interest.

My sister in-law told me to do CD's at my bank -- but you only get about 2% interest and you can't take the money out.

I found these 'online savings accounts', and they seem absolutely incredible. Some offer as high as 5% interest.

Here's an example of one:

FNBO Direct offers 2.60% APY, with no monthly fees, no minimum balances, and “no strings”. $1 minimum to open. Named best online savings account by Kiplinger’s Personal Finance magazine.

All of these accounts are FDIC insured and, unless otherwise noted, can link to other bank accounts (your local credit union, for example).

Does anyone do this? It sounds like a wonderful opportunity to earn good interest. If you do, which bank do you suggest?

[Stretch]

DollarSavingsDirect has had the highest rate since EmigrantDirect launched it last summer. I'm guessing that they're waiting until the portfolio has gotten sufficiently large enough before they reprice it, though.

It really depends on what you're looking for. There are five things to look for with online deposit accounts -

1) FDIC insurance. Never open an account that doesn't offer this; it's a must-have.

2) Maintenance / participation fees. No brainer -- don't choose an account with fees.

3) Other product requirements. A lot of banks (i.e. Citi) require you keep a checking account with direct deposit in order to get the best rate on your savings account.

4) Tiered interest rates. Read the fine print, or you'll be earning 0.50% on your $6k since you didn't cross the $10k minimum requirement for the best rate.

5) ACH transfer speed. If you need to get money in / out, read up on which banks have expedited ACH transfers. Standard is 3 days; some banks hold your money longer, and others offer 1 day.

[Liberi Fatali]

Do you personally use one online?

[Stretch]

I have one with the company I work for, but that was more so I could do monitoring / get a sense of customer experience for my job than anything else.

Here is my Top 5 list -

1) DollarSavingsDirect
2) Capital One (if you have an Executive Costco membership)
3) E*TRADE
4) CountryWide
5) FNBO Direct or Zion's (tie)

Those banks have consistently ranked in the top 5 by rate ever since I started tracking rates back in June.

Might be counter-intuitive to go with banks that are teetering like E*TRADE or Countrywide (now B of A), but since they are strapped for cash, they obviously are willing to pay more for deposits than a well-funded bank. As long as the FDIC insurance is there, it doesn't matter to you.

[Clove]

Does anyone do this? I'm looking to move my tax refund (about $6200 this year) into a savings account and earn some interest.Imagine if you had reduced your tax-withholding and had some (or all) of that $6,200 earning interest in 2008, instead of loaning it interest-free to the federal government for a year? Seriously, unless you're paying estimated taxes on a business, review your withholding.

[Xaerve]

I am assuming he got it because of the baby.

[Belnia]

Way to not spend the money on diapers, Tabour.

[Clove]

I am assuming he got it because of the baby.I'm just saying- review your tax withholding when you have a refund that large. It's better to invest the extra today, or use it for the kid or whatever than to bank it interest-free with the feds for a year.

[Keller]

I'm just saying- review your tax withholding when you have a refund that large. It's better to invest the extra today, or use it for the kid or whatever than to bank it interest-free with the feds for a year.

Imagine if he put that 6k into the market back in July. It'd be worth almost 3k today!

:)

[The Ponzzz]

Imagine if he put that 6k into the market back in July. It'd be worth almost 3k today!

:)

:rofl:

Yeah, earned income credit and that housing credit equal some decent returns.

[Clove]

Imagine if he put that 6k into the market back in July. It'd be worth almost 3k today!

:)LMAO. You think he'd have that much?