Low savings interest...

[Nana2Callie]

Why are local banks so much lower in interest rates that the online banks - recommend an online bank with good rates?

 

[havaneselover]

Capital one 360 or American express

 

[*pixie*dust*]

Why are local banks so much lower in interest rates that the online banks - recommend an online bank with good rates?

Online banks generally have lower operating costs because they don't have physical branches to maintain, staff and operate.

 

[Marionnette]

Why are local banks so much lower in interest rates that the online banks - recommend an online bank with good rates?

Online banks have very little overhead (no branch offices, fewer employees, etc.) plus they offer fewer services. So, they can offer a higher interest rate than you would get at your local bank.

However, don't expect the online banks to have a much better interest rate on savings accounts. Pretty much all of them are below 1.0% APR, which means that unless you're saving tens of thousands of dollars in your account, you're not going to see an appreciable difference in the amount of money you accrue.

I like my Capital One 360 account. I've had it for years and use it to save for my vacations. Money moves in and out of the account easily, but it can take a considerable amount of time (3-4 days) for a transaction to complete. So if you're looking for some place where you can access you money quickly, you may want to just stay with your local bank or look into a credit union near you.

 

[Golf4food]

You need a readily accessible amount you can get to quickly in your local account. Online savings transactions, as mentioned, can take multiple days - not great in an emergency. I, too, am a fan of Capital One 360 (formerly ING). Been with them for over a decade back into the ING days. Their online accounts currently earn 0.75% APY. Better than nothing...

 

[IBelieveInTheMagic]

Another vote for Capital One 360 savings (formerly ING) - love them. I love setting up different accounts for each trip or item I want to save for.

I've never had any issues and I think their website is very user friendly.

Heather

 

[megsoro]

To solve the I need it now it's an emergency I opened a checking account with ing. That way I have a debit card that I can instantly transfer savings in case of an emergency.

 

[alymae1010]

I use SmartyPig, which has a 1% APR. Same issue with other online accounts, however, with a lag in withdrawl time.

 

[Kristie911]

I've had a Capital One 360 account from way back in the ING days...the interest used to be a lot higher but it's still higher than local banks. I keep it because it does take a couple of days to transfer money but it's really simple when I do. It makes me think twice about whether I really need the money or not.

I've been really happy with them for years.

 

[ruadisneyfan2]

To solve the I need it now it's an emergency I opened a checking account with ing. That way I have a debit card that I can instantly transfer savings in case of an emergency.

I did this too. Last summer they were offering a $50 bonus to open a checking account, and make a certain # of transactions. IIRC, I made 3 ATM transactions to buy grocery store gift cards. I did this in dh's name too. I had every intention to get the bonus $ and close it but it turned out to be very convenient for when I want to hold $ aside short term and not have dh think our regular checking account balance is more than what it really is.
I also like that there's no minimum balance to maintain and no fees. They also sent me a checkbook in case I need it which I haven't so far.

You can transfer instantly from a 360 savings to a 360 checking. We also opened savings accts for our kids and a teen checking for ds17. I can see all of their transactions and can transfer $ in and out of their accts but they don't see ours when they log in.
Once he turns 18, it automatically turns into his own acct.

.75% is wonderful compared to .03 from our local bank.

 

[nat8199]

I haven't seen it mentioned yet, but we use Ally bank and love them.

Great interest rate, no fees, ATM fees refunded.

 

[crisi]

If you can afford a little risk and have a longer term horizon - consider dividend paying stocks - particularly utilities. They don't tend to be volatile (of course, when the market crashes EVERYTHING goes down) and usually pay 3-5% depending on the stock and the current stock price. It isn't good for money you'll need next year, but it might not be a bad place to stick money you wouldn't NEED to spend. Getting your money out is even harder than an online bank though.

 

[ellochka]

There is no such thing as a bank that pays good interest. Interest rates are 1% and lower, and this is behind inflation, so it's just a bad deal all over.

If you have funds available for longer term investment (at least 2 years), then you should consider opening a taxable brokerage account. You need to look into low cost bond funds. If you have a 5 year investment horizon, you may consider a low cost stock index fund. Do not buy individual stocks until you are fully financially independent, and even then they should not be more than 20% of your investment portfolio. I would also caution against the money market funds - their return is about 0% now, and that won't change quickly.
Here are the funds you should consider:
1. You state's bond fund. Generally pretty safe and the income from is not taxable.
2. Government bond funds. There are many options. You can get slightly longer term and more volatile funds that give you a bit more interest, but the prices tend to be volatile. I would stick with short and intermediate term funds because there is more risk of interest going up than down (interest up -> your bond value down).

My advice is to stick with Vanguard because they have low fees. You want to look into anything 0.2% or lower. Fidelity has a fund family called Spartan which also has low fees (disclaimer: I invest in some Spartan funds).
https://investor.vanguard.com/mutual-funds/vanguard-mutual-funds-list?assetclass=bond