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Before Opening An Online Savings Account
Find Out How To Get
The Best Savings Account Interest Rate!

What is the Best Savings Account Interest Rate? Have you asked yourself this question before? If not then you should!

Finding the best savings account interest rate is very important. Why opt for a lesser interest rate of around one or two percent when you could be getting FOUR or FIVE PERCENT! And if you're looking for the best savings account interest rate then you're looking for online savings accounts.


So how do you get maximum return for all the money you want to save? You'll most likely want to open an online savings account or maybe even open online savings accounts? Diversification is always a good thing.

Once you start researching various online banking institutions, (YOU MUST DO RESEARCH), you'll notice that their interest rates vary. Some even vary by large margins! One savings account may be offering you a 2.5% interest rate on your money but wait this other one is offering you a 5% interest rate on your money! WOW 5% is so much better than 2%! Right away you'll be asking yourself, "What's The Deal?"

So What Is The Deal With High Interest Rates?

High interest rates are great and it's so much better to receive a four or five percent interest rate rather than less than one percent that many neighborhood banks offer with their "basic" savings account.

Even though many online banking institutions offer some "Great Rates", you'll need to read the small print or look at their interest rate structure in more detail. Yes some of the online savings accounts have a tier structure that determines the rate of return you'll get on your money.

In general most online money market / high yield savings accounts will offer you a higher rate of return IF you carry a higher monthly balance. So the best savings account interest rate for you may not be right for your friend. Of course each bank has a different tier structure and here are two examples of tiers that you may come across.

  • Example 1 From $0 - $5000 your interest rate may be 1%. From $5001 - $20,000 you may earn 2.5%. Then you'll notice if you keep $100,000 - $500,000 your interest rate may jump to 3.8%.

  • Example 2 $0 - $500 your interest rate may be 4.5%. Then from $501 and above you could have a 5.1% interest rate.

    As you see the two example above vary greatly. Will you see examples like that in your search? YES!

    Would Example #2 be the better choice? In most cases, yes. The reason I say most cases is that each account has their own rules and guidelines. Example #2 may not offer you liquidity – The only way to access your money may be through an EFT (Electronic Funds Transfer) and it may take up to 4 business days to get your money.

    Whereas Example #1 has a lower interest rate but may offer you 6 withdraws per month with 3 of your withdraws by check and the others by transfer or from an ATM. For someone who wants to access their money quickly then Example #1 would be better.

    Of course these two examples are both on the extreme ends. There are many "in-between" tier structures and surely there's one for your needs!

    *Important Information On Interest Rates

  • *Remember that your online savings account interest rate is more than likely a variable rate. Usually the "variable rate" is very competitive but not always! Most if not all of the online banking institutions that advertise The Best Savings Account Interest Rate on their website have an *asterisk by it, so make sure you know what that asterisk means. Usually you'll find the "asterisk" information on the bottom of the page.

    That *Asterisk usually says something like: "Annual Percentage Yield (APY) is accurate as of 01/15/06. APY is variable and subject to change after account opening." Of course the APY date is more than likely within a few days of the current date. If it's not then you need to find out what the rate is before signing up for an online account!

  • *Liquidity may also play a role in the best savings account interest rate you find. Concerning online banking - Liquidity is basically the ability to get your money out of an online savings account quickly while paying minimal or no fees at all. A less liquid account may give you a little better interest rate because the bank knows you're money shouldn't be moving around much.

  • *The time it takes to access your funds may also play a role in the savings account interest rate you get. This basically goes along with liquidity. If you can't use checks or an ATM to transfer or receive funds then you'll have to use an EFT (Electronic Funds Transfer) either online or by phone and it may take up to four days to receive your money. Because of this you may also receive a higher interest rate on your money.

  • *APR (Annual Percentage Rate) – For online savings this term refers to "investing/saving" money. Basically the APR includes fees or additional costs associated with opening/having your online savings account.

  • *APY (Annual Percentage Yield) – Must be disclosed on interest-bearing deposit accounts and reflects the interest you'll earn based on your online bank's compounding method. The APY also assumes your funds will remain in your account for a year/365 full days.

  • *Usually the interest your earn on your savings compounds monthly. Meaning at the end of each month you'll have more money because of the interest you've earned. The next month you'll earn interest on your original deposit plus the pervious months interest. For example if your initial deposit is $5000 dollars you'll earn interest on that for a month. Say you now have $5010 dollars after the first month, that means you'll earn interest on $5010 dollars not $5000 dollars for your second month. And on and on it goes.

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