The key to finding the best online savings account at the best online bank comes down to interest rates. The bells and whistles are nice but ultimately it’s about the money and the bank with the highest interest rates will win. That’s why we’ve included a table of the best interest savings account rates followed by a review of some of the more popular online banks. The best online bank for you may depend on a lot of factors outside of the interest rate, which is why minimum balances, fee, and other details are included in the table. One thing is clear, online savings accounts always pay more than a regular brick and mortar.

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One of the things I learned whenever I drew up our financial network map was that I had a lot of bank accounts, mostly high interest savings accounts at online banks. FNBO Direct, Dollar Savings Direct, HSBC Direct, ING Direct, and E*Trade for starters and that was after we closed accounts at Emigrant Direct and Virtual Bank.

There are many reasons why I have so many bank accounts, and I’ll explain that some other time, but the point of this post is that it’s easy to forget the big picture whenever you’re dealing with the nitty gritty of daily affairs.

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I’ve been emailing back and forth with reader Tomas (he’s the impetus for the Bargaineering VideoCast that will be published on Sunday), and one question I struggled with was which online bank has the best high yield savings account offer now?

In the last few months, interest rates have plummeted. It was only a few short months ago that Dollar Savings Direct offered 4.00% APY on their savings account. Now the rate is half that, a mere 2.05% APY. FNBO Direct, a long-time favorite of mine, just lowered their rates yesterday to under 2%. ING Direct, HSBC Direct, and E*Trade Bank all have rates under 2.00% and have had rates that low for quite some time.

So which one is the best? For me, it’s any of them. The difference between 1.50% at ING Direct and 2.05% at Dollar savings is microscopic. Half a percent isn’t worth the hassle of opening up an account, to be honest, and my money is going to whatever account makes it easiest for me to work with them.

How about you? What do you consider the best high yield savings account nowadays?

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One of the most frequent questions I get is “Where should I open an IRA?”

Short answer: Anywhere, just open one! If you want mutual funds, open an account with the company that offers the funds you want, like Vanguard, Fidelity, etc; because they will let you buy and sell the funds for free. If you want stocks, open an account with a company that offers the lowest fees.

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(Updated 11/6) I’ve been keeping a list of the best CD rates for certificates of deposit in the 12-month to 18-month maturity range, figuring that’s typically the sweet spot for CD rates. If the CD maturity is too short, banks won’t give you a good rate because it’s such a short period of time. If the CD maturity is too long, the customer is taking on a lot more inflation risk than the bank is probably paying out for. However, short term certificates of deposit still have their place:

• You’re setting up a CD ladder and you need CDs to fill up those short period slots.
• You have funds in an account that currently isn’t earning the highest yield for savings, transferring the funds will take time and cut down on your interest earned… so you might as well throw it into a short term CD to get a better rate.
• You simply don’t want to rate chase and open up a new account with each new online bank that offers a high rate, so you might as well hit up a short term rate with the bank you’re worth just to get a little extra.

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The high interest rates of online banks may be appealing, but before you open an account, it pays to do a little research to learn more about the bank itself.

When Dollar Savings Direct first appeared with its amazingly high interest rate, I know I was one of the first customers to sign up. The 4.00% APY savings account was amazing, as other banks dropped to 3% or lower. I saw the FDIC emblem, I saw that it was affiliated with Emigrant Direct and Emigrant Bank, but I never confirmed it. I did a little bit of research and discovered that it was once branded Banco Fortuna, Emigrant’s aborted attempt into the Spanish-speaking market. I was satisfied and opened an account. Thankfully, astute readers investigated further, even calling up the FDIC, and we learned that Dollar Savings Direct was FDIC insured but shared that protection with Emigrant Direct. In other words, having a Dollar Savings Direct account, for FDIC insurance purposes, was the same as having another Emigrant Direct account, the combined assets would be protected up to $250,000. I did not know that when I opened the account and while it wouldn’t have affected me, I should’ve known.

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If you’re looking for the best CD rates, you’ve come to the right place. Below is a list of the nationally available best CD rates, updated every single day. I looked at the best rates available for CDs of less than 18 months and listed the ones with the highest rate. Typically the longer the term, the higher the rate, but for many online banks the best rates were for periods of shorter than 18 months. For simplicity’s sake, I put the cutoff at 18 months (some banks offer higher rates for longer terms). If you want shorter term CD rates, I have also compiled a list of highest short-term CD rates (less than 12 month maturities).

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My first concrete memory of E*Trade was during a half-time commercial from a Super Bowl many years ago. The commercial was that of a monkey dancing for about twenty seconds followed by a single line flashed across the screen, “Well, we just wasted 2 million bucks. What are you doing with your money?”

Back then they were primarily a discount brokerage that offered extremely cheap trades compared to full service brokers. Since then, they’ve expanded into banking and now offer one of the most competitive interest rates available in a high yield savings account.

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