A couple weeks ago I closed my HSBC Direct account and today I closed my FNBO Direct account. As was the case with HSBC Direct, I’m not closing the account because I don’t like FNBO Direct or the online savings account itself. I’m trying to simplify our financial lives, post-marriage, and we have far too many financial accounts. Part of it is because you take two adults and make them one financial unit and part of it is because as a personal finance blogger, I open a lot of accounts so that I can provide a first-hand opinion of them.

Now that we’re in the simplification phase of our lives, something has to give and unfortunately it’ll be FNBO Direct today. I do have to say, the customer service lines were very fast and I appreciated talking to someone in Omaha (the “O” in FNBO). It’s nice to see a business provides jobs locally, especially in our economic environment.

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If you are looking for a high yield savings account to earn more money, you have come to the right place. This page will give you three of my choices for the best online bank along with their rates, a list of comparable banks, and between the two you will find a savings account that will beat your current one.

High yield savings accounts are the rage these days, with people pouring billions of dollars into banks and certificates of deposit. A few years ago, the only online bank with a high yield savings account was ING Direct. At first I was a little apprehensive – an entirely online bank with no physical branches I could visit? But they were FDIC insured and it’s turned out well. Since then, dozens have popped up to offer high yields because they run leaner than traditional brick and mortar banks. No branches, no tellers, no managers, no paper statements – all result in higher yields.

Enter in a new class of deposit account – the high yield savings account. It follows all the rules of a regular savings account except the bank running it is cutting costs wherever it can and passing it along to you, the customer, in higher interest rates. So which online banks offer the best high yield savings accounts?

Best High Yield Savings Accounts

Everbank’s 2.51% Bonus Rate

If you’re looking for the best rate you can get from an a high yield savings account, Everbank is the one for you. Right now you get an interest rate of 2.51% for three months, which is certainly among the highest, and the initial deposit requirement is only $1,500. You only earn the bonus rate on the first $50,000 you deposit, anything over earns 1.50%. EverBank, along with every bank on this site, is FDIC insured since 1998 (FDIC Cert. #34775) up to $250,000.

In terms of accolades, they have collected several in their years in the business. Kiplinger’s Personal Finance once named them the “Best Checking Account” because their yields were often 10X that of industry averages while Money Magazine named them a “Best of the Breed.” For five years in a row, Forbes.com named them the “Best of the Web.” This isn’t a bank that will pull a bait and switch, they’ve been here for a while and their reputation speaks for itself.

Ally Bank

A relatively new entrant into the online savings account world is Ally Bank. Ally Bank is an online bank that’s been FDIC insured since August 2nd, 2004 under FDIC Certificate 57803. They are a unit of GMAC Financial Services and was once known as GMAC Bank before changing their name in May of 2009. The reason I like Ally Bank is because they have no minimums on any of their deposit accounts, they offer plenty of options from an online savings account to no penalty certificates of deposit; all of which are at market competitive rates. They are certainly worth a look.

Click to apply for an Ally Bank account today!

Best High Yield Savings Accounts Rates

I’ve compiled a list of the best of the best FDIC insured (now up to $250,000 through December 2013) banks below.

* Everbank offers 2.51% promotional rate for the first 3 months, then 1.77% thereafter.

Are these online banks safe? Yes, they are FDIC insured and you can confirm that with the FDIC’s Bank Find tool. In fact, with all the bank failures lately, you might be surprised to learn that not a single one was an online bank.

We have twelve bank accounts.

You read that correctly, we have twelve accounts.

Ally Bank, FNBO Direct, ING Direct, HSBC Direct, Bank of America, M&T Bank, … the list goes on.

We also have a dozen credit cards. Citi, Discover, Capital One, … again, the list goes on.

We have so many accounts because we’ve slowly acquired them over the course of the last ten years. Our financial network map is an intricated mess despite our best efforts to simplify our personal finances.

That’s why we need to hit the reset button on our financial life.

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How much money do you have sitting in a savings account? $500? $1,000?

Do you have plans for that money? If not, it should be in a certificate of deposit at your bank. If your bank doesn’t offer good CD rates, then you should open a CD with an online bank and take advantage of their better interest rates. If you don’t think you have enough money, you’re wrong. You can open a CD at an online bank with a single dollar.

One dollar.

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This is comprehensive review of the best online banks, specifically those with a high interest savings account and high yield savings accounts available (high interest refers to the interest rate). Given the recent economic uncertainty, interest rates have come down from their earlier highs and so “high yield” is more a relative term than an absolute one. Gone are the days of 5% and 6% APYs, today the best ones are in the 2-3% range. While not incredible, they are certainly better than the 0% your local bank is likely giving you on your savings accounts nowadays. In this post, Everbank, Ally Bank, E*Trade, HSBC Direct and WTDirect are given brief looks to see how strong they are in the current rate environment.

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(Updated 9/1) In the world of banking products, you are always trading off interest rate for flexibility. Typically the higher the interest rate, the less flexible the account. Take CD rates for example, they are often higher than savings accounts and they are less flexible. You decide how long you’re willing to keep your money locked up and then pick a bank that offers the best rate for that term. If you wish to get your money early, you pay penalty. On the other end are checking accounts. Checking accounts have the worst interest rates but offer the most flexibility. You can get your cash whenever you want it, write as many checks as you’d like, and visit your own ATM without penalty. For that flexibility, you earn very little, if any, interest.

Where does that leave money market accounts?

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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?

(Photo: refractedmoments)

(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 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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After closing my Emigrant Direct account last week, I figured I’d add to my paperwork and open up a new bank account! This time I turned to a bank I’ve talked about in the past but never dealt with personally – EverBank. They have all the characteristics I look for in an online bank – FDIC insured, competitive interest rate, and informative website. They’ve been been in business for many years, as a mortgage lender, before they started taking deposits in 1998 (when they were FDIC insured). Since then, they’ve won a ton of awards such as Money Magazine “Best of the Breed” in 2007 and Kiplinger’s “Best Checking Account” in 2006. Most importantly, they don’t appear to be too affected by the credit crisis… all good things, so I opened an account today.

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