Top 5 Online Bank Accounts for 2010

Since their inception in 1994 when Stanford Federal Credit Union began offering their members online interest banking services, online banks have generally been able to offer customers better savings rates and efficiency. Due to reduced overhead expenses, online banks have been able to pass their savings on to customers in the form of better interest rates. Today, because of the increasing number of FDIC insured online banks, they must differentiate themselves further – competing on interest rates, functionality and online features. And since savings rates (certificate of deposit, money market, etc) are all offering record low interest rates, we’d like to go over our top 5 online banking institutions that not only offer rates above the current national average but also have some fairly cool and handy features to boot!

BankVibe.com’s top 5 online banks:

1) Sallie Mae’s Online Savings Account – Since Sallie Mae came out with their savings products this year, they have consistently been listed at the top of the charts for interest rates. In fact, their online savings rate has been number one for the last two months! Want more than a great rate? This product also comes with NO fees, NO minimum balance required and daily compounded interest.

2) Discover Bank High Yield Savings Accounts – Claiming to earn you 5x the national rate average, Discover Bank’s online savings account offers a very clean user interface, 24/7 live support and fast and free online money transfers. They also offer the second best interest rate behind Sallie Mae.

3) Smary Pig’s Online Savings Account – Smarty Pig’s online account is one of the first we’ve seen with social networking features. Although it can be used as a standard online savings account it was originally designed to help you save for specific “big purchase items” such as college tuition, a new or used car, or a vacation in which your facebook/myspace friends could help you save for by contributing. They also offer highly competitive interest rates to their customers.

4) EverBank’s Online Savings Account – EverBank offers customers some of the top rates available and also throws in a bonus interest rate for the first 6 months your account is open. This bonus rate changes regularly but always hovers far above the current national average. This account comes with a minimum balance of $1,500 and you are allowed 6 withdrawals per month.

5) Ally Bank’s Online Savings Account – You may have heard of Ally Bank even before they had that name. Ally Bank is the former GMAC (the banking branch of General Motors). Since GMAC collapsed, they attempted to re-brand themselves with a new name. Today, Ally Bank frequently offers top rates, however, lately they have slipped in BankVibe.com’s charts, however they still offer a very easy to use banking interface and their accounts come with no minimum balances and no monthly fees.

A few years back MSN’s money central disclosed their 10 top online banking institutions (shown below or linked to here) and highlighted the desirable features each offered. However, many of these institutions either collapsed in the 2008 bank collapse or have been defeated by some of the new comers.

Best MMA (money market) rates for balances of $10k or more

We got an email over the weekend from BankVibe.com reader Stephan asking where to open a money market account in order to receive the highest yield for his balance (which he suspects will remain above the $10,000 mark). Rather then sending him a personal response we thought we’d help him in his research with today’s post.

First, for those of you whom may be in the same boat as Stephan, we would like to point out that you have many options besides a traditional money market account. We can assume that you are looking for a liquid, FDIC insured investment vehicle with more flexibility than a standard bank CD and while MMA’s are decent options, there are also other alternatives. Rewards checking accounts have been exhaustively covered on BankVibe.com over the last year due to the perseverance of their high interest rates (even while MMA and CD rates tanked relentlessly). With these accounts you can expect to yield returns of anywhere from 3 to 5 percent for balances of up to $25,000 to $50,000. Please review the specifications of those accounts before opening one as they come with monthly requirements to earn the high APY. You may also want to take a glance at our review of SmartyPig’s online savings account. It takes a unique approach to savings while providing a phenomenal APY to it’s customers.

So, that being said…

If you are still simply after a traditional MMA, the table below shows the top products which are available to customers nationwide. Please note that in most cases you will receive equal rates whether your balance is $100 or $10,000 so trying to maintain a high monthly balance may not be a prerequisite to earn a solid interest rate. Also, to put these rates in perspective the current national average for MMA rates sits at roughly 0.80% APY.

SmartyPig Review: Unique approach to savings with great rate!

The SmartyPig online savings account is offered in partnership with West Bank and comes with one of the best interest rates on the market. We were surprised to hear that on May 19, 2010, the APY on total goal balances of less than $50,000 will go up to 2.15% (the current APY is 2.01%). This positive interest rate adjustment goes against current money market and online savings rate trends. The average savings rate provided to money market accounts sits at a meager 0.90% APY and has been relentlessly dropping over the course of the last year and a half – which makes SmartyPig’s recent rate rise a stand out move.

SmartyPig’s Unique Approach to Savings:

What makes SmartyPig’s savings account unique is it’s design. It is made specifically to help consumers reach financial goals and avoid credit card debt by saving for big items. In other words, the creators of SmartyPig thought that consumers wanted a way to save cash for large purchases they may have previously put on a credit card, such as a home makeovers, large vacations, holiday gifts, etc. – and you do this by setting up goals. Tell SmartyPig what you want and use their calculators to figure out how much you will need to set aside each month before you will have enough cash for the purchase. Friends and family can also contribute to your goals by depositing money into your account.

SmartyPig’s Phenomenal Interest Rate:

If you’ve compared interest rates lately you’ll know that this rate more than doubles the current national average for similar accounts. The creators of SmartyPig claim they can provide such high savings rates to their customers because most customers will keep their savings stocked away for longer periods of times (to complete their financial goals). Plus, just like any traditional online bank your money is federally insured by the FDIC through their partnership with West Bank.

Positive Features of this Account:

- Extremely high interest rate

- Help save for specific purchases while avoiding the use of credit cards

- Social networking features for encouragement and participation of family and friends

- Bonus percentage at retail partners!

- fund via ACH transfer

- FDIC insured

Smarty Pig’s Online Savings Account: 2.01% APY!

Smarty Pig’s online savings account is currently yielding an interest rate which absolutely demolishes the national average for these particular accounts, plus they have some innovative features/tools to help you save!

Smarty Pig’s online savings account rate: 2.01% APY national average: 1.25% APY

SmartyPig, based out of Des Moines, Iowa was launched in April of 2008 and is a banking partner of West Bank and a subsidiary of West Banc Corp. Because West Banc Corp is member FDIC your funds held in Smarty Pig’s savings accounts will be federally insured (by the FDIC) up to $250,000.

Smarty Pig’s Unique Approach to Savings…

Open a goal-based savings account that can be attached to social networking features (Facebook, MySpace, Blogger, Google, etc.) allowing your friends and family to view and even contribute to your savings goals.

You then set a time in which you would like your goal to be completed, along with an initial deposit (the minimum deposit required is only $25.00). You can allow anyone to contribute and view your goal (or nobody) it’s up to you.

Some customers have set up goals to either help pay for Christmas shopping, pay off a credit card, pay off a student loan or save for a vacation.

…And to help you reach your goal they claim to consistently provide a savings rate which beats the national average. The current rate is 2.01% APY.

Smarty Pig’s 3.05% APY savings account

BankVibe reader Patrick just gave us the heads up on a very lucrative savings account rate through SmartyPig.com. They are offering all potential customers an FDIC insured 3.05% APY savings account.

If you are to invest money with Smarty Pig you may want to note that your money will be held at the West Bank of Iowa, however anyone within the United States is still eligible to join.

The Smarty Pig savings account is particularly unique in two ways. First, is their unbelievable savings rate (3.05% APY) which beats the national average by roughly 50%. The second is that the SP savings account is specifically designed to help you save for something in particular (a trip/vacation, flat screen TV, anniversary, etc). Along with a predefined savings purpose is also the ability to make your savings account public to anyone you deem worthy. For example, you may adjust the settings of this account so that your grandmother, brother, or mother could view the account and make small deposits within it to help you achieve your particular savings goal.

Smarty Pig Savings Account details:

- no minimum balance required

- FDIC insured

- Interest rate is subject to change without notice

- Interest rate effective as of April 7, 2009