High Yield Savings Accounts

A savings account is operated by a commercial bank, a credit union, mutual savings bank or other organization, and it allows account holders to place money in the account.  The money in a savings account will earn interest, with the actual interest rate dependent upon the establishment that you use to save your money as well as the current economic conditions.

The national bank average of interest earning bank accounts for 2007 is around 2%, while some organizations (online banks, mainly) are providing what are known as high yield savings accounts.

How Do High Yield Savings Accounts Work?

Most of the high interest savings account providers are online banks.  The reason they are able to provide a higher interest rate than your local commercial bank is because they do all of their operations online.  They save on overhead costs of operating a brick and mortar bank, and then pass the savings on to the customers of their bank via higher interest rates, no fee accounts, and typically, no minimum deposit amounts.

To ensure a reputable organization, just check to make sure the online bank is FDIC insured- most banks will insure individual accounts up to $100,000.

Most online, high yield savings account providers offer the ability to connect your online savings account with your existing bank accounts- meaning you don't have to close your accounts to use the high yield savings accounts.  Once you connect your accounts, you can transfer money back and forth with a quick phone call or by using the convenient online tools. 

High Yield Savings Account Providers

There are numerous banks and institutions providing high yield savings account products.  Here are a few of the most popular online banks with high interest savings accounts:

ING Direct is one of the leading online banks with high yield savings accounts (as well as other money management solutions).  The current interest on ING Direct's Orange Savings Account is an exceptional 4.5% APY.   FDIC Insured.

HSBC Direct is an online bank offering a high yield savings account with many options for depositing and withdrawing money from your account.  You can deposit via bank transfer (you don't need to have another account with HSBC), mail in a deposit, or stop by any HSBC branch and make a deposit or withdrawal from the ATM. FDIC insured.

Emigrant Direct  currently offers a savings account with a 5.05% APY.   There are no minimum balance requirements, and you can easily transfer money from your existing bank accounts.  FDIC Insured.

Citibank Direct-eSavings is a money market account with a 4.75% APY, when you link the account to your checking account.  Linking to a checking account also gives you all the benefits of Citibank Online- such as online bill pay, viewing statements online and even fraud protection.  FDIC Insured.