5 benefits of an online savings account

Dan Stous works in financial planning and wealth management. Online savings accounts initially came on his radar when he saw their interest rates steadily rise.

“The whole reason I was looking for an online account was because deposit rates at traditional brick-and-mortar banks have continued to stay low despite rising interest rates,” says Stous, who is the director of financial planning at a financial planning and investment management firm in Lincoln, Nebraska.

He and his wife opted for an online savings account and started making monthly transfers into it to help save for a car. Whether you’re saving for a new set of wheels like Stous and his wife, a home down payment, an emergency fund or [enter your next big financial goal here], an online savings account could help you save for your next financial goal.

1. You can grow your savings with a high interest rate

Regardless of your financial goal, you’ll want your savings to earn interest (and then you’ll want that interest to earn even more interest).

With online banks offering superior yields compared to traditional banks, Stous recommends online savings accounts to his clients as a financial strategy. “We have been steering people to online accounts because the rates have been so much better,” Stous says.

2. You can save on fees

A bank account fee here and there can really add up. And who wants sneaky fees to eat into your hard-earned savings? Here are some common fees you should watch out for:

• Monthly maintenance
• Deposited item returned
• Insufficient funds
• Stop payment order
• Account closure

3. There’s no balance requirement

When thinking about important things to consider with savings accounts, add no minimum balance requirement to the list. If you are just getting started with your savings (way to go!), it can be challenging to set aside a large chunk of cash just to avoid a balance requirement fee. Some savings accounts have no minimum balance requirement, so you can start small and continue to add to your savings as your budget allows.

4. You can manage your account online—and on the go

Your life is online and on the go—so your savings account should be right there with you. You can open an online savings account from the comfort of your couch (or when commuting in your rideshare). You’ll typically need to:

1. Enter the essentials (personal information like your address and Social Security number).
2. Fund the account with a starting balance of your choosing. Many online savings accounts let you open with a low or even no initial deposit.
3. Check your inbox for an email confirmation.

Once you are up and running, in most cases, you can easily transfer funds between different accounts and set up automatic transfers into your savings account so you can grow your funds on autopilot.

If you’re on the move, your account’s mobile app lets you manage your account right from your smartphone or tablet. Whether you’re in line for a coffee or waiting for your child’s extracurricular activity to wrap up, you often can easily transfer money between your savings account and other accounts, view your account activity and electronically deposit checks.

5. You can easily access your funds

When and how you can withdraw money is important to know before you open a savings account. “How easy it is to get the money is a huge question, particularly with older generations,” Stous says. Having multiple ways to withdraw is a plus.

Having multiple ways to move or withdraw your funds is a key benefit, such as:

• Making electronic transfers between your savings account and other bank accounts.
• Requesting an official bank check.
• Initiating an outgoing wire transfer.

On your mark, get set—save!

Understanding the things to know about an online savings account could help you make the decision to open an easy-to-use and high-yield financial solution for storing your cash. Whether you’re saving up for something special or creating a savings safety net, it’s tending to these areas of your financial plan that will better prepare you for what comes next.

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The information provided herein is for informational purposes only and is not intended to be construed as professional advice. Nothing contained in this article shall give rise to, or be construed to give rise to, any obligation or liability whatsoever on the part of Discover, a division of Capital One, N.A., or its affiliates.