Experienced a pay cut? Here’s what to do next:
- Discuss a plan with family members
- Adjust your budget or create a new one
- Trim non-essential expenses
“I had been using a brick-and-mortar bank my whole life, and didn’t have much to show for it,” Germano says. The interest from her branch-based savings account was accruing ever so slowly, and an occasional fee would wipe everything out.
Knowing that online accounts may have a higher interest rate than traditional savings accounts, Germano looked into online-only accounts as a way to boost her savings income. She’s now an advocate for online banking and recommends her clients make the switch as well.
“They can have fewer fees and more interest returns,” she says. “It’s definitely the way to go.”
Opening an online savings account is a little different than walking into a bank branch to open an account, but the entire application can be quick and easy to complete. Phew. If this is your first go and you’re unsure of how to open an online savings account, the following five steps can help guide you through the process:
If you have questions about how to open an online savings account, you may be able to call, chat or email a bank’s representative for help.
“With most online savings accounts, it doesn’t matter if you have $1 or $100,000, they won’t charge a fee for not maintaining a minimum balance. You won’t find arbitrary ‘maintenance’ fees either because your online account is low maintenance.”
Before you open a savings account online, you may want to shop around to compare multiple account options and features. Here are several things to evaluate when deciding which bank account to choose:
If you’re interested in opening a savings account online, you might want to take a look at the banks’ websites and mobile apps. With no bank branches, you’ll want to make sure you’re comfortable accessing your account electronically and on-the-go.
After you open a savings account online, there can be several ways to deposit money into your new account. You may be able to transfer the funds from a different checking or savings account, mail a check to the bank or have your paycheck directly deposited into the account (chat with your employer about direct deposit, if you don’t already have it set up). You can also use some banks’ mobile apps to take a picture of a check and deposit your funds.
Withdrawing money from an online savings account can be done in similar ways. You may be able to transfer the funds to a checking account or different savings account with the same bank, or to an account at an outside bank. Some online banks let you request a bank check. You could also use a wire transfer to withdraw money, but you may have to pay a fee each time you do. Keep in mind that there may be limitations on the number of withdrawals you can conduct each month. Federal law limits the number of certain types of withdrawals and transfers from an online savings account to a combined total of six per calendar month per account.
Opening a savings account online can be a great move for your short- or long-term financial goals. Not only are the accounts easy to open, it’s simple to log in and review your account information and initiate transfers between accounts.
“Determined savers like being able to look at their account balances to remind themselves of their savings goals,” Chidester says. He adds that, “especially with online savings accounts, once you accrue a bit more money, it’s nice to see interest payments roll in and be reminded of that benefit you’re reaping.” Online savings accounts may also have fewer or lower fees, so you won’t need to worry as much about expenses eating into your savings and holding you back.
In fact, with their lack of fees and no or low balance requirements, Chidester recommends his clients create multiple online savings accounts and give each one a specific goal.
“It can be psychologically discomforting to take $50 out of an account marked ‘vacation’ to splurge on a night out,” he says. “On the other hand, in the heat of the moment, it’s not so hard to take $50 out of unmarked, ambiguous savings.”
Before you think about how to open an online savings account, you may want to compare different offerings and features. While the application process may be similar among most banks, the potential benefits and expenses can vary, and you want to find an account that can best help you accomplish your goals.
1 Outgoing wire transfers are subject to a service charge.
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