In today’s economy, finding a bank that’s willing to give you a good rate on your everyday savings purchases can be like finding a needle in a haystack. Most of the major banks will give you savings rates of less than half a percent on a standard savings account, and may impose charges for low balances. Finding a interest-bearing checking account can be next to impossible. My Bank of America checking account pays a tenth of a percent of interest. Isn’t there any way to increase returns on everyday savings and checking funds?

In fact, there is a way to increase the interest you receive on your money in your bank accounts. Many banks offer online-only, or “direct” accounts that offer interest rates that are many times the national average for a standard account. Below, I’ll introduce some of these banks as well as discuss some of the advantages and disadvantages of having an online-only bank account. As per the Revolut bank review, it is one of the best ones to choose. 

Online Banking Providers

ING Direct (www.ingdirect.com) is one of the pioneers of the online banking industry. The Orange Savings Account offers a savings account with an average many times the national average. ING also offers the Electric Orange Checking Account, which offers all of the conveniences of a regular checking account, but with an interest rate that usually rests around 1-3{a10f0a273fbd80fa0e73ecd0b999ae91e6d89122313bce5096ee6413d381b468}. ING will issue you a debit card that you can use to make purchases, and you can use the Electric Orange checking account to make online payments a la PayPal or mail paper checks to the person you have to pay.

Like any other online bank account, you’ll access your online account by accessing the bank’s website. If you use the online banking service offered by your regular brick-and-mortar bank account, you’ll already be familiar with the way these interfaces work. You’ll be able to keep tabs on your balances, make transfers, and receive statements electronically. All reputable online banks, including all the ones listed here, are FDIC Insured, making them a safe place to stash your cash.

HSBC Direct (www.hsbcdirect.com) is a subsidiary of HSBC, one of the largest banks in the world. They offer a rate that is, at the time of this writing, higher than ING Direct’s account. Just like ING, you can get a debit card to make purchases and access your savings and checking accounts online through an easy to use interface. HSBC has the additional advantage of being able to make withdrawals and deposits at any HSBC ATM. If you have any HSBC bank branches around you, this can be very useful. Be aware that it takes several weeks to fully open this account. HSBC sends you your username, password, debit card, debit card PIN, and several other pieces of information in separate mailings that can take a while to get to your door.

Emigrant Direct (www.emigrantdirect.com) is one of the pioneers of online-only banking as well as ING. Its American Dream Savings Account offers rates that are generally comparable to ING, and these two are often talked about together. There’s nothing special about Emigrant Bank, but it can be a solid option that has been around for a while.

PNC’s Virtual Wallet (www.pncvirtualwallet.com) is a unique new concept that pairs a powerful online interface with a good savings rate. The Virtual Wallet allows you to portion your money into several different accounts with different savings rates depending on when you’re going to spend the money. The account also offers other savings tools that could help you manage your money and set savings goals better. However, the downside to the PNC account is that the associated checking account doesn’t pay much interest at all. Consider PNC if you like the virtual wallet, but you’ll probably want to make a different choice if you want to maximize the interest rates.

There are other options available for online bank accounts, but these four should be the first ones that you check out. All are reputable companies, FDIC insured and safe to put your money in.

Pros and Cons of Online Bank Accounts

There are several pros and cons to using an online banking account as your primary payment method. On the plus side, you’ll get most of the conveniences from any other bank account at a much higher interest rate. You’ll be able to make purchases with a debit card, easily transfer money between accounts, and more without having to go to a branch.

However, not having a branch to turn to if there are problems can be an issue for some customers who want an available banking representative. There are a few other problems with using one of these bank accounts. For most, you’ll be unable to use an ATM to make deposits-you’ll have to transfer money in from another bank, use direct deposit, or mail a check to the bank’s headquarters, all of which can take time. You’ll also be unable to get cash unless you want to pay a fee to use another bank’s ATM or get cash back with a debit card purchase.

You should also know that online banks can change their interest rates at any time without advance notice. While the rates aren’t likely to become as low as regular bank accounts, don’t be surprised if you get an email saying that your interest rate has decreased for your online savings or checking account.

The happy medium? Consider having a local bank account with a few dollars to get cash and make short term deposits linked to your online bank accounts. This way, you’ll be able to use an ATM for free with still enjoying the benefits of the online-only account. Also note that some online accounts refund the ATM surcharges that other banks charge, which can be a real benefit.

Wrapping it Up

An online checking or savings account could be a great solution if you want easy liquid access to your funds while enjoying all of the benefits that having a regular checking or savings account would have. In most cases, an online bank account is a better alternative than your normal bank account-but don’t close out your local account if you want to be able to talk to a teller in person. Do the research, look around, and find the online bank that offers you the best rates and the best services. Good luck!