How To Open An Online Savings Account

As anything else, before you start you need to do your homework. It is not very difficult but it requires your attention and time. Do your research and find banks which offer high-yield online savings accounts. Determine your purpose. Do you want a high-interest rate or to skip all ATM fees?

There are many other additional features, such as the opportunity to pay your bills online or a checking account, which may also help you choose a bank.

What Documents Do I Need?

Bringing all the right documents with you to open an high-yield online savings account can ensure that the process is smooth, and you don’t get stuck not having everything you need. Many savings accounts can be opened online so you can easily get the documents you need while at home.

Every bank is a little different, but you will need some basic items no matter where you decide to the bank. You need a passport or driver’s license or some form of government ID. You also need to social security card, your date of birth, and proof of address.

You will usually need two forms of proof of address from two different sources. If you are funding your new account with an existing account, you will need the banking information to link them together.

How Much Money Do You Need to Open an Online Account?

High yield online savings accounts usually don’t require a huge minimum deposit. They usually need about 25-100 dollars to open the account. However, you will need more to avoid the monthly fees. You will need at least a few hundred dollars in the account at all times to avoid a monthly fee.

You also don’t need the money right when you open the account in many cases. This means you can open the account and then deposit the money a few days or weeks later.

How to Choose The Best Online Savings Account?

Whether you're looking for a high-yield savings account at a new institution or are fortunate enough to have one available at your current bank, it's always a good idea to compare your options. Differences in interest rates and fees can add up over time, especially if you have a sizable savings balance. Here are some things to look for and compare:

When choosing the best option for you, take a look at the following factors:

• Interest Rate – well, since this is a high-yield savings account and the idea is to make a profit, this one is very important. Be careful because some of the rates banks offer may vary over time. Read your contract carefully before signing and make sure the rate is what you wanted and expected.
• Costs, fees, charges. What will all the fees and charges will be? Generally, most online banks don't have any fees but like the previous one, go over the conditions carefully.
• Is it FDIC insured? Some online banks are not covered by the FDIC. Avoid them.
• Customer service. Since all the things happen on the internet, you will rely on impeccable customer support. Is there such when you need it?

A survey conducted by IPSOS in February 2021 on the most valuable mobile banking features in the United States shows that 35% of the participants considered check deposit the most valuable mobile banking feature. At close range and above 30%, viewing statements and account balances, transferring funds between accounts, received 33% and 31% of the responses. 3% of the respondent did not have a bank account.

It's important that you also check out credit unions and local banks. Sometimes, they might offer very good terms on their online savings accounts. Remember – the competition is fierce.

Once you have chosen a place to open your account, perhaps you'll have to pay a small deposit. This deposit will be taken from a checking account linked to the new online savings account.

How Is Your Account Secured?

Security and protection are of paramount importance when we talk about online services and transactions. For a bank to verify your savings account, they need your identity information in order to protect themselves from fraud.

Some online banks, require from the account holder to choose a security question. In fact, this is a standard procedure when opening an account anywhere. Then you have to give the answer, which supposedly only you know. In case of a problem with your account, the bank might ask this question. Others will have your mother's maiden name as well as your previous address.

Also, if you want to have an online savings account you have to link it to a checking account. This is yet another verification and protection.  This is great because you can transfer money between the two accounts if they are both active, of course.

The Potential Risks of High Yield Accounts

On the whole, online banking is very safe and secured. However, there are always risks.

Risk of Bank Bankruptcy

Even though this is quite a rare occasion, it does happen every now and then. In 2008 during the great economic recession, 25 banks in the USA failed. So make sure the bank you want to open an account with is Federal Deposit Insurance Corporation (FDIC) insured. It's also recommended to keep your deposit under the maximum coverage limit (currently $250,000 per deposit). What does this mean? If your lender fails, then this money (250,000) will be secured and restored by the FDIC.

Do Online Savings Accounts Have Monthly Fees?

Some high-yield online savings accounts have monthly fees, but it depends on the bank you are using. Oftentimes, the fees can be avoided if you meet certain criteria such as keeping a certain monthly balance or not making too many withdraws in 30 days.

A high-yield savings account might have a monthly maintenance fee and an excessive withdrawal fee. Most savings accounts only let you withdraw 2-3 times a month. If you find yourself needing more money during the month, you might have to pay a pretty excessive fee to get out.

Hacking And Information Theft

Normally, most credible banks offer great security, and their apps and web services are well protected. All the information and processes are “encrypted” and no one else but you can have access to it. Make sure you have all the credentials somewhere safe because if someone breaks into your computer, they can steal your information and access your accounts.

How Do You Get Your Money Out Of an Online Savings Account?

The easiest way to get your money out of an online savings account is to transfer it into a checking account. If you have your checking account and savings account with the same bank, linking them together can be done on your online banking portal. Transfers are usually instant.

You can also send a wire transfer to another bank using certain apps or through the online banking portal. Some banks even allow you to make a phone call and set up the transfer on the phone.