Best Online Bank High Yield Savings Accounts- Updated October 2011

With interest rates hovering at fairly historical low levels, maximizing the return on your savings is still very important. Who doesn’t want to make the most of the money they already have?

Online bank accounts are a great place to keep your emergency fund, as you can keep a degree of separation, making it easier to truly use it for emergencies only. While savings account rates are pretty low historically right now, they will likely begin to rise some time in the fairly near future.

Why open an online savings account?

An online savings account can offer some advantages that traditional bank savings accounts do not offer, such as:

Higher interest rates
Minimum or no fees for transactions or maintenance
Not as accessible as a regular savings account

Below are some of the top online bank accounts and
interest rates updated as of October 18th, 2011

Discover Bank- 1.0% APY

Discover Bank High Yield Savings Accounts, one of the newer online high yield accounts on the block, currently offers a very competitive 1.0% APY. While it does have a minimum deposit of $500, if you have that much saved already it is not much of an issue, as there is no minimum balance required thereafter.

Minimum deposit of $500 required
No minimum balance
FDIC insured

Ally Bank- 0.91%

Ally Bank, formerly GMAC Bank, was named 2009′s Best Online Savings Account by Kiplinger Magazine, this past December. Offering competitive rates and great customer service, Ally has become quite popular since

No fees, no minimums
FDIC insured
Daily compounded interest
No minimum to open

ING Direct- 1.0% APY

ING DIRECT is one of the oldest and well-known online high yield savings account. I’ve had an ING Orange Savings Account since 2002 (wow, has it really been that long?), and have been please with the service and competitive interest rates over the years.

FDIC Insured
No fees or minimums
Ability to set up “sub accounts” for different savings goals

HSBC Advance -0.80%

HSBC Advance (formerly HSBC Direct)- HSBC Advance is an online banking arm of HSBC bank, which does have physical branches. Unlike many other online savings accounts, you can access your money via ATM. Named “best online savings account” by Kiplinger’s Personal Finance in 2006.

FDIC Insured
$1.00 minimum to open account
No fees for transfers, does not have to be HSBC checking account
Can withdraw funds via ATM
No minimum balance

SmartyPig- 1.35% APY (on balances under $50,000)

Smartypig is not a conventional savings account per se, but is FDIC insured, and accounts are held at West Bank. Smartypig is a goal driven savings program, where you can set savings goals that you can make public to others to keep yourself accountable, and friends or family can also contribute to your goal.

FDIC Insured
The minimum requirement for a savings goal is $250.
A minimum deposit of $25 is required to start and maintain a savings goal, minimum monthly contribution of $10 per goal. One time contributions can be made.
Interest accrued daily and posted quarterly.