I have been using my Vanguard money market account as a place to save part of my emergency (short-term) funds, and when checking it recently I saw that the rate had fallen to a miserly 0.13%! This was the lowest I had seen the rate since opening the account a few years ago, and with most high yield savings accounts providing at least 1%, or more than 6 times the money market account average, I decided it’s time to move all my money back to a high yield savings account. I already have HSBC and ING accounts, but there are a number of new and updated offerings out there and as long as the institution is FDIC insured, it’s best to get an account with the highest yield. You shouldn’t have to pay any account or maintenance fees either. Here’s a short-list of 2 recommended savings accounts:
ING Direct has a very simple and easy to use interface, which along with its strong brand makes it amongst the most popular accounts in the market place. The new electric orange account combines their competitive APY offering along with checking and ATM features that put in direct competition with the established banks, that offer little or no interest on their checking accounts. If you want a steady and simple high interest account, then ING Direct is the one for you.
Ally Bank (formerly GMAC Bank) is a relatively new player in the high interest savings account space, and is providing some strong competition to the market leaders like ING Direct and HSBC Direct. Their offering is quite standard relative to the leading providers but the feature I liked best was that they calculate and compound interest daily, rather than monthly or quarterly like some other big banks. The more often interest is compounded, the faster it grows. They also have the leading Certificate of Deposit (CD) offering which is good for longer term savers that like to use laddering.
Conclusion: I would suggest you check out the various offerings above to see their latest rates (APY) on offer and if there are any special promotions. Then pick the one you feel that best suits your saving, spending and investment needs. With saving interest rates falling across most money market funds, online high yield savings accounts can provide the best investment to park your short-term cash savings.
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