Choosing The Best High Yield Savings and CD Account

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When choosing any high yield savings accounts (HYSA), you should use the following 4 key criteria to determine which is best for you:

1. Interest rate or Annual Percentage Yield (APY) they offer – You can see what the industry benchmarks are at Bankrate.com. The account you choose should be paying more than this and make sure you look at the standard or normal APY and not only at any promotional rates they are offering.

2. No fees. Always. If an online savings account is charging you account maintenance or other similar fees, move on.

3. Ease of use. You can demo most of the reputable online banking user interfaces via their websites. See what you like and feel comfortable using. Also, ensure that linking to your checking or regular bank account is straightforward, and that you can deposit your pay directly into these accounts.

4. FDIC Insured. If you find a financial institution trying to offer you significantly above average APY’s, check their insurance status at the FDIC website. If they are not insured, then it is best to avoid them. All deposit accounts worth $100,000 and less are automatically insured by the FDIC.

With the above criteria in mind, here are currently the best savings accounts for you to consider:

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.

Everbank pays out higher-than-average interest rates on most of its savings and money market accounts and pledges to be amongst the top 5% of all providers (which is clearly demonstrated by their recent rates). The minimum opening deposit is $1,500, but after that there’s no minimum balance. A bonus for new accounts provides a special interest rate on checking for the first year, and a competitive yield on their IRA, CD and money-market savings accounts.

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.

ETRADE, not only offers a very competitive brokerage service, but also a top-notch savings account with a straight forward multi-function user interface. Having a combined savings, brokerage and IRA account also make things very easy to manage from an administrative standpoint. This savings account is great for those who want a one-stop shop for all their financial activities.