If you're anything like me, you hate doing paperwork... and waiting on things... and going to the post office... and so on. When most people consider signing up for an online savings account, the potential hassle and time it takes are among their top concerns.
Thankfully, it's actually pretty painless (and it seems to get easier each year). The signup process for an online savings account usually works as follows.
Step 1: Do the research.
I usually recommend either Emigrant Direct, ING Direct or HBCS Direct. The interest rate offered by your "other" bank is probably terrible by comparison. Among these three, there are slight rate variations, so if you plan on putting, say, 10K or more in the account for a long period of time, it's probably worth shopping around for the best interest rate. Keep in mind, though, that these rates fluctuate regularly, and each of the major online savings accounts hold the "highest rate" title regularly. So it's probably best to choose based on the features you want (although in reality, the big names offer very similar features, too).
Step 2: Apply online.
Applying online takes about 5 minutes. Make sure you have the account number for the checking account to which you plan on linking the savings account.
Step 3: Fund the account.
You have a few different options to deposit initial funds into your account. Most banks will allow you to either mail in a check or use ACH debit (an online transfer from your existing checking account).
The great thing about ACH debit is that you can fund your account online, without making a trip to the post office. Furthermore, it's easy to regularly transfer funds between an online savings account and your existing checking account.
Step 4: Verification.
Most online banks will require you to verify your address. They'll mail you a letter with information on confirming your account. Done.
Wow... that was painless.
All in all, it's pretty easy. If you have several thousand dollars you need to stash away, it is definitely worth the half hour or so of time to sign up for an online savings account.
Ready to learn more about popular online savings account programs? Read my reviews of Emigrant Direct, HSBC Direct, and ING Direct.
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