Online Bank Savings Accounts and My Experience With iGObanking

(Broke-Ass Student has moved to a new home! Please visit www.brokeass-student.com for further adventures and content)

Here are current rates of some online savings accounts, as of December 29, 2006.

iGObanking    5.30% APY ($1 to open, no minimum, no fees, FDIC insured)

E*Trade    5.05% APY ($1 to open, no minimum, no fees, FDIC insured, compounded daily)

EmigrantDirect    5.05% APY ($1 to open, no minimum, no fees, FDIC insured, compounded daily)

HSBC Direct    5.05% APY ($1 to open, no minimum, no fees, FDIC insured, compounded monthly)

ING Direct    4.50 % APY ($1 to open, no minimum, no fees, FDIC insured, compounded monthly)

I highly recommend putting money you want to remain relatively liquid in an online savings account if you haven't done so all ready. A huge incentive of online savings accounts are the competitive APY rates offered, as opposed to traditional savings accounts at physical banks. This equals a yummy, much higher interest rate for the customer. If you're still feeling a bit reluctant or need further information, be sure to check out the advantages and disadvantages of having an online savings account.

My experience with iGObanking

iGObanking currently has one of the highest rates for online savings accounts with a low minimum of $1 to open. I initially signed up with iGObanking on December 18th. The application process was relatively quick and painless, and took roughly ten minutes to complete. If you're interested in learning more about iGObanking, here is a quick rundown of what you'll need to open an account with them.

• A social security or tax ID number
• Driver's license or ID card issued by a state DMV
• Information on any loans or mortgages you currently have (they will ask a few random questions about these to help confirm your identity during the sign-up process)
• Your current bank account number and routing number for funding purposes
• For a joint account, the other individual's personal information (Secondary Applicant's name, social security or ID number, and their date of birth)

Once your application has been approved, you'll have the option to immediately transfer funds from your current bank account(s) into your new iGObanking online savings account. However, I'd recommend only transfering a small portion (even if only the initial $1 minimum to open) because you won't be able to access your account until they mail a password to your home. The letter arrived approximately a week after I completed the application process. I had put $50 in my account to start with, but it admittedly made me a little nervous when I realized I wasn't able to access my account yet. Therefore, if you're a neurotic worrier like me, it might be wiser just tossing $1-$5 into the account and waiting until the letter arrives with your password before transferring over the rest.

Once you receive your letter, you'll be able to log into your online savings account and will be prompted to change both your user name and password to your own preference. Once you obtain full access to your new online savings account, you can then continue transferring the remainder of your funds into it.

Congratulations on opening your brand new online bank savings account! You've taken a wonderful first baby step in helping your money grow and work properly for you. If you haven't all ready, acquaint yourself with the beauty of compound interest. Now you can focus on building a comfy nest egg for yourself while funneling your savings into your new high APY online savings account.

A good rule of thumb is to count up your total bills and expenses for one month, and then concentrate on saving at least four to six months worth of expenses in case of an emergency. If you're heavily in debt or a broke-ass student like me, try to save at least $500 to $1,000 in an online savings account for yourself before focusing on aggressively tackling your debt.

So, no more excuses! Today is the day to get started, as in, right now. Welcome to taking a simple yet positive approach towards building a brighter financial future.

~†~ Baby Steps are Key ~†~

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Comments

[Chris]

I didn't know that you could have a savings account with an online bank, I didn't even know they had banks that were only online. Definately something to think about. Nice job.

Chris
http://collegefordummies.blogspot.com

[pfstock]

At the risk of sounding like I'm an advocate for these banks, I wanted to point out that Citibank and Washington Mutual (WaMu) each offer "online" savings accounts that pay 5.00% interest APY. Although I've had some issues with these banks in the past, they each have real branches and ATMs, which addresses a couple of the disadvantages of internet-only banks.

[Breton]

Financial topics need covered in college classes. This forum discusses what I seemed to miss working on my BA.

[United Steelworkers]

Over the past few years, the ING Group has come under considerable scrutiny for a series of questionable business and investment practices. Check out the facts at www.can-you-trust-ing.com

[Sun]

The rate is certainly very attractive, but do you know if they do a hard credit inquiry or a soft one? Also what about ATM/Debt card? Do they card ATM fees? Do they allow you to link other banks (other than the one you used to fund your account) to your new account? Thanks.

[Jennifer Lynn]

I talked with a CR over the phone and they do a soft credit inquiry. There are no ATM cards or check writing, and up to 20 external linked checking or saving accounts are allowed. Hope this helps.

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[Sun]

Thanks for the information. That helps a lot.

[hustlermoneyblog]

awesome site. I love all the money saving tips. If you would like to trade links, email me. thanks

[Justin]

I signed up several weeks ago and transferred some dollars from one institution, Amsouth, to iGoBanking.com.

During the transfer process I got nervous because it said "click here for fees for transfer."

I clicked the link and it opened a new window where all it explained was transfer limits. I looked through FAQ and all over the site where it explained the transfer fees (not mentioned anywhere).

I sent an email last Friday with a 'read receipt' attached. The email was read Monday morning. It is now Wednesday night and I still have no response. I sent a follow up email this afternoon and got a read receipt, but still no response.

I am concerned that this is an example of there customer service and it makes nervous and putting my money there.

I called, and did get an answer. The woman spoke English very poorly, wasn't very polite and seemed annoyed that I was asking her questions about the fees, which she said there were none.

Of course we all have probably had experience talking with "John" at some big company who has no way to reach him or extension to hold him accountable to what he says.

Apparently there are no fees right now, according to this one person. But it isn't clear on their site, and no one responds to emails.

Not sure I want to put my money there. Emigrant Direct might be a few points lower on the rate, but they respond quickly.

[TimmA!]

hey everyone, I opened my account with igobanking.com and everything seems to be working fine, but I noticed at the top of this page that it says the interest compounds daily, but I have had my account open for over a week and have seen no change in the dollar (or cent..) amount so far. Am I misunderstanding what you mean by interest compounds daily?

[tim]

although your interest compounds daily, you do not receive interest until the end of the month.

i agree about csr with igobanking. sometimes i get immediate response, other times, i think the emails get lost.

i have kept another account open, so if there are issues, i'll just reduce to $10 and close the account after 180days.

that is one FEE of the no FEE portion of igobanking. you must keep the account open for 180 days otherwise you are charged $10 early closing fee.