The Economist, financial publication purports that mutual funds account for more than 400 investments in the American high-yield bond markets. Nonetheless, for the investor optimistic for healthy returns,  high-yield bonds are ultimately a bet that the organization issuing debt will not fall prey to a default.

High yield interest savings accounts in the U.S. present their benefits, too. Even as high interest savings accounts offer better returns, be sure to weigh any minimum balance requirements with the interest rate. Compare brick and mortar high interest savings account terms to those offered online.

Although online savings accounts generally afford a high yield interest account, be sure to peruse the terms of service in entirety.  For instance, the high yield interest rate at FNBO.com and ING Direct do not impose fees.  Through ING Direct, customers can administer transfers from a banking account right tin to the high interest savings account. Another high interest savings feature at ING is the ability to register an account to a Revocable Living Trust.

The European Crisis coupled with the U.S economy’s recent downgrade are diminishing the luster and security that investors once relied on as safe haven.  Today’s current wide credit spreads present opportunities in the medium of short maturity high yield funds.

The reason that high yield bonds seem quite appealing to European corporations is due to the de-leveraging of banks rendering loans unavailable. In lieu of the low interest rates, coupled with high inflation, these high yielding bonds are quite appealing for the investor in quest of an expeditious return.

American Express is one such company, offering attractive high interest savings account to lure in new accountholders. Since the US Stock market has been quite volatile, investors are search of safe havens to stockpile cash.

American Express’ high interest savings account maybe appealing to the saver, who prefers the flexibility of connecting his or her personal checking account to the high yield savings account. The benefit here streamlines making transfers and deposits.  

What to do with a surplus of cash? Is a high interest rate savings account better than a standard savings account? 

As U.S. financial  statistics indicate that savings account balances are up better than before the Great Recession. Now that Americans are holding onto so much cash, the prudent approach to stretching one’s s dollar is to stockpile cash into a high interest savings account with a financial institution, protected by the Federal Deposit Insurance Corporation ( FDIC).

The FDIC backs deposits up to $250,000 per account holder at a bank. In the event of a failure, the depositor is guaranteed not to withstand any losses. 

One percent interest far exceeds earning 0.00% on money collecting dust in your savings account. Even if one earns a measly $69 a month, this is dinner once a month or at least a $828 annual gain for doing nothing. 

5-Approaches to Protect Your Assets with a High Interest Rate Savings Account

• But before one subscribes to the high interest savings account, the first critical step to safeguarding funds is to evaluate the financial rating of the bank. A primary lesson learned from America’s financial meltdown is to always evaluate each institution’s financial stability. AIG and Lehmann Brothers exemplify that no bank “is too large to fail.” 

Although Capital One Financial recently acquired ING Direct, an institution renowned for its no fee-high interest rate savings accounts, a news report, published by Reuters (June 17, 2011) says that Moody’s just issued a review of Capital-One’s financial stability  for a  potential downgrade.

• Don’t place more than $250,000 in a high savings account with one financial institution. Since the FDIC insures the aforementioned amount, reserves–exceeding that amount, may not be covered in the event of another financial meltdown. 
• Although the objective of opening a high interest rate savings account is to yield the highest return, be leery of any financial institution offering more than one percent. 
• Also, note that many banks offer high interest rate savings accounts to lure new customers. Many of these high interest rate savings accounts are introductory  or riddled with maintenance fees and charges.

Fees and the number of withdrawal allowances represent another area to evaluate before subscribing to a high interest rate savings account. Some banks impose fees and penalties for withdrawals.

ING Review – Fact Sheet

Inception: 2000

Corporate headquarters: Wilmington, Delaware

Balance policies: ING Direct’s unlimited deposit minimum, enables anyone to open a high interest rate savings account without any balance minimums. 

Fees:  None

Yield of high interest rates savings account: ING savings account, dubbed the Orange Savings Account– yields an annual 1 percent or more

Financial Access: Online, ING Direct: gives its policyholders 24 hour access to their funds

How is AIG’s Orange Savings Account (high interest rate savings account) calculated? A variable yield, where the interest is accrued according to the daily amount and then compounded monthly.

Security: Immune from financial collapse, deposits up to 250,ooo are insured  by the FDIC.

Fraud protection: With ING Direct Orange Savings Account, the policy holder not liable for fraudulent activity.

Nominal carbon footprint: If the high interest rate savings account remains active, then policyholders receive a statement at the end of the month. (Inactive accounts only receive quarterly statements).

How does ING Direct not charge fees or impose balance requirements?

ING Direct has the ability to eliminate certain fees and minimum balance requirements on high interest rate  savings accounts because the financial institution does not have the overhead to manage like most financial institions.  Unlike brick and mortar banks, which staff employees, have utility bills and other responsibilities involved in owning or renting a commercial property, ING only has eight satellite offices in the United States.

Credits high interest savings account: At the end of every month

Flexibility: ING Direct lets accountholders with a Revocable Living Trust  register the high interest savings account as a Living Trust.

What are the minimum requirements?

Among large banks such as ING Direct and HSBC Bank, consumers need only a dollar to open a higher savings account. The caveat is that the minimum balance fees have the ability to consume any account where the balance falls below required amount of he high interest saving account.

How does the bank compound interest?

Although banks feature a variation of high interest savings account products, each institution compounds interest differently. While one institution may compound interest on an annual basis, others compound the interest on a monthly basis. For consumers, this discrepancy influences returns generated from the savings account.

Does the bank impose penalties for withdrawals? Although federal legislations authorize consumers to make up to half a dozen monthly withdrawals, most banks impose a fee after the third or fourth withdrawal. Some financial institutions use high interest savings accounts to simultaneously  entice new consumers to open an account, while optimizing the institution’s financial liquidity.

Is the interest rate on the high interest savings account short term?

In an effort to attract new customers, banks promote high interest savings accounts for a specific period of time. Generally, three to six months, the introductory rate expires, dawning a significantly lower rate. Financial advisors recommend that consumers shop for banks offering a cash bonus incentive.

Axiom: High interest savings accounts afford a variation of features, which warrant additional fee structures.

Compare high interest online savings accounts to similar products. By  analyzing the offerings of major financial institutions, this provides a complete composite of average rates. Abnormally, high interest rates are usually a warning sign. As with any financial situation, the old adage applies: “If the deal sounds too good to be true, it probably is” — rings true.

Verify the bank’s financial standing.  Banks in the red often use high interest savings accounts to generate new business. In an effort to maintain liquidity, institutions will lure consumers to stockpile cash at a significantly higher interest rate.

Remember that certain banks tempt consumers with substantial returns as the riskier trade off for lacking insurance coverage by the FDIC. 

Check the limits. Some smaller banks, offering high interest online savings accounts, impose caps balance caps  of $50,000 or less.

Fund with an insured high interest online savings account. Circumnavigate any unforeseen monetary damages losses via an high interest online savings accounts. Any high interest online savings account that is not insured by the FDIC is unworthy of consideration.  Customers who maintain accounts with financial institution that are not backed by the FDIC are highly susceptible to the bank’s closure and financial losses. 

Validate contact information. Even if a financial institution’s Web site features the FDIC logo, verify the following information:

•  Address
• Phone number
• Headquarters

 Any high interest online savings accounts lacking the aforementioned information is suspect to unscrupulous business transactions. 

The new-fangled, high interest online savings account with  charge card tendencies. Here’s how it works:

• A minimum deposit of up to $25 is needed to open an account and a monthly deposit of $10 is needed to keep the account active.

• Consumers set a financial target via Smarty Pig’s social network.

• Friends and families can contribute to an accountholder’s “goal,” but there is a 2.9 percent processing fee for the transaction.

• Once the consumer has made their goal, the funds can be transformed into a debit card or gift card via a major retailer or transferred into one of their accounts. Although the online savings account does not charge any ATM, load fees or monthly fees, account holders should expect a nominal charge form the owwer of the automated banking machine.

Smarty Pig promises a sizeable yield. Assessed by West Bank, which is secured by the FDIC, Smarty Pig’s variable interest rate tier system awards individuals with a balance less than 50,000 will earn 2.133% (2.15% APY). However, the high interest online savings account with more than $50,000 accrue only .5 percent.

[According to the online savings accounts terms of use and Truth in Savings the aforementioned rates can be changed without notice.]

• Smarty Pig is totally green in the sense that all bank statements are submitted via email. 

• The high interest online savings account also enables consumer to use their payable on Death (POD) Beneficiary. But, the caveat is that the beneficiary must be over 18 years of age.

As for an online high interest online savings account with socially engaging features to save money, Smarty Pig seems to offer a high incentive.

Let us know what you think about  the high interest online savings accountSmarty Pig.

• Maximize gas mileage, by keeping tires on the proper inflation.

• Shop for a high interest savings accounts, where funds are electronically transferred from the paycheck into the savings account.

• Regular automobile tune-ups can minimize major car repairs, requiring vehicle owners to dip into their high interest savings account.

• The average car wash costs anywhere between $5 and $15. By washing one’s car by hand, that’s more than a $60 savings per year.

• Decrease energy consumption around the home.  By turning down the thermostat five to ten degrees below the normal temperature, actualize a savings of at least 10 percent a year–another savings opportunity with worth an annual savings of $75.

• Using a mason jar or other similar sized receptacle (piggy bank), discard all extra change into the jar. Try to fill up the jar monthly to deposit into the high interest savings account.

• Practice financial prudence by avoiding overdraft fees.

• To reduce the chances of overspending, set a weekly budget that accounts for transportation, food and other personal necessities. Then, store all credit and debit cards in a safe place, alleviating  the temptation to exceed the financial plan. 

• In the end, the only way to maximize savings is by setting realistic monthly goals. Since  high interest savings accounts fluctuate based on inflation, be sure to check the yield of your high interest savings account on a regular basis to assure that you’re attaining the best return on the savings’ investment.  

The high interest savings account tends to give prudent, cynical savers, who prefer pure liquidity, a certain level of security. Despite the FDICs safety cushion (covering accounts up to $250 K insured), the high interest savings account calls for some due diligence.

In an effort to minimize research, consumers will open a high interest savings account at the bank where they have a checking account. The rational seems practical when one considers transferring funds between accounts.

For a household with a savings of $100,000, the high interest savings account makes the most money-wise sense.

The only problem is that banks, such as Chase, have persnickety little guidelines that many consumers overlook until it’s too late.

Since many Americans prefer to do conduct banking at one financial institution, remember to review all the terms.

For instance, some financial institutions will charge a monthly fee, if the checking and high interest savings accounts do not maintain a minimum balance. In example, the minimum average requirement of both accounts is $75,000 at Chase.

Although many brick and mortar banks offer incentives for consumers to maintain both a checking and high interest savings account at the same financial institution, remember to peruse the fine print. As at Chase, when consumers do not conduct any banking transactions within a 35-day period, they run the risk of yielding a lower interest from the “enhanced rate” originally shown with the high interest savings package. (The aforementioned stipulations are just a few reasons consumers must always read financial details in entirety).

Reading reviews and perusing the terms of service of the high interest savings account will save a lot of surprises, frustration and any potential losses in the long run. This article is a review about a renowned, online high interest savings account, who goes by the name of Ally.

(While this article describes the details of the high interest savings account, it is not an endorsement).

About Ally

Ally should not be confused with the American boxer, Muhammed Ali.  Ally is also not the dietary pill (alli), touted as an effective weight loss program. No, actually as an online financial institution, Ally is driven by money. Well, it’s with a bevy of financial products. In particular, Ally’s high interest savings account plan has been the hot pick lately for consumers, looking for a safety net to stash cash.

High Interest Savings Attractive traits/ benefits: With a no monthly minimum or monthly fees, Ally tends to outshine other financial institutions, offering high interest savings. Compared with other banks, Ally’s high interest savings account does not charge fees that are not issued by an employer. Like other banks backed by the FDIC, Ally ensures that deposits up to $250,000 are insured. Moreover, with every statement cycle, customers have six-fee-free transactions.

Unappealing feature(s): Since a good percentage of the population is flummoxed by  which financial products offer the best yield, Ally’s monthly Sleeping Awards, recommending other financial savings’ programs, tend to perplex most consumers.

Ally’s high interest savings mantra: “We work to keep rates high. Other banks tempt new customers with promotional rates.” (Source:  http://www.ally.com/online-savings-account/index.html)

Ally assesses interest…. on a daily basis. With Ally’s practice to compound interest each day, customers have a definitively better return on a high interest savings account that at other financial institutions that assess interest on monthly, quarterly, and annual cycles.

Although the above details, pertaining to an Ally high interest savings account are current as of April 19, 2010, always review all details, terms of services and fine-print to avoid any financial blunders.