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.

As for saving money for retirement, the stock market is not a secure place to build the nest egg. Given the uncertainties of the global economy, money-wise consumers prefer the high interest savings account. Unlike the tax penalties and restrictions associated with making premature withdrawals from CDs (certificates of deposits), the high interest saving accounts doubles as nest egg – emergency fund.  

Amid financial analysts, there is a modicum of contention regarding the big bank versus small and online financial institutions. Individuals familiar with the situation assert that — any savings account under $250,000 is safe at any financial institution long as the FDIC backs it. Others contend that there’s a disparity between the high interest rates saving account from the small banks and large ones.

Many experts argue that the behemoth banks pay lower yields on high interest savings account. For example according to data provided by the FDIC, during the fourth quarter of 2009, institutions wither $100 billion or more of assets paid only .77 percent in annual interest on deposits. In comparison, smaller institutions shelled out an average of 1.73 percent. The 1 percent disparity suggests that larger banks are more apt to reap the financial benefits of being backed by the government.

On the other side of the coin, colossal financial institutions attribute the high interest savings discrepancy on the fact that they have other costs factored into the yield. Dissimilar to the small bank, where ATMs and brands are few and far between, large banks indicate that consumers are paying for the convenience of being able to access funds anywhere.

So when it comes to selecting a bank to open up a high interest saving accounts determine which is more important for your financial situation, an account where you can access the savings account anywhere, or the high interest savings account that yields higher returns.

Have a question about high interest savings account? Please post your questions below. 

While some analysts laud certificates of deposits, there are a few  drawbacks. For instance, a short term CD rate generally accompanies ultra low interest rates, presenting a better return with a high interest savings account.

While a long term certificate of deposit assures an investment return, the accountholder is not supposed to touch the funds for a specified period. Depending the bank, there are specific guidelines and penalties for making withdrawals.

For the frugal saver, who has the discipline and does not mind not having access to their funds for a 4-year commitment, some CDs accompany a higher rate.

Alternatively, if inflation gains traction, maintaining funds in a CD may not be the smartest choice. 

Flexibility is what makes the high interest savings account so attractive. Many certificates of deposits require accountholders to issue withdrawal requests by mail or in person. With the autonomy to withdraw or access funds at anytime, the high interest savings account possesses many redeeming qualities over the certificate of deposit.

• Up to six monthly transactions (includes withdrawals)
• Pure liquidity (an ability to access funds at any time)
• Online banking convenience
• Nominal service fees

Click on high interest savings

Consumers, who are shopping for a high interest savings accounts, have a pool of financial resources. From the brick and mortar bank to online high interest savings accounts, there are a slew of savings – investment options. Nevertheless, just as all credit cards do not offer the same benefits, the same is true of high yield savings accounts.

High interest savings, reviewed sevaral popular online accounts. When compared with brick an mortar banks, there were significant discrepancies with the two financial tools;

• Monthly Fees
• Minimum balances
• Promotional rates
• Daily Interest compounding

Transparency. In an effort to entice new customers, many banks offer high interest savings accounts, which are simply promotional . Be sure to review the APY terms of any high interest savings account that you’re considering. For instance, interest daily. Many others compound monthly, quarterly, or annually.

Certain high yield accounts charge a monthly fee; particularly in cases where the deposit is not transferred automatically from the employer.

Depending on the terms of the high interest savings account, instituted by the bank, many have a minimum balance requirement.

All banks have a six-transaction minimum. Since the federal government has set the limit, checks written to third parties, withdrawals and other financial transactions are limited.

Fortunately,  online and brick and mortar financial institutions, do not charge consumers for making deposits.

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Repetitive Withdrawals

High interest savings  (HIS) accounts are not advisable for individuals, who are need to make perpetual withdrawals each month. Since banks are authorized to impose fees for withdrawals, easing the arbitrary limitations, a HIS is suitable for the individual, who adds funds on a regular basis.

Accountholders with fluctuating savings balances are generally an awkward fit for the high interest savings account holder. All banks require a minimum account balance. Accounts with insufficient balance requirements are subject to fee penalties.

Deposits over $250,000

The high interest savings account is not recommended for the saver who has more than $250,000. Since the Federal Deposit Insurance Corporation  (FDIC) is insuring deposits up to $250,000, any excesses would not be backed. As a result, divvying up the money and placing them into separate banking institutions, may potentially protect one’s savings from unusual investment market events. However, the FDIC plans to roll back the standard insurance coverage to $100,000 on January 1, 2014.

High Interest Saving Tip: Compare the following terms of service and provisions:  

• ATM Card Replacement – Mishandling
• ATM Deposits
• ATM Withdrawals
• ATM/Online Fees
• Bill Payment (online or by telephone)
• INTERAC Direct Payments
• International ATM Withdrawals
• Personalized Checks
• Personalized checks
• Preauthorized debits

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