If you are serious about becoming debt free, one of the things you must have is an emergency savings account. But not just any savings account. Many major banks today are paying dismal interest rates, often under 1%. And to top it off they have monthly service charges and minimum balance requirements that can make it where you are actually losing money on your savings account. Especially when you are just starting your savings plan and don’t have a lot of money to save, you need a savings account with no fees and no minimum balance requirements. And, as you progress in your debt reduction and savings plan you will probably end up with thousands of dollars in your emergency savings account. You need to earn the most interest possible, while keeping your funds safe.
This is where online banks come in. Online banking is safe and reliable. You can link your online savings account to your regular checking account, so getting to your money is easy. But not so easy that you will be tempted to make impulse purchases with your emergency funds. And many online banks typically pay much higher interest rates on savings accounts.
I really like HSBC direct. If you open an account before September 15, 2008 you can earn 3.50% APY* in Online Savings. Thats 9 times higher than the average savings interest rate. What makes this even better is that there are no fees for this account, and no minimum balance requirements. You can open an account for as little as $1, and did I mention, no fees. That means no minimum balance fees, no service charges, nothing to cut into the interest that you are earning. Plus your money is FDIC- insured. You can deposit with confidence.
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