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Online Based Banks Can Boost Your Savings

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TWC News: Online Based Banks Can Boost Your Savings
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Banking online can have an effect on your wallet, especially when it comes to building up your savings. NY1's Tara Lynn Wagner filed the following "Money Matters" report.

You might work hard for the money, but is your money working for you? Not if you've got it sitting around in a traditional savings account. While such accounts once earned an interest rate of around five percent, that number has now diminished to, well, practically nothing. On average, it's now .1 percent, according to

"But you can do a lot better than the average if you know where to look," explains Richard Barrington, a senior financial analyst at

Which isn't to say you need a treasure map, just access to the Internet.

"Online savings accounts offer on average a savings account rate that is six times what traditional banks offer," says Barrington.

Barbara Yastine is president and CEO of Ally Bank, an online bank that currently offers one of the best rates available. We're still talking less than one percent but substantially more than traditional banks.

"We don't spend our money on bricks and mortar, on branches. We are accessed by the Internet or direct mail or our call centers. We are able to take the savings versus branches and pay more to our customers," explains Yastine.

But are those extra tenths of a percentage point enough to get people to change banks? Research being done by Ally Bank suggests it needs to reach a certain threshold.

"Once that gets to be about a half a percentage point, people start to take it seriously and actually do some research and take some action," says Yastine.

While more and more consumers are doing at least some of their banking online, that doesn't mean they are ready to close the door on their local branch. But the thing is, you don't have to.

"You can add to your branch. As a matter of fact a vast majority of Americans have more than one banking relationship and they take advantage of both, whatever it is that they are looking for," notes Yastine.

However, if what you are looking for is a higher return and lower fees, Barrington says chances are your search will take you to the web.

"Across the board, monthly maintenance fees, overdraft fees, ATM fees. The checking account fees at online banks on average are lower than those at traditional banks," says Barrington. ClientIP:, UserAgent: CCBot/2.0 ( Profile: TWCSAMLSP