Part 10 (2/2)

In its July 2009 issue, the Consu, despite a rocky start, is beco the rule rather than the exception” The newsletter cites research by Forrester associates that predicts that 76 of American households with Internet access will bank online by 2011

If you're considering an online bank, keep two things in h o) have a growing online presence, they generally offer lower interest rates and have higher fees than online-only banks like ING Direct and HSBC Direct And second, the biggest thing that holds people back fro online is security concerns But Consubecause there's less of a paper trail and your transactions are digitally encrypted

Here are some online banks to consider: - Ally Bank: allycom or 1-877-247-2559 or 1-877-247-2559 - Capital One: capitalonecom or 1-866-871-7932 or 1-866-871-7932 - Citibank: citibankcom or 1-800-374-9700 or 1-800-374-9700 - EverBank: everbankcom or 1-888-882-3837 or 1-888-882-3837 - HSBC Direct: hsbcdirectcodirectcom or 1-800-ING-DIRECT or 1-800-ING-DIRECT For a more complete list, check out MoneyRates (money-ratescom) or BankRate (bankratecom) At Get Rich Slowly, I've coh interest rates and good security: tinyurlcom/GRSbanks

It's easy to try an online bank-you're not stuck with the first bank you choose Sign up for an account at one, give it a spin for a feeeks, and if it doesn'telse Take the tiht Bank for You I opened e I had two options: a bank that offered free checking and a bank that was handing out Frisbees I chose the Frisbee, as did e kids couldn't resist free toys

My new checking account cae I didn't think much about it; after all,deal, right?

I paid that ”no big deal” for e to 8 a month I asked them to waive it a couple of times, but they wouldn't Eventually I wised up and switched to a credit union that didn't charge a monthly fee-but not before I'd paid that first bank about 1,500 for the ”privilege” of banking with them And all because I wanted a ”free” Frisbee

I'ive away all sorts of stuff to bring in new custoift cards-you name it But as I learned the hard way, you should never choose a bank just because it's giving sos that matter, like: - Convenience How convenient is the bank? What are its hours? Where are its branches? How easy is it to find an ATM?

- Fees What sorts of fees does the bank charge? What's its policy on overdrafts? Does it offer free checking? Free online billpay? Free access to canceled checks?

- Service How's the customer service? Ask your friends and fa Is the website easy to use? You o into a branch and ask soive you a demo

- Rates What kinds of interest rates does it offer on savings accounts and CDs? (If you'll soon be shopping for a e or other loan, check those rates, too) - Values What about the intangibles? For exae points or pay extra fees to put theira Bank) Make sure the bank's philosophy matches yours

And remember: You're not stuck with a bank forever Shop around Don't stay with a bank simply because it's the one you've always had if other banks are offering better rates or lower fees There's no reason to settle for crappy service at a crappy bank

TipIf you serve (or have served) in the US military, be sure to check out USAA (usaacohouse for veterans USAA has excellent custo, insurance, and investured out what kind of bank would work best for you, there's one other important factor to consider: What kinds of accounts the institution offers The next few pages explain what to look for

Finding Accounts That Meet Your Needs The other half of the banking equation is accounts Even if you find what seems like the best bank in the world-one with convenient locations, long hours, and a wonderful website-if its account options don't meet your needs, you're better off soives you an overview of the s and explains the pros and cons of each

Types of Accounts Picking a bank account is like choosing the right tool for a job: Sure, you can pound a nail into the ith a screwdriver if that's all you have, but you'll get the work done faster and more precisely if you use a haht account and you'll get better results The next four sections cover common types of accounts so you can pick the best ones to help you reach your goals

Checking accounts Most people use their checking accounts as the hubs of their financial lives This is where they stash their paychecks and pay their bills nobody expectsaccounts But believe it or not, under certain circu accounts can actually offer better interest rates than savings accounts

Many s accounts, which they provide in partnershi+p with a company called BancVue (bancvueco accounts, but they all share sih interest rates-if you meet certain requirements You have to: - Get yourinto your account at least once a month

- Make a certain number of debit-card purchases each month (usually around 12-and ATM withdrawals don't count)

- Make at least one electronic transaction per month, like an automatic payment to your electric company

If you use your debit card often, a rewards checking account h interest rate only applies to a certain portion of the money in your account (At some banks, this amount is 10,000; at others, it's 100,000) Any money above that cap earns only a tiny return

You can read(tinyurlcoe list of such accounts at tinyurlco

NoteBanks pay interest on many accounts, but they don't do it out of the kindness of their hearts It's good business The bank takes your her interest rates, or invests it to earn better returns In exchange for using your money, the bank pays you interest-but s accounts You use your checking account for day-to-day stuff, but your savings account helps you oals It's also the best place to tuck your eency Fund) Because you'll eventually end up with a ton of s account is a high interest rate

A lot of folks have their checking and savings accounts at the sa account at a local bank and your savings account at an online bank because: - Traditional banks generally offer a pittance on their savings accounts (s account is currently paying 010 interest) Online banks can offer higher rates because they tend to have lower operating costs

- It's easy to connect your checking account to an online savings account, but it's slightly tougher to transferaccount (it usually takes a couple of days for the enerally a good thing because it keeps you fro the s to checking and spend it that sa isn't your only option Some traditional banks actually offer decent interest rates, so check rates in your neighborhood When you do, don't forget to ask about unadvertised specials; they reat deals you won't know about otherwise

Be sure to keep an eye on your savings account's interest rate Rates fluctuate froh rateIt usually doesn't her rates every tiet stuck in an account paying 025 when others are paying 25!

Money market accounts Money s accounts that sport higher interest rates and higher minimum balances My credit union, for example, requires h not all banks have h With some money market accounts, you can write a few checks every her minimum balances, banks have more leeway to use the funds in your account (see the Note on Savings accounts Savings accounts), so they're able to pay more interest Other than that, there's not a lot of difference between s accounts Still, it's important to know the term because it's one you'll hear often

Certificates of Deposit Certificates of Deposit (CDs) are tiive your money to a bank and promise not to touch it for a specific amount of time A CD is basically a loan that you make to your bank, which can invest the eneral, the longer you let the bank keep your et

Unlike a savings account, once you put e If you open a 12-month CD at 350, say, and then interest rates drop to 100 (as they did in 20082009), you still earn 350 over the whole year

The catch is that CDs are less liquid than other accounts,you can'tpenalties If you take your reed upon amount of time), you'll be docked interest In some cases, you may even lose part of your principal

NoteUnlike savings accounts, CDs end-or mature-after a set period What happens then depends on the arrangements you've made with the bank Many CDs renew automatically, which may not be what you want So make sure you knoill happen when yoursinfo about an actual CD that I opened recently at ING Direct to set aside ure7-1The Anatomy of a Certificate of Deposit This CD started out at 14,000, earns 175 interest, and has a term (lifespan) of 12 months If I decide to redeeardless of whether I've already earned that interest In other words, if I had takenthe second month, the bank would have taken part of my principal because I'd have only earned 2 months' interest at that point

When my CD matures on November 12, 2010, I'll have 14,24499-alh to pay for quite a few nice oal with CDs isn't to get rich-it's to earn a decent return in a safe account, and CDs are super safe This account is a great way forabout losing money in the stock market (There'sAccounts As you can see, certain accounts are better for certain situations, so you want to ht tool for each job When you choose an account, ask yourself: - What do you need the account for? Long-ters? Business? Personal? Everyday use?

- How much will you keep in the account? Reet the best interest rate (To get the top rate with my credit union's money market account, I need to have 50,000 in the account) - How liquid does the money need to be? If you need quick, easy access to your cash, choose accounts at a local, traditional bank If you don'tto your dinero, an account with an online bank ork fine And if you can let your ht be your best option

- Do you need easy access to the money? If you need frequent access to your account, make sure to open one with a bank that has ATMs all over the place If you'd rather create a sort of barrier so it's tougher to spend your money, choose an account that isn't tied to an ATM card

- How important is online access? Do you want to download your transactions to Quicken or Excel? Do you need online billpay? Some accounts (and banks) offer more advanced online features than others

Your answers to these questions will direct your search: If you need constant access to your h balance, look into asome research, you can pick the best accounts for your situation

Making the Most of Your Accounts You'll have -and earn et by default When you open an account, find out everything about it; read the fine print to learn what you can and can't do And remember that accounts aren't just places to stash oals! Here are so the Best Rates If you're shopping for the best interest rates, check out online banks (Online banks) In general, they offer better rates than traditional banks and credit unions

Many websites have tables listing current interest rates I keep one at Get Rich Slowly (tinyurlcom/GRSrates), and you can find others at sites like MoneyRates (money-ratesco Your Accounts Optimized If you use a traditional bank or a credit union, you should ask a teller once or twice a year if there are any improvements you could make to your accounts Ask about: - Better interest rates Is there a siive you a better return?