Where traditional banking falls short, digital platforms rise to the occasion. Digital banking has transformed not only how we manage our finances but also how we save for the future. Modern digital savings accounts are the top example.
You can now open, access, and manage your savings account entirely online, anytime, anywhere.
That said, not all digital savings accounts are the same, and choosing the wrong one can cause more harm than good. This guide unpacks five core features you should compare when choosing an online savings account provider. Let’s get in!
- Account Opening Procedure
When looking for the best online savings account, start by comparing the account activation process. Reputable online banks like SoFi don’t drown you in paperwork or turn the process into an Olympic sport.
The onboarding process should be fully digital, so you can set up the account in minutes using a smartphone or computer. Moreover, digital banks use video-based Know Your Customer (KYC) processes for verification. This eliminates paperwork and the need for physical visits.
- Interest Rates (APY)
Next, consider the interest rates offered by different digital banks. The interest rate, often expressed as Annual Percentage Yield (APY), tells you how much your money can grow over a year, including compound interest. It’s basically a measure of how rewarding a savings account can be.
Generally speaking, digital savings accounts offer significantly higher annual percentage yields compared to traditional brick-and-mortar banks, with some reaching as high as 4%, which is a great deal.
But here’s the thing: many digital banks offer high APY for a limited time. So make sure the interest rate you’re saying yes to isn’t a limited promotional offer, but the standard ongoing rate.
- Fees and Minimum Balance Requirements
In addition to interest rates, consider minimum deposit requirements. Many digital savings accounts do not require a minimum balance to open or maintain the account to earn high interest rates.
Moreover, watch out for additional fees, such as account maintenance fees or overdraft fees. Reputable digital banks don’t impose such additional costs.
- Security Protocols
Robust security protocols indicate commitment. Reliable savings account providers rely on advanced technology and regulatory protocols to keep customer funds and data safe.
Here are some security must-haves:
- Two-factor authentication
- Biometric login
- End-to-end encryption
- SSL and TLS protocols
Pro tip? Opt for a digital savings account that is insured by the Federal Deposit Insurance Corporation (FDIC). FDIC insurance typically covers deposits up to $250,000 per depositor.
- User Experience
Lastly, consider how seamless the user experience is. As hinted earlier, you shouldn’t have to jump through hoops to review your account balance.
Make sure the mobile application is easy to navigate. The following features improve user experience:
- Transaction alerts
- Low-balance alerts
- Real-time notifications
- Automated savings tools
- Built-in budgeting tools
- Goal tracking
- Account management features
- Virtual cards
- Instant card controls
Responsive customer support also adds to the experience. With in-app chat, email, and 24/7 phone support, you can navigate any account troubles without feeling lost.
