Ryan's Journal

I'm no financial adviser, but in tough times, making money work is essential. Online savings accounts are something of a stroke of genius, taking money out of brick and mortar institutions and getting to use it for their own loans and investments. Because the overhead of physical property and checking account maintenance is avoided, they can afford to offer much higher rates of return (annual percentage yield, or APY) than most well established banks, thereby leeching even more liquid funds. The only pre-requisite is that you have an existing bank account (again, genius; there's no due diligence on their customers since they've already proven themselves to another banking institution).

There are a good number of them out there. How do you choose? The Sun's Financial Diary has started to keep track of a history of interest rates offered for online savings accounts. I've taken the data and put it in Timeplot form for easier comprehension. As noted in that page, I have no direct business relationships with any of them. And as side/snide commentary, some of those banks have really, really bad names.

That isn't the full story, of course. Some accounts have minimum balances, others offer incentives, I'm sure still others have regular maintenance fees or brokerage options. It seems to me the most salient point in making a choice, though, is knowing how much money your money will make for you.