Online Banks: Which Should You Choose?

10,000.00 dollars or more in a standard saving account through normal banks may only earn a pitiful annual percentage yield (APY) of one percent. That equals to one hundred a year in interest. However, through some online banks that same 10,000.00 balance could earn that in three months. Because, most of them offer a higher annual percentage yield (APY), on average 5.05 percent. Even if you do not have 10,000.00 in the bank, you still want to get the highest percentage rate you can.

Of course, online banks do have their drawbacks. Not to mention the trust issue, considering they are "online". A few of the banks are emerging as leaders in this new way of banking.

The first one that would come to mind is ING Direct (.com), since they advertise on TV. An ING Direct Electric Orange Checking Account is as good if not better than a savings account. With this account, you get flexibility and all the conveniences of a checking account, including an ATM/debt card (MasterCard) but a savings account percentage rate. In addition, the electric orange account allows for unlimited debt card purchase and withdrawals. You can even set up automatic bill paying. The ATM access if free if you use one of their 32,000 and more networked ATM's, to find one you can use their ATM locator. With an Electric Orange account you get an automatic overdraft line of credit, there are no fee's to use the line of credit other than a competitive interest rate on the borrowed money.

The APY for this account is four percent on balances up to 49,999.00 (may change) this is high for a checking account. 5.25 percent on 50,000.00 to 99,999.00, etc...

A down side to this bank is there is no physical checkbook, because it is an all-electronic account. If you need a paper check you can have one sent out, however it takes five days (or more) to process and deliver. Of course, with debt cards writing a check is almost an ancient art form and you probability will not ever need one. Another down side is to make a deposit you have to mail in a check and no ATM deposits either. An ING checking account is a good option if you want to get a higher interest rate on your money, and 24/7 access to your money.

The requirements to open an account are you must be US citizen or permanent resident and have a valid SSN, be 18 years or older, have a (non-business) personal checking account through another US chartered bank.

ING Direct has many other great account options, their savings account also offer an "on average" higher APY, currently it is 4.50 percent. There is no minimum balance to open you orange savings account. In addition, the interest rate will be 4.50 (may change) on whatever balance you have in the account, there is no specific balance required to get the high interest rate. With all that, it gets better, No fees or service charges/penalties. If you have an ING Direct Checking account, you can transfer money from one to the other 24/7 making in instantly available through your checking account's debt card. Transferring money to and from your savings account is easily done through a checking/savings account that you already have through your local bank. The account you use to make the initial deposit is automatically linked. You can set up automatic monthly transfers to your Orange savings account, to effortlessly save for that rainy day. "You are assured high interest with an ING Direct Orange Savings Account day after day" is the claim on the website.

You can apply for both of these accounts online or by printing out the application(s), fill them out, and send them by "snail mail". You can also call 1-800-ING-Dierct to get an application sent to you.

Both of these accounts are FDIC Insured, ING Direct's FDIC certificate number is 35489, they are registered as ING Bank. To learn more about what this means go to www.fdic.gov

ING Direct also has offer CD's with great rates, guaranteed returns and no market risk. They have features such as automatic renewal, and online account maintenance with interest disbursements. That feature allows you to transfer the interest your CD earns to either your ING Direct Orange savings or checking account, and it can be set up to be done automatically. Like any CD, early withdrawals will incur certain penalties.

If you are a business owner, check out their accounts for businesses.

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An E-Trade complete savings account (US.E-Trade.com) is another great choice when it comes to online banks. Its biggest lure is its Quick Transfer, an integrated tool E-Trade is very proud of. Quick transfer connects all E-Trade and outside accounts to one place, making it the fastest inter-bank transfer in the business.

If your request is submitted before four PM (Eastern Time) on a regular business day it is guaranteed to be processed that day, making the money available that same day as well. Another advantage, because of the Quick transfer you do not lose any interest. "Zero days of lost interest"

You can open one of these accounts with only a one dollar deposit, and earn 5.05 percent APY (may change) on that dollar. There is also no minimum balance required and no monthly fees. You can customize your account reports and have them sent to any of the fallowing: E-mail, your PDA, or Mobile Phone.

To deposit money into this account you can mail a check, make arrangements for direct deposit. However, the easiest way is to transfer it from you checking account. All you will need to set that up is your banks routing number. You can get this by calling the bank and asking for it or off the bottom of your checks, call the bank if you cannot decipher the numbers. To make sure you got it right.

The only bad thing is no ATM access, but that may change in the future.

E-Trade also has checking accounts, The Max-Rate checking account has money management features, along with a decent APY of 3.25 but that only for balances over 5,000.00. You can pay bills online with this account, and the QuickTransfer is available for this account as well. You get a Visa ATM/Debt card for your checking account, there are no ATM fee's from any machine, any bank, anywhere nation wide, because they will refund any ATM fees you incur. To open a Max-Rate Checking account your initial deposit must be one hundred dollars or more is required, to avoid a 15-dollar monthly fee you must maintain a balance of 5,000.00 or more. They will waive this fee if you 1: make arrangements for a 200.00 (or more) monthly direct deposit. 2: have at least 50,000.00 in combined E-Trade bank deposits, or 3: maintain a combined balance of 50,000.00 or more in linked E-Trade securities, E-Trade Bank Accounts, and employee stock plan accounts. Therefore, this is not a good option if you do have that kind of money.

The other checking account they offer is better, the E*Trade Checking, is still has a minimum opening deposit of 100.00 dollars, but there is no minimum required balance or monthly fee's. You still get a Visa Debt card, unlimited debt card and check transactions (Free initial checkbook included). You can deposit money into your account in a number of ways, by mailing a check, wire funds, direct deposit, ACH transfer, or transfer from another account.

To apply you must be over 18 year of age and a U.S. resident with a valid SSN. To get more info on these accounts go to their website or call 1-800-ETRADE-1 (1-800-387-2331)