Online Savings Accounts that Pay Well, Offer Great Extras

Online savings accounts are an excellent way to store cash or build that "just in case fund" you've been meaning to establish... Unlike traditional accounts, which typically offer an anemic interest rate between just 0.5 and 1 percent, online savings account can usually offer much higher rates due to lower overhead.

Online banks don't need to worry about expensive branches or managing ATM machines or drive-thru teller kiosks. They can focus on maintaining an easy-to-use web site and giving better interest rates, in addition to accessible customer service when necessary.

Below are my three favorite online savings account services. (I do not make a commission by referring you to any of these, nor do I work for any of these banks.)

ING Direct (ingdirect.com) -- We have all seen the commercials and billboards for ING Direct and it's "We the Savers" campaign. ING Direct is a service of ING Bank, a heavyweight in the global financial services industry. The web site is bright orange and easy to use: signing up only took me a few minutes. In addition, linking your account to an existing checking acount for initial funding purposes was easy to do and transfers back and forth have been, in my experience, generally quite speedy (within 2-3 business days). At time of publication of this article, ING Direct offers a variable annual percentage yield, or APY, of 2.50%. Not bad compared to the 0.5% or 1% offered by many brick-and-mortar banks. Also offers instant transfer between an ING Direct account and a Sharebuilder investment account, if you have one of those (Sharebuilder was recently bought by ING, that's why they offer this).

HSBC Direct (hsbcdirect.com) -- HSBC Direct, a service of HSBC Bank USA, is another friendly and easy to use online savings account web site. The annual percentage yield at the time of writing and publishing this article is a little higher than ING Direct's at 3.00% APY (ING Direct is 2.50% APY) and the web site's promotional literature claims no fees and no minimum balance requirements. They also offer debit cards that can be linked to the savings account and an easy-to-use "earnings calculator" showing exactly how much you'll make from a certain-sized balance. This is a nice touch; the HSBC Direct service makes sense especially for those who already own a traditional HSBC account.

Citibank's Ultimate Savings Account (accessible via citibank.com) -- The same rate as ING Direct's (2.50% APY) and no monthly maintenance fee. The minimum initial deposit is $100; the web site claims the online application process takes ten minutes or less.

All three services appear to have FDIC insurance, meaning deposits up to $100,000 are insured by the Federal Deposit Insurance Corp and are therefore safe. These are by no means the only online savings account services offered, but these are the three I am most familiar with. Good luck finding one that works for you -- and I hope you enjoy the feeling of setting aside some money as much as I do.