For the most part, I tend to use the advertised interest rates as the deciding factor in choosing a high yield online savings account. After all, if there isn't more interest to be had, why bother with sending money to an online account when the traditional savings account at my bank will do?
Yet, as I opened up more and more accounts through the years, certain features started jumping out at me as being important than I realized at the beginning. Nowadays, in addition to how much interest I could earn with yet another bank, I look for:
Their Commitment to Service
The easiest way to figure out whether you will be treated fairly is by calling the customer service directly. Just tell them that you are planning to sign up and ask them specific questions and listen their response. You will get a feel of whether you are comfortable dealing with them when/if you need help with your account by thinking about whether they were polite and knowledgeable. What's especially important is whether they are communicating to you as an individual (rather than just reading off of a script every chance they get).
In addition, the customer support hours are extremely important too. Is there a way to contact them 24 hours every day? Or are you confined to 9 am to 5 pm in some different time zone than where you are?
Lastly, some companies offer phone service, others offer email and some even have semi-instant messaging (or all three). Obviously, the more the merrier, so which of the three does the online bank you are thinking about offer?
The Bank's Interest Rates Trend
With these high yielders seemingly changing interest rates daily, it makes sense not just to see where the current interest rates are but also how the banks have reacted to interest rate changes. Did they start off being the highest interest rate offering in town and then subsequently lower their rates to one of the lowest in the industry? Or have they tried to keep the rates steady in the name of consistency?
Their Transfer Limits
This particular "feature" is the most annoying issue for me by far. Most institutions don't really pose a problem, as their transfer limits are something like $100,000 per day, but with others, you cannot transfer more than $5,000 a day. A $5,000 a day limit may not sound like a problem now, but what if there's news that the bank may be going under and you want to withdraw all your money? Can you wait 10 days to take out the $50,000 you have in the savings account? I know there's FDIC insurance and all that, but who wants to deal with that headache.
Their Values / Culture
You will always hear someone talking about not doing business with a company because they don't agree with the CEO's political viewpoint or something unrelated. I'm not that guy. But I do care about news of how a company treats their customers in other parts of their business because that reflects company culture and in general, the same company values spread throughout the organization.
With so many of these online savings accounts being just one part of the company, you can probably find out how customers are treated not just in the banking department but other branches of their services as well. Are they primarily a credit card company? How do they treat their customers there? What about an auto financing company? Any complaints? With a bit of research, you can not only figure out potential issues online savings account customers will be experiencing, but other bad news such as cost cutting as company integration ultimately takes over any independency of different departments.
What I'm saying is let's say for example that a company has a history of sticking it to their customers in their credit card arm of the business, can you actually trust that they will take care of you if you need their help with your savings?
Look. Without a high interest rate, there is almost no reason to even have a savings account. But if it might be a pain in the butt to deal with an online bank, why bother?
David Ning owns MoneyNing Personal Finance, a site that explains personal finance issues in simple terms such as how his reader benefited by getting a 0% balance transfer credit card to pay off his debt. Check it out as soon as you can!