How Does Online Savings Account Work?

You put money in a bank.

The bank lends your money out to other people and businesses in the form of personal and business loans, charging the borrowers interest on what they owe until they pay back the money.

Online-only banks may offer higher interest rates on savings and investment accounts.

Are online savings accounts worth it?

So, are savings accounts worth it? From purely a yield standpoint, it might appear that savings accounts aren’t worth it. However, the benefits of a savings account aren’t in how much you earn. Instead, it’s about the purpose of your account and the liquidity and access you have.

What is the typical interest rate of an online savings account?

Average Interest Rate for Savings Accounts. According to the FDIC, the national average interest rate on savings accounts currently stands at 0.09% APY.

Can you pay bills from an online savings account?

Checking accounts can help simplify paying bills. You can choose to pay bills via debit card, check or online. Savings accounts don’t allow for this, but a savings account may make saving easier with automated transfers from your checking account to savings.

Can you write checks or pay bills directly from an online savings account?

Paying bills from your savings account would be detrimental to your savings goals, so most banks don’t allow you to write checks, use a debit card or pay bills from your savings account. If you want to withdraw any money from your account, you usually have to transfer the funds to a linked checking account.