If you're looking for a better interest rate for your savings, an online bank could be the ticket. Many online banks offer higher rates than their brick-and-mortar counterparts.
From Consumer Reports Money Advisor, here are some tips on the best ways to evaluate an online bank:
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Get the best interest rate. You can check the most recent rates at Bankrate.com. But don't stop there: Verify those rates with the banks themselves. Also, compare online rates with the rates of banks in your area.
Know the fees. Many online banks come with a host of restrictions that trigger fees. For example, many online accounts limit the number of transactions each month. They also charge extra for printed statements and in some cases for calling a customer representative instead of banking online.
Choose the right account. Besides savings accounts, many operations include checking and money market options. There might also be retirement, joint, trust, and payable-on-death accounts. You might even get attractive rates on mortgages or other loans.
Be aware of rate changes. Remember that rates on accounts change often — you might receive alerts from your bank, but you might not.
Marshall Loeb, MarketWatch