How to Find the Best Bank Savings Account Interest Rate

Some banks offer cash bonuses for opening accounts online, so ask about "new accounts" promotions.

Parking your money in a savings account can kill two birds with one stone: reduce budgeting stress and pay dividends. When you are searching for the best yield, remember that rates change rapidly, computation formulas differ for compounding the annual percentage yield and the minimum balance requirements vary. Read the fine print.

Things You'll Need

• Calculator
• Writing pad

Instructions

Compare Interest Rates Online

1. Go to google.com/advisor. Under the heading "Choose a category below," click the blue button "Highest interest rate." In the left column, you can make selections to refine your search by ZIP code, account type and banks listed in the drop-down menu. Punch in a dollar amount for the savings account under "account details." Choose the "regular savings" option.

2. Select the banks you want to compare; you can choose up to four items at a time with the Advisor tool. Click the "compare checked" button in the top left-hand corner. This narrows your search and you can review the selected banks side by side. Based on your starting balance, the tool computes the annual percentage yield (the interest rate) and lists the compounded period (daily, monthly) and when it pays out (monthly, quarterly). Note the minimum amount to open the account and the fees listed.

3. List your selected savings accounts in order of preference (for example, highest interest rate, lowest fees, lowest deposit). Recheck that you have the current rate offerings. It's helpful to know the amount of assets the bank holds; higher deposits can translate to more competitive rates, especially with online banks. You can find this information at the bank's company website under "inverstor relations."

4. Compare your list of banks and the advertised interest rates at Bankrate.com for a second opinion and to uncover any discrepancies. This finance site has a complete suite of search tools for consumers and offers reviews and money management education.

Tips & Warnings

• Use the contact number provided to open an account via telephone If you're more comfortable dealing with a customer service agent.

• Prevent cyber-theft and protect your private financial data. Close all the windows open on your your web browser after you complete an online application.

• Check for red flags by reading the service agreements. Banks will offer "no-fee" accounts with certain stipulations, such as five purchases per month using a debit card or minimum balance requirements. You can get hit with a large service or maintenance fee if you don't meet the monthly quota.

References

• Consumer Reports Magazine; Get The Best Rates on Your Savings; March 2010

Resources

• Bankrate.com; Advantages of Having a Savings Account; Josh Gilmore; July 21, 2010
• Google Advisor: Compare High-Yield Savings Account Rates