With the national savings rate at less than 1% of disposable income, the high cost of gas and other utilities, and interest rates at traditional brick-and-mortar institutions at miniscule levels, it is not surprising to me that many people say that it is not even worth saving money if they cannot earn anything on it. However, when I ask them if they would consider opening a savings account if they could earn 3% APY, or more, their first reaction is disbelief, relaying the thought that they do not want to lock-in their money for extended periods of time in CDs. Even more revealing is their total insecurity when asked about opening an account at an "online-only bank".

A simple review of the chart of the highest-yielding money market accounts at BankRate.com shows names such as WTDirect, HSBC Direct, M&T Bank, and Zions Bank all which offer high-yield savings accounts paying 3.25% APY or higher. The first reaction from most people is that online banks aren't real or they can't be FDIC insured. What they do not realize is that each of these "online-only" options, are simply divisions of more traditional institutions. Zions Bank for example was founded in 1873; WT Direct is actually a division of Wilmington Trust, which was established in 1903; HSBC direct is a division of HSBC which began its existence in 1865 under the name Hong Kong and Shanghai Banking Corporation Limited. In other words, there is nothing fly-by-night about any of these particular banks: they all have lengthy histories exceeding 100 years, they are all FDIC insured, and they are all legitimate places to keep your savings.

Another excuse is the manner in which funds are transferred into such accounts. All transactions are done electronically by linking a traditional account and logging in to the online bank to initiate a transfer (although some banks still permit customers to mail in deposits). Many people still have a fear of technology and do not trust even the most secure connections. My response to them? I always ask what they think is easier to accomplish: hack a secure connection and steal their information or walk up to them at an ATM or bank branch and rob them? It's very simple actually: by transferring money electronically there is no need to go to a bank and you will not have to handle any money physically. It's especially secure if you have your paychecks deposited directly to your checking account and then transfer the money to your online savings.

Understand, that there are some drawbacks as well. Firstly, it takes about 3 business days on average for the funds transfer to be complete and the funds to clear. Fortunately, since the main reasons to have these accounts are for emergency funds or long-term savings this is a relatively non-issue. In some cases, you will be given the opportunity to get an ATM/debit card which will at least enable you to access your daily ATM limit should the need occur which will help alleviate some of the hassle of transit times. The other drawback is that in the event of a communications outage (power failure, internet connection failure) you will not be able to access the funds.

Quite simply, if your only reason for not saving is the low interest rate payouts, then you really have no excuse anymore. By doing a little research you can find a well-established, insured, institution which pays high-yields and offers relative liquidity of your funds.