It's time to try an online bank

Hand putting coin in white piggy bank

If you want to earn top returns from your certificates of deposit, checking, savings and other accounts, it's time to consider an online bank.

Signing up is easy and safe. We'll show you how to do it.

Although online banks are relatively new, they operate much like your neighborhood bank. The major difference is that you'll conduct most of your business, whether it's checking interest rates or moving money into your savings account, by computer.

While some online banks exist only in cyberspace, others are divisions of older banks with traditional branch offices. And many local banks now allow anyone to apply online to take advantage of top rates. These offerings also expand the market that the banks can draw from.

One of the best 12-month CD rates is from Nexity Bank, which serves Internet customers in all 50 states. Nexity has a one-year CD with a 5.15% APY and a $1,000 minimum deposit. You can apply online, over the phone or by mail.

If you are looking for a great interest rate on your savings account, AmTrust Direct, which is the online division of an old, established bank in Ohio, offers a 5.36% APY with no service fees and minimum balance charges. That's a whole lot better than the 1% (or less) some of the big-name banks are paying.

And if you keep enough in your checking account to make interest a worthwhile concern, you can't do better than Charles Schwab Bank. It's now paying 4% APY on checking accounts, with a minimum deposit of $1 and no other fees.

A check of our interest rate comparison charts shows online banks consistently offer good returns on all types of deposit accounts.

This doesn't mean you should rush down to the neighborhood bank and close your accounts. But to make the most of your savings, trusting at least some of it to an online bank is an increasingly smart move.

Here's how to get started:

Step 1. Find a federally-insured bank with a secure site and the best interest rate.

Use our interest rate comparison charts to find an online bank offering the best return on the type of account or certificate of deposit you want.

Every bank on our interest rate comparison charts is a member of the Federal Deposit Insurance Corporation, which insures your deposits up to $100,000.

Most online banks also state right on their home page that they are members of the FDIC. But if you find a bank elsewhere, it's a good idea to verify that it's insured by checking with the FDIC.

You might also have some anxiety about protecting the private information required when applying for an account.

Online banks understand that, so their application sites are secure. Look at the URL on the application. It should begin "https:." That "s" stands for secure.

Step 2. Fill out the application.

All banks need the same information to open an account and online banks use forms similar to those at a branch down the street.

Electronic applications are on the Web sites of all online banks.

It will ask for your name, address, phone numbers, e-mail address, Social Security number and driver's license number along with the date issued and the expiration date. The bank will not ask for paper copies -- and certainly not the originals -- of any documents.

Most applications will also ask for a "secret" word, such as your mother's maiden name or the city where your father was born. These are just additional security measures.

You may also be asked to create a password and user identification name (the form will say how many letters to use and if numbers are required) to access your account. Be sure and write these down.

You're usually asked what savings plan you're signing up for and the amount you'll be depositing. Any questions? All banks have 800-number help lines and they can walk you through the process.

Step 3. Make a deposit. Manage your money.

Most online banks ask for a check for the amount of your deposit, say $500 for a one-year certificate of deposit. Mail it to them and they'll return the paperwork verifying your deposit, interest rate and the date it will mature.

If you're opening a money market or savings account, you'll probably be asked for a check with your initial deposit and a voided check. (Just write "VOID" across the face of the check with a felt-tip pen.)

The online bank will use the account number and tracking number on that check to establish an electronic link between your current checking or money market account and your new savings account.

That way money can be transferred between checking, savings and money market accounts, even if they're at different banks.

You may also be offered an ATM card, paper checks, or both, that allow money to be withdrawn from your savings or money market account.

Remember when we learned to shop online? Well, we really mastered that. Then we learned to bid online to get good deals at eBay and other auction sites. Now it's time to earn money online and save time while you're at it.

A Pew Project survey taken in December 2005 projected that 63 million consumers, or 43% of Internet users, did at least some of their banking online, from checking account balances to seeking the best interest rate.

That was up from 16 million consumers doing online banking in 2000 and shows how much more comfortable we're becoming with managing our money on the Internet.

Making the most of online banks is the next, logical step.

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