Online savings account...E-Loan, ING Direct, somewhere else?
Answer:
The rule in interest rates is that the higher the risk, the greater the interest that must be paid in order to attract deposit capital, and you can see this rule in effect in the two examples you've mentioned.
E-loan is a finance company that finances risky loans like 2nd mortgages, cars, motorcycles and so on. ING is a bank that is subject to all the stiff banking regulations of the USA, although it's an innovative Dutch bank that offers its services in electronic form only.
The risk with E-loan is that, in a recession or economic downturn, many of their borrowing customers will lose their jobs or otherwise be unable to make the payments on their loans. The whole structure could weaken, possibly collapse. As a depositer, you could lose. What sort of insurance can they offer on your savings account, for example?
ING can probably insure your account to the fullest extent required by federal and state bank regulations. Their parent bank in Rotterdam, Holland is among the biggest in the world.
There's a solid reputable work ethic that infuses ING operations worldwide and they're easy to deal with. No, I don't work for them!
We're in a nervous, turbulent economic period. Already there are stories in the media of 2nd mortgage home owners who've lost their jobs, gotten in over their heads, and now their houses are being repossessed. The value of the housing stock has dropped, in some regions dramatically, over the past year.
I would stick with licensed banks and avoid finance company accounts, at least in these times.
go to www.bankrate.com and click on bank savings accounts. They will tell you the highest rate in the nation and they also rate banks as to their safety.
Why not open a brokerage account at Scottrade.
It is free.
You can invest in stocks and bonds.
They offer many no-load,no transaction fee mutual funds. Some make over 10% per year, but of course, they are not as safe as a bank.
ETrade Financial - has it all, bank, brokerage, mortgage, etc
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