One day you might be at work or at home surfing the Internet and run into an advertisement stating that a particular bank offers a 4.8 annual percentage rate for their savings accounts. You may be thinking to yourself, wow that percentage rate is much higher than my 0.35 percentage rate at my local bank. Better yet, this bank does not require a minimum deposit or length of time like many conventional bank CD’s. Is this too good to be true? There has to be a catch! With a little bit of research you are able to confirm the information in the ad, but the offer is from an Internet Bank. Should I put my money into a bank that I cannot touch, and see every day as I go past driving to work? Welcome to the wave of new ways to bank; Internet Banking.

Why do online banks offer higher than regular bank establishments?

According to an article published in the March 17, 2006 online edition of The Baltimore Sun, online bank rates can offer higher rates because they do not have the overhead of brick-and-mortar branches. They do not have the expense of purchasing property and constructing a building. For the computer savvy consumer, these great banking services are a mouse click or two away and available 24 hours a day. Comparisons of these banking services are at your fingertips.

With all the different Internet schemes going on in this day in age, there are very legitimate reasons why people are scared or even paranoid to deal with their finances online. Phishing is one scheme that has made people very wary. In a typical phishing case, you will receive an e-mail that appears to come from a reputable company that you recognize and do business with, such as your financial institution. In the e-mail, phrases such as (immediate attention required) or (please contact immediately about your account) among many others will appear. The e-mail will then have a link directing you to a phony website where they can take all your private information. Then we all know what happens from there. This is why people hesitate to handle their finances on the Internet. So how can I make sure any bank (including an Internet Bank) is legitimate?

Make sure the bank is FDIC insured.

According to the official site,, there are four major tips to find out if the bank is legit or not.

o Confirm that an online bank is legitimate and that your deposits are insured.

o Read key information about the bank posted on the website.

o Most online banks have an “about us” section that will describe their institution.

o You may find the official name, the address of the bank headquarters and if they FDIC insured.

o Protect yourself from fraudulent websites.

o Watch out for sites trying to copycat online bank sites in intent of gathering your information.

o Always make sure you type the web address correctly.

o Verify the bank’s insurance status.

o Look for the familiar FDIC logo or the words “Member FDIC” or “FDIC Insured” on the web site, but beware that some bogus bank sites that phish for your account information will put a fake FDIC logo on their site.

o Go to the FDIC search engine and check to see if the bank is insured by the FDIC at

As of this month, according, HSBC was offering a 4.7 introductory rate. ING DIRECT was offering a 3.93 introductory rate. Almost all of the online banks were in the threes and fours. So as you can see – there is a great opportunity to save quite a bit of cash. So, why not put your money to work for you? But make sure when you are considering Internet banking, do your homework first.

Copyright 2006 Debt Management Credit Counseling Corp.