Nervous about putting money in online accounts. Silly, right?

[SavingMon(k)ey]

Hello, all. Please help a beginner.

So, I need a little reassurance here. I've never put my money online anywhere, and for some reason I'm feeling squirmish about something as silly as an online CD with GE Capital Retail Bank (with Optimizer+Plus). All I'm looking for is a safe place to park $3000 that actually don't belong to me (I'll be paying them back to someone in about a year and a half) and a high-yield savings to park my emergency money. Did the research and GE has a promotional 15-month CD at 1.15% APY that seems like the best rate around and one of the highest rates for high-yield savings at 0.90% APY. Right now this money is in regular savings accounts at the bank/credit union earning something completely pathetic not worth mentioning.

I think it's just the online aspect of it that makes me hesitate. What say you, wise mustachians? Is it ok? Did I find good rates?

Thanks!

[kpd905]

It is FDIC insured, there is nothing to worry about just because it is online.

[SavingMon(k)ey]

Yes, alright. I'm feeling very silly and will get over it.

Now, did I do ok on the rates? Or is there better out there?

[.22guy]

I felt the same way when I started putting money in Barclay Online Savings.  I had some vague fears of there being a computer glitch or something and then "POOF", my money is gone and I would have a hard time getting them to give it back.  But I've been doing it for a while and I feel pretty good about it now.

[SavingMon(k)ey]

I felt the same way when I started putting money in Barclay Online Savings.  I had some vague fears of there being a computer glitch or something and then "POOF", my money is gone and I would have a hard time getting them to give it back.  But I've been doing it for a while and I feel pretty good about it now.

Ok, thanks for sharing. That has been my fear. But I know even the brick-and-mortar bank could theoretically have a glitch of that sort. And yes, there is FDIC.

[Bigote]

I have an online account at GE Capital Retail Bank.  Everything is good


Before them I had one at TIAA-CREF, before them at DollarSavingsDirect.    (I chase interest rates every year or so)

[.22guy]

I felt the same way when I started putting money in Barclay Online Savings.  I had some vague fears of there being a computer glitch or something and then "POOF", my money is gone and I would have a hard time getting them to give it back.  But I've been doing it for a while and I feel pretty good about it now.

Ok, thanks for sharing. That has been my fear. But I know even the brick-and-mortar bank could theoretically have a glitch of that sort. And yes, there is FDIC.

Definitely, brick and mortar banks could also definitely have the same issue. Maybe it feels different because a B&M bank has branches where you could go in and talk to a manager face-to-face if there was a serious problem? 

[Another Reader]

There are two GE Capital banks.  One is GE Capital, one is GE Capital Retail.  You can compare rates for various products from both at www.depositaccounts.com.  GE Capital has the 0.90 rate on line savings and money market accounts.  CD minimums are $500 and the 12 month rate is 1.00 percent, 18 month 1.05 percent.  GE Capital Retail offers on line savings at 0.90 percent, and a special 15 month CD at 1.15 percent with a minimum of $2,000.

TIAA-CREF was fine for awhile, but they never bothered to inform customers when the interest rate dropped.  They stopped offering new accounts and shortly after, I closed my account.  Sallie Mae Bank offers a money market account at 0.90 percent, but the CD rates are not competitive.  Barclays offers a gimmicky Dream account at 0.95 percent and online savings at 0.90 percent.  Their CD's are also not competitive.  I have had Ally Bank and Sallie Mae for years and I opened the GE Capital Bank account before closing the TIAA Direct account.

Before that, there was ING and Emigrant Direct.......  but that's at least a decade ago!  When the rates are this low and this close, I don't bother switching.  I closed TIAA-CREF, but their behavior was out of line and the handwriting was indelibly etched on the wall.

[randymarsh]

A computer glitch could just as easily "erase" your money at bank with physical branches, it's all computerized. The average branch also doesn't keep nearly as much cash on hand as we think, in case you ever wanted cold hard cash ASAP.

[Empire Business]

I've never been inside a physical Vanguard, or anywhere else my employers may have had my retirement accounts over the years.  I presently have accounts with around 20 different financial institutions, and I've only ever been to branches of a couple of them.  Never really had any issues, except with Wells Fargo Home Mortgage, which has branches all over the place.