6 online banking accounts offer high yields on short-term allocation

There are banks made of bricks, and then there are banks made of clouds. Or rather, banks that are hosted in the cloud.

David Ning, starter of online financial blog Money Ning, suggests six of the best online banking accounts for short-term allocation. Using online accounts is what he always recommends for finding a high yield on short-term allocation, according to an article on his blog.

There are three things that make an online account good, according to Ning: liquidity and flexibility, safety (FDIC insured), and a high yield with good rates.

CIT Bank, American Express, Discover Bank, FNBO Direct and Ally online savings account, EverBank yield pledge, and ING Direct orange savings were the online accounts he says have these three things.

Beth Coggins, a spokesperson for Ally Bank, a completely online banking company, explains why she thinks online banking is a good option.

"We're 100-percent online banking, no brick and mortar branches," Coggins said to Work Goes Strong, a finance blog. "It's a different structure and we pass the savings on to customers."

Interest rates tend to be higher through online banking systems, with rates currently around 2 percent. While some consider the 4-day transfer time a hassle, Ning said it is a deterrent from reckless spending.

"It’s a savings Account," Ning said in his article. "Even though it’s very convenient, it is still a savings account. So many people treat it like a checking account and try to pay bills with it even though it’s not the intention. Consequently, they run into the six withdrawal per month limit set by the government and complain (that) they are charged a fee."

Along with slow withdrawals and contributions, there are other restrictions on online saving accounts. Most require monthly contributions, so you have to add a certain amount of money each month. There are no tellers, so customer service is done through online chat.

There are also minimum balance requirements, and transfers are a little tricky, because there is nowhere to hand over cash — it has to be done either with a check or transferring money wirelessly.

EMAIL: alovell@deseretnews.com