Why online savings is ideal for Baby Boomers

With more and more Baby Boomers embracing new technology, from cell phones to GPS to Facebook, online savings accounts fit right in. Their 24/7 access to funds and competitive interest rates make them a good choice for anyone, but especially if you're over 50 years young.

Of course, if face-to-face customer service is your thing, you may need a little more convincing to make the switch to online banking. After all, you can't walk into an online bank and chat with a teller (although perhaps you'd just as soon skip the chat and get your banking done, thank you).

The following advantages may very well outweigh the drawback of not being able to speak with a teller face-to-face. And aren't some banks charging for that anyway?

Why online savings accounts are better

1. Online interest rates are often higher. Many banks operate exclusively online, while other well-known brick and mortar banks have online partner institutions with better rates than you get in their traditional accounts. That's why online savings account interest rates are usually better - because the banks don't have the expenses associated with a physical building. And there's less "paper" work.
2. Websites are generally superior. With every transaction done online, the banks have to have clear, easy-to-navigate sites.
3. You can bank in your pajamas. When you're conducting financial business on your computer, it doesn't matter what you wear. If you're sick or for some other reason unable to make the trip to your bank building, but you need to make a transaction or two, you still can - just switch on your computer.
4. Your account information is instant. Instead of waiting for your statements to arrive in the mail, you have up-to-the-minute information on your account status right at your fingertips.
5. Saving has never been so easy. Online banks welcome you 24 hours a day, 7 days a week, so you can make deposits or transfers pretty much any time. You can also set up a direct deposit to filter into your online savings account.

What to look for

All online banks are not created equal, so when you're shopping around, you should look for certain features and decide which of those features determines the best fit for you.

1. Low or no fees. Fees that banks might assess include ones for low account balance, using an ATM, inactivity or making a transfer. Inactivity fees are usually charged when there's been no activity on the account for at least a year. Ideally you don't want any of these fees; read the fine print carefully so you're sure of the bank's policy.
2. A simple, clear website. You want a site that you understand and can easily move around in. It should be readily apparent where to click to read about the bank's products and services. The information should be current with no broken links, plus any text on the site should be easy to read.
3. Visible security. Worrying about the safety of your money on the Internet may be a major stumbling block for Baby Boomers if they are uncomfortable handling finances on the Web. But traditional banks face the same risks. These days nobody, neither customer nor bank, is immune from the risk of electronic information theft. Banks have a vested interest in keeping your money as safe and secure as possible.
4. FDIC insurance. Banks pay the cost of this nearly universal deposit insurance program. Look for the FDIC logo. It's usually some place on the front or home page of the online bank. In many cases, money deposited with an online bank is actually held with a parent bank with FDIC insurance.
5. Initial deposit amount and minimum balance requirements. If the online bank you're thinking of doing business with has these, make sure they mesh with the way you bank before signing on. You should also be able to set up email alerts to let you know if your balance runs low, if there have been large withdrawals from your savings or if there's been unusual or excessive activity.
6. ATM card. If you want an ATM card associated with your account, make sure the online bank makes that option available to you.
7. Reports. A list of deposits, interest and transfers should be available. You'll also want monthly statements and access to archived statements.

Commonsense safety tips

A final word about security seems vital here. Besides what your online bank already provides, you can and should take some steps yourself to make sure your finances are protected when you bank online. Create a password using a mixture of upper and lower case letters, numbers and symbols (like the dollar sign, exclamation point and ampersand).

Don't use anything easily guessed like birthdays or pets' names. Change your password often. Keep up-to-date virus protection on your computer. And check your account often to make sure all the transactions recorded were made by you.

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