In early October, I will announce the winners of the Second Annual Plutus Awards, which will include the best bank, best credit card, best brokerage, and a number of other categories. Later today, the Plutus Awards website will list the finalists. Money Magazine has already completed its survey and announced the publication’s editor’s picks for best bank this year.

For an alternative to these selections, I’ve reviewed what I believe to be the best online savings accounts, looking past the antiquated notion that a physical branch is necessary for a good banking experience.

For the best national checking account, Money Magazine recommends U.S. Bank, citing the bank’s high customer satisfaction ranking in J.D. Power & Associates. With no branches in my region and one ATM within 100 miles, U.S. Bank is not an option for me. For checking accounts, I appreciate having not only nearby ATMs but convenient branches. Wells Fargo is not my favorite bank, and like other national banks they rely on increasing fees to maintain their profits, but I have a checking account there because the branches are ubiquitous. I prefer TD Bank, but a less professional website prevents me from keeping my primary checking accounts there.

Money Magazine picked the Discover Bank Online Savings Account for best savings account. It’s difficult to argue with this selection. Although I closed my Discover account to consolidate my savings, I had a positive experience with that bank, and the interest rates they have been offering have been solid. The rates have been higher than the online banking mainstay, ING Direct.

Ally Bank wins Money Magazine’s selection for best online package, thanks to great rates, unlimited ATM fee reimbursements, and remote check deposit. The magazine also mentions that Ally introduced a debit rewards program at the same time other banks are eliminating them. I expect this benefit to be short-lived, though. Ally Bank is a result of General Motors and its subsidiaries distancing themselves from the negative public image of the company. The rebranding worked so well that more GMAC departments eventually changed their names to Ally. Here’s my review of the Ally Bank Savings Account.

Money Magazine chose Alliant Credit Union for the best credit union category. Credit unions often have regional or local associations, making it hard to determine a best credit union relevant to all Americans. I’m a fan of moving away from large banks towards credit unions, but not everyone can qualify. I’ve searched, and it doesn’t appear that I can become a member of any credit union near me.

The survey also recognizes the best regional banks: Bank of the West in the west, Huntington in the mid-west and TD Bank in the east.

Overall, the above selections are good choices for best bank. I think it’s good that the formerly innovative ING Direct receives some serious competition in the online space. With ING’s large customer base, the company has little incentive to staying competitive. Executives know that most customers will not switch to other banks just to chase higher interest rates. The more other online banks can improve their services and offer compelling products, the more ING Direct will need to worry about staying competitive.

National banks, with their overzealous fees and impersonal customer service, should be concerned about losing business to regional and local banks, credit unions, and online banks that offer more convenient services like remote check deposit and ATM reimbursements.

Money Magazine

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The best 12 month CD rates may not be impressive overall today compared with historical rates. With the Federal Reserve keeping interest rates low for the near future, all types of deposits will not command the interest rates that were common before the recession. With nowhere to go but up, it may not make a lot of sense to lock in a rate for a long period of time. With most certificates of deposit, once you agree to a term like five years, you’ll be stuck with that rate even if new CDs have different rates.

This is a good approach in an environment where rates are high and possibly falling, but not a great idea when rates are low and possibly increasing. Nevertheless, you can often find better rates for CDs than for savings and money market accounts, so if you know you won’t need your savings for three months, six months, or a year, you might be able to achieve slightly higher interest payments from the bank. One drawback is there is often a penalty for accessing your cash before your term is up.

For the uninitiated, a certificate of deposit (CD) is considered a “time deposit.” CDs are generally considered cash or savings when it comes to asset allocation, but the “time” requirement presents a maturity date like a bond. This probably doesn’t matter for most individual savers and investors, but it does carry an important distinction for businesses whose investments are reported to regulatory authorities.

Like savings accounts, CD interest rates are compared using APY, annual percentage yield.

Here are some of today’s best 12 month CDs APY rates.

Discover Bank offers a hassle-free banking experience. I am a current, happy customer. Discover offers a rate of 1.00% APY as of February 2012.

Ally Bank offers two unique types of CDs in addition to a traditional CD. The Ally Bank Raise Your Rate CD has a feature that mitigates the risk of CD rates increasing while you’re locked in. You’ll have one opportunity during the term of the CD to lock in the market interest rate. The shortest term offered is 2 years, though, not 12 months. The rate for this product is 1.14% APY as of February 2012.

Ally Bank also offers a No-Penalty CD, where you can withdraw your money at any time without a penalty. This term is slightly less than a year at 11 months, and the current rate is 0.91% APY as of February 2012. Beyond these products, Ally Bank also offers a typical 12-month CD, subject to an early withdrawal penalty and no option to increase the interest rate mid-term, and the current rate for a 12-month high yield CD is 1.02% APY as of February 2012.

Aurora Bank offers a 12 month CD with a minimum balance of $1,000. The Aurora Bank 12 month CD offers a rate of 0.15% APY as of February 2012.

ING Direct is a mainstay of online banking and set the standard for all other online banks. While the bank has been recently sold to Capital One, ING Direct continues to offer state-of-the-art banking products and deliver excellent customer service. The interest rate for ING Direct’s 12 month CD is 0.50% APY as of February 2012.

American Express is a relative newcomer to online banking, but their products are compelling to offer here. I like my account with American Express. This bank offers a wide range of terms for CDs from six months to 60 months, with many intermediate terms. The interest rate American Express offers on their 12 month CD is 0.55% APY as of February 2012.

Sallie Mae Bank is also new to offering banking products, having been established in 2005. My account with Sallie Mae was the easiest to open, and my only criticism is the lack of integration with Quicken and online tracking tools. Sallie Mae offers a strong 0.90% APY on the 12 month certificate of deposit as of February 2012.

Do you have a favorite bank, offering a compelling CD product, you’d like to see added to this list? Let me know by leaving a comment below.

If time deposits aren’t right for you and you’d like the ability to withdraw your money as needed, consider a high yield savings account from one of the best online banks. If you do like the idea of saving with CDs, consider creating a CD ladder to make the most of the highest CD rates.

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I’m a member of AAA, paying once a year for benefits like roadside service, travel assistance, and in some cases, discounts. AAA members can now earn a higher interest rate at Discover Bank than non-members. Currently, the rate for AAA members is 5 basis points (0.05 percentage points) higher than the standard Discover Bank online savings interest rate.

A difference of 0.05 in the annual percentage yield (APY) isn’t exactly what I would call significant. It is a benefit, though, and AAA members who are looking to open a high yield savings account should know about it before they shop around. For AAA members, like me, who already have a Discover Bank Online Savings Account without the higher rate, the benefit is not available. I cannot convert my Discover Bank account to the higher-rate account available to AAA members. This is only available for AAA members who open a new account.

If you find this AAA benefit worthwhile, you must open a new account using this AAA link and transfer funds from your old Discover Bank account to the new one. For me, this is not worth the effort. For a typical balance of $1,000, the additional 0.05 percentage points amount to $0.50 over the course of a year. The yearly cost of basic AAA membership in my area is $65.50. I would need a balance of $131,000 in my Discover Bank account to make this jump worthwhile, assuming I was not taking advantage of any other AAA benefits.

Potential Discover Bank customers should read this review before opening an account.

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