Welcome, visitors from The Dallas Morning News! This is the next installment in a series at Consumerism Commentary about taking control of your finances. Please consider subscribing to the Consumerism Commentary RSS feed for updates.

If you’re on your way to spending less than you earn, then you’re going to need a good place to put your excess income. Even before setting savings goals and before establishing an emergency fund, it’s best to let your cash earn as much interest as possible while staying somewhat accessible. High-yield savings accounts are the best options.

Typical savings accounts at most banks pay an interest rate well below 1%. With conservative estimates of inflation running 3% to 4%, you’re losing purchasing power quickly by leaving your money in these accounts. In the last several years, internet banks paved the way for higher interest rates. Theoretically, these banks without branches could afford to pay higher rates because the companies lacked the expenses associated with owning a network of branches on street corners or in strip malls. More recently, traditional brick-and-mortar banks added more accessible high-yield savings accounts to compete with these offerings.

Interest rates have fluctuated over the past few years and we’re currently at one of the low points. Great interest rates are harder to find, but there are a few quality savings accounts offering 4% or close to it. While you may barely beat inflation at this rate, the purpose of a savings account is not long-term investment. You want to cash available to you within a day or two. All it takes to withdraw your cash is perhaps an online transfer and a visit to an ATM.

You shouldn’t just chose the savings account with the highest interest rate. Banks offer high interest rates because they want to compete for your deposits. If any particular bank is in the midst of a capital crisis—if they don’t have enough cash on hand to pay their expenses and liabilities—they will raise rates to attract more customers. For example, earlier this year, Washington Mutual raised rates several times and was frequently at the top of the list of interest rates. The purpose of this plan was to receive more cash. In the end, Washington Mutual failed and was bought by JP Morgan Chase.

Despite turmoil through bank failures, mergers, and acquisitions, there is very little risk in savings accounts. The FDIC insures these deposits on behalf of the banking industry. As long as you stay within the coverage limits, you should be able to access your money even in the event of your bank going out of business or being taken over by another bank. There may be a delay in your ability to access the money, but that is not typical

I have two recommendations for high-yield savings accounts. I am a new customer and new fan of FNBO Direct, the online division of the First National Bank of Omaha. I’m not the only fan of this account. Recently, Kiplinger Magazine honored FNBO Direct as the “best online savings account.” As of today, the online savings account offers a 3.25% APY. Since opening my FNBO Direct account in September, my experience with FNBO Direct has been smooth.

My other recommendation is ING Direct. With the Orange Savings Account’s 2.75% APY, this is not the highest rate you can find. ING Direct was one of the first banks to popularize the idea of branchless banking, and they have historically offered great interest rates. All reports indicate that customer service is fantastic and they have one of the best websites for navigating your accounts. It’s also very easy to organize your money at ING Direct into different labeled subaccounts. With ING Direct you can earn up to $525 in bonus interest my participating fully in their referral program.

Last Friday, I wrote about newcomers to the high-yield party, including Venture Bank Direct, ShoreBank, and DollarSavingsDirect. I also maintain an index of the popular high-yield savings accounts, organized by interest yield on the first $1 of deposit. The list was updated last night to include the rate changes from the past few weeks, and there have been several.

The high-yield savings account is an important piece of healthy finances and it will come into play as someone further develops money management acumen. Here are six tips for optimizing your savings:

1. Open the high-yield account. It will take only minutes to be approved, but funding your account electronically may take several days.
2. Keep your change. Use a jar to collect your excess coins every day and take the jar to the bank.
3. Automate your savings. Set up Direct Deposit for your paycheck so you’re saving first, withdrawing for expense later.
4. Divert small, unnecessary daily expenses to savings. If you spend $10 on two gourmet coffee drinks each morning, switch to one $2 Dunkin’ Donuts regular coffee and deposit the $40 you save each week into your savings account.
5. Hide your savings from yourself. Try to forget that you have money stashed away earning interest and survive without it.
6. Make your raise invisible. If you receive a 3% increase in your salary, increase the amount you leave in savings each month.

If you do things right, the money in your high-yield savings account should grow each month. It feels good to be in control of savings.

Image credit: Redvers

As some of the more popular banks like ING Direct, HSBC Direct and FNBO Direct lower their interest rates, other less-known banks are appearing in their place with higher rates. Some of these banks do not have reputations yet and haven’t been in the public eye for long. Here are a few that you may want to consider, all FDIC insured.

Venture Bank Direct is the new online-only arm of Venture Bank. The Venture Bank Direct “Wise Choice Savings” account has no minimum balance requirement and is currently offering an interest rate of 3.8% APY. Venture Bank is rated two stars by BankRate.

As with all savings accounts, you are allowed to make six withdrawals from the account in any one month period. However, only the first three withdrawals are free; any additional withdrawals are assessed a $1 fee. You can deposit money up to 3 times in one day via ACH with a maximum total of $50,000. You are limited to no more than 3 ACH withdrawals per day with a maximum total of $10,000.

Venture Bank Direct offers support for downloading your activity into Intuit Quicken and Microsoft Money.

DollarSavingsDirect is a new online offering of Emigrant Bank, similar to Emigrant Direct. Emigrant Bank is also rated two stars by BankRate. DollarSavingsDirect offers the “Dollar Savings Account” with a minimum balance of $1,000. DollarSavingsDirect is a reincarnation of Banco Fortuna, Emigrant Bank’s former Spanish-language branch.

While Emigrant Direct’s rate has fallen, DollarSavingsDirect is offering a 4.0% APY, one of the highest rates currently available. Keep in mind that the FDIC will insure your deposits at Emigrant Direct, DollarSavingsDirect, and Emigrant in aggregate, as these banks share an FDIC certificate. For example, for an individual account you can deposit $200,000 in each of these three “banks,” but only $250,000 of your $600,000 would be insured.

I mentioned ShoreBank earlier this year alongside other high-yield savings accounts. ShoreBank, rated two stars by BankRate, expects a $1 minimum balance with its online savings account. The account earns 3.5% APY and is FDIC insured.

This bank focuses on the community and environment. Deposits placed with ShoreBank help fund environmentally-friendly development as well as projects like mortgage rescue programs. Fast Company profiled ShoreBank earlier this year.

If you have experiences with these lesser-known banks, please share your thoughts.

Profit From the Obama Economy. Invest in biotech, green energy, infrastructure, advanced manufacturing, and information technology. These sectors of the economy are expected to grow during Obama’s presidency.

A New Way to Transfer Cash. New technology lets customers use ATMs to transfer cash from one person to another. You will be able to register your cell phone use text messages to receive passwords that allow you to retrieve money. No bank accounts are necessary. One person deposits cash into an ATM, sends the money using the controls, and the receiver accesses another ATM to withdraw the money. I would hate to see the fees.

Citi to Modify $20 Billion in Home Loans. If the press release reflects the action Citi takes, 500,000 Citi mortgage customers will be able to lower their payments to just a percentage of the interest due each month for a total payment of 40% or less of their income.

Announcing the Save $1,000 in 30 Days Challenge. Each day this month, I Will Teach You to be Rich is presenting one tip to help readers save money now. Ramit is guaranteeing that he will not include “stupid frugality tips.” One such tip that passed the test is to involve your friends with your savings goals.

What Circuit City Customers Need to Know. With the announcement that Circuit City is declaring bankruptcy, customers and investors are concerned. They are honoring gift cards, but you should use these as soon as possible. Warranties will be serviced by third parties (as they would have been otherwise).

News and Blogs sponsor: Discover More Card is currently offering a $50 bonus for new cardholders.

Only yesterday, HSBC Direct lowered the interest rate offered on the bank’s online savings account from 3.25% to 3.0% APY. Today, following suit, FNBO Direct lowered its rate from 3.5% to 3.25%. These drops are now expected with the Federal Reserve lowering interest rates and the London interbank offered rate (Libor) decreasing.

It’s increasingly hard to find good outlets for short-term cash. The tax-exempt money market fund I invested in three weeks ago, VNJXX, has seen its annual yield drop 2.5 percentage points from 4.83% to 2.36% in that same time.

While I’m generally happy with my ING Direct account for a good portion of my savings, I’m looking to spread the money around to take advantage of some higher interest rates. One of the banks I’ve targeted is FNBO Direct, the online arm of First National Bank of Omaha, currently offering 3.50% interest yield.

FNBO Direct is a member of FDIC, so deposits at the bank are insured. As long as balances stay below the limits set by the FDIC, I won’t have to worry about the safety of my money.

Opening My Account at FNBO Direct

Opening a savings account at any bank takes several days from start to finish, and FNBO Direct is not an exception. I started the process this past Sunday.

Step 1: Visit FNBO Direct and fill out an application. Read the rest of this article »