When to invest in online savings account?

Usually you want to divide your money-bin into 3 groups:

What types of accounts are listed and why?

On PandaInvest we include High Yield Savings accounts and Money Market accounts. Both types are covered by FDIC insurance up to 250K, so you can sleep in peace knowing that your money is safe.

How does FDIC work?

The standard deposit insurance coverage limit is $250,000 per depositor, per FDIC-insured bank, per ownership category. So if you have 3 personal savings accounts in Capital One adding up to $300k, only the first 250K is covered. If you have more then 250K to invest, it is better to invest 240K to one bank and the rest invest in other banks. This way you are covered by FDIC for all your money, and you still have some padding (10K) to cover interst you will be earning for some years.

If Bank has several high yield options available which one does PandaInvest pick?

The one with highest interest rate. If bank calculates the interest rate based on your balance, we pick the balance that will cover widest range of customers. For example, if bank pays 0.5% for all balances up to 10K, 1% for balances between 10K and 500K and 1.1% for balances over 500K, we will use 1%.

What is the difference between Money Market and Savings Accounts?

In general, if you want to just invest your money online and let it earn interest rate, both account types are pretty much the same. Savings account is usually a bit more flexible. It usually doesn't require a minimum balance and you can transfer money a little easier.

What is the difference between Interest Rate and APY?

Interest Rate is used to calculate interest that gets added to your account, usually every week or every month depending on the bank.
APY stands for annual percentage yield. It takes into account the interest rate and compounding period to give you a single number that represents how much you will earn from that investment in one year.