How to find a better online savings account

A year ago, when the economy was all roses and executives didn't have to fear public backlash for taking a jaunt in the corporate jet, the interest rates paid for online savings accounts couldn't stop going up. The competition to recruit new customers was so fierce that banks engaged in pricing wars with new promotions rolling out weekly, often paying higher rates than the CD's at my local bank.

Sadly the bubble has burst and online interest rates have come tumbling down. There are still plenty of deals to be had,, though, to make your money work for you. Here are some of the top online high yield savings accounts and up-to-date rates courtesy of the High Yield Savings account comparison from Get Rich Slowly.

These rates are up to date as of January 15th.

• E*Trade - 3.01% APY
  
• FNBO - 2.80% APY
  
• HSBC Direct - 2.60% APY
• ING Direct - 2.50% APY
  

Get Rich Slowly continually updates the rates for these and many more online banking accounts.

If your rate, like mine, has dropped significantly since the middle of 2008, keep reading for more information on what you need to know before you find a new place to stash your cash.

My current saving account's rate has almost been cut in half since signed up a few years back, dropping faster than many other online high-yield savings accounts. As I started looking into switching I discovered a set of six important factors to consider when looking for a new online bank.

1. Consumer Reviews
2. Customer Service
3. Bankrate Rating
4. Ease of Automation
5. Access to Cash
6. Interest Rate

Starting your search by comparing interest rates may seem like the best idea, but before you place your savings in the trust of an institution, you should pay attention to several more important factors. Finding customer reviews of the bank and looking for customer service ratings can quickly give you a good idea about how the bank treats its customers.

The Bankrate rating is another great tool to use to find out how secure your bank is. Even though your deposits are FDIC insured up to $250,000, when a bank goes under or is sold it can be a hassle to get to your money promptly. With record bank closings in 2008, this five-star rating system may be one of the most important factors to consider. For my current account, the current interest rate drop and it's two-star rating by Bankrate is another indicator that it may be time to move on.

Finally, before you get too mesmerized by the interest rate you should find out how easy it will be to automate your savings and how easily and quickly you can get to your cash. By choosing a bank that makes it easy to automate and transfer in your savings, you'll be more likely to save money. While easy access to your cash may seem like a bad idea if you're trying to build up a cash reserve, you don't want to be cut off from your money. Many people, myself included, use a high-yield savings account as an emergency fund and need to be assured of easy access to their money in case an event arises that warrants dipping into their savings. If you can't get to your money within one-three days, you should look elsewhere.

Once you've narrowed down your bank choices based on the previous five criteria, you can make a more informed decision. In my case, a switch can bring my interest rate up almost a whole percent, but I don't want to sacrifice the kind of customer service, safety and automation options that my current bank provides. This leaves me with several banks to choose from, but the highest paying bank was removed because of poor customer service and reviews. One thing is clear though -- I do need to find a new bank. Otherwise, I'm throwing away extra cash.

What online savings accounts do you recommend and which ones should we all avoid?