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The Best Online Savings Rates

NEW YORK ( RateWatch) -- The days when you were stuck with the rates offered by your local bank are long past. Numerous online-only banks now allow you to open an account no matter where you live, and national banks likewise offer online savings accounts that don't require you to walk into a branch. So if you're not pleased with the rates you're getting at the banks or credit unions in your town, it may be time to look online.

Indeed, the gap between bricks-and-mortar banks and some online savings accounts is considerable. According to data from RateWatch, the national average APY for savings accounts is 0.174%. By contrast, the majority of the accounts listed below boast APYs more than five times as high.

There is one caveat: Not all banks are created equal. Some financial institutions are considered stronger than others, and some are even considered "at risk," which should give pause to anyone considering opening an account there. Sure, most of these banks are insured by the Federal Deposit Insurance Corp., but that only covers up to $250,000 of your assets. And if a failing bank is taken over by another institution, there's nothing to stop the new owners from lowering the rate on your savings account or certificate of deposit.

The banks listed here also include the bank safety grade given them by Weiss Ratings so you can better decide where to put your money. This rating measures the financial stability of the bank. For the Weiss rating of your own bank, and for a more in-depth explanation of how these ratings are generated, you can visit TheStreet's bank safety tool.

Here, then, are the top 10 highest savings rates offered by online banks.

Capital One Direct Banking (COF)
Bank Grade: C-
Account: InterestPlus Online Savings
Rate: 1.3% APY
Conditions: There's no minimum to open an account (OK, you need at least $1), but the 1.3% APY applies only to balances of $1,000 and up; the first $1,000 in your account will only earn 0.1%.

Discover Bank (DFS)
Bank Grade: C-
Account: Online Savings
Rate: 1.25% APY
Conditions: There is a minimum initial deposit of $500, but you don't need to maintain a minimum balance.
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