Step cautiously into an online bank

Interest rates and convenience are high, but so are security concerns. And customers have to be especially vigilant.

By G. Jeffrey MacDonald | Correspondent

For savers looking to get the highest possible interest rates on their cash holdings, the call of the Internet keeps getting louder.

In March, ING Direct launched nationwide the first completely electronic checking account. Depositors receive 4 percent interest on balances up to $50,000 and have no minimum requirements. This month, HSBC plans to roll out its own high-yield electronic checking account with an interest rate that's soon to be announced.

High-yield checking accounts mark the latest enticing offer from a universe of about 60 domestically registered virtual banks, which conduct business online rather than in brick-and-mortar operations. Virtual savings accounts now routinely pay 5 percent or more. Deal hunters are also finding mortgages with reduced fees and higher than average rates on certificates of deposit. conitnue...