By Sabrina Karl

Most Americans are familiar at this point with online banking. Even if your bank is a brick-and-mortar institution, online banking is the way most customers interact with their accounts.

But online banking can go a step further, to institutions that operate fully online, with no branches at all. And for those who want to be smart with their money, it’s an important option to consider.

Because an internet-only bank with no physical location can seem risky to some, it’s important to note this fact: internet banks are federally insured by the FDIC just like traditional banks. That means they must follow all the same rules and regulations that keep your money safe, as well as provide the same protections.

So with your money just as safe at an internet bank as at the branch down the street, there are good reasons to open an account with an online bank, with the number one reason being that you’ll earn substantially more on your money.

That’s because online banks don’t incur all the costs associated with operating physical branches, and as a result, can pay customers much higher interest rates. And not just a little higher, but massively higher.

The national average savings account rate is currently 0.06%. And banks like Chase, Bank of America, and Wells Fargo pay only 0.01 or 0.02%. But you can find more than two dozen online banks currently paying 0.50% to 0.70% APY. That’s 8-12 times more than the national average.

A savings account is the best place to start an online bank relationship. Because you can easily transfer money between the online account and your existing bank, a smart setup is to keep your traditional checking account, but open a separate online savings account to earn significantly more on the cash you sock away.