Online savings accounts offer more convenience and higher` interest rates than brick-and-mortar options. This makes them an excellent investment vehicle for people who want to grow their savings from the comfort of their homes.

Still, there’s one question that users often ask when considering online accounts—is your money stuck in an online savings account? In this article, we’ll answer this question and offer other useful information regarding online savings account withdrawals to help you make an informed choice when choosing your type of savings account.

Is Your Money Stuck for a Set Time in an Online Savings Account?

No, your money generally isn’t stuck for a set period in an online savings account. Still, there may be limitations on the number of withdrawals you can make in a specific time frame. 

For example, federal regulations used to restrict savings accounts to six withdrawals per month. While that rule is no longer in place, most banks still uphold this restriction. This means your money will be stuck after you complete the allowed number of withdrawals per month. Exceeding this limit may result in fees and eat up your profits.

The scenario is different for certificates of deposit (CD). CDs are online savings accounts that offer higher interest rates than traditional savings accounts, but they require you to keep your money in the account for a set period. If you take out your money before this agreed-upon date—also known as “term” or “maturity date”—you’ll pay a penalty.

Here’s a quick table to summarize the differences between a traditional online savings account and a CD:

Feature	Traditional Online Savings Account	Certificate of Deposit (CD)
Interest rate	Low and variable	High and fixed
Liquidity	High (you can withdraw funds at any time)	Low (funds are locked for a term of six months, one year, or five years)
Early withdrawal penalty	No	Yes
FDIC insurance	Yes	Yes

How Can You Withdraw Money From an Online Savings Account?

There are four ways to withdraw money from an online savings account:

1. Electronic transfers—The easiest way to access your funds is through electronic transfers to another bank account, such as your checking account. The transfer will be instant if your checking account is in the same bank, but it may take a few days if the accounts are in different banks
2. Wire transfers—Wire transfers are a viable withdrawal option, but they’re more expensive than electronic transfers. Still, they have stricter security protocols than electronic transfers, making them a good choice for larger withdrawals
3. ATM withdrawals—Some online banks offer ATM cards for savings accounts, allowing you to withdraw cash directly from an ATM
4. Checks—While less common, your online bank may issue checks that you can use to withdraw funds

Some or all of these options may be available to you, depending on your bank. If you plan to frequently withdraw funds from your online savings account—which isn’t recommended—make sure to ask your bank about withdrawal options when opening an account.

Is It a Good Idea To Regularly Withdraw Money From an Online Savings Account?

Although your money isn’t stuck in an online savings account, this doesn’t mean that you should withdraw it regularly. Here’s why:

• You won’t be able to maintain financial discipline—Treating your savings account like a checking account undermines your financial discipline and delays reaching your long-term savings goals
• You may fall below the minimum balance requirement—Most savings accounts still impose a limit of six withdrawals per month. Many online savings accounts also have a minimum balance requirement, and frequent withdrawals may cause your balance to fall below the permitted amount. This can result in incurring profit-damaging penalties
• Savings accounts are based on interest—The pace at which your wealth grows depends on the amount of funds you have in your savings account because your account’s interest rate applies to the funds in it. The higher your account balance, the more interest you earn, and the faster your wealth multiplies. The main benefit of a savings account is that you can sit back and let your money grow, and frequent withdrawals counteract this advantage

To avoid the negative effects of frequently withdrawing funds from your savings account, it’s a good idea to create an emergency fund account separate from your online savings account. This way, you won’t end up withdrawing funds from your savings account every time the going gets tough.

Can You Add to an Online Savings Account Regularly?

Just like it’s easy to withdraw funds from an online savings account, it’s also easy to add money to it. In fact, it’s recommended to add money to your savings account as often as you can to speed up wealth accumulation and earn more interest. Here are a few ways to do this:

• Mobile deposits—Many online banks offer mobile apps that allow you to deposit checks directly into your savings account by taking a picture
• Direct deposits—You can arrange for a portion of your paycheck to be directly deposited into your savings account
• Automatic transfers—Setting up automatic transfers from your checking to your savings account ensures you consistently save money without having to think about it

The only problem you may encounter with online savings account transfers is depositing cash into it. This is because online accounts don’t have physical branches you can visit, and many don’t offer an ATM card. Still, you can always deposit cash into a checking account and then transfer it to your savings account through online banking.

Is Your Money Stuck in a Traditional Savings Account?

No, your money isn’t stuck in a traditional savings account either. However, like online savings accounts, these accounts also have maximum withdrawal and minimum balance limits.

That being said, an online savings account is a better choice than a traditional savings account because:

1. It offers better accessibility—You get to manage the bank account entirely online, with no need to visit a physical branch
2. It offers higher interest rates—An online bank has lower running costs than a brick-and-mortar one, so it’s able to pay you more out of its profits
3. It’s insured by the Federal Deposit Insurance Corporation (FDIC)—Not being able to dispute any issues in person doesn’t necessarily mean opening an online savings account is risky. Most online savings accounts are insured against bank failure by the FDIC, so your funds won’t go anywhere in case the bank shuts down
4. It may help you build credit—This isn’t true for all online savings accounts because they’re not usually reported to the credit bureaus

Is Your Money Safe in an Online Savings Account?

Another reason why people may be reluctant to keep their money in an online savings account is security. With fraudulent schemes becoming more elaborate, the safety concerns aren’t unjustified. Scammers use various methods, including impersonation, phishing, and employment scams, to target the victims’ funds.

Here are the precautions you can take to ensure your savings are safe and minimize the risk of fraud:

• Beware of the urgency method—Scammers will often try to pressure you into taking action by creating a sense of urgency. They thrive on people’s naiveness and rashness
• Don’t click on unknown links—Malicious links are one of the most successful methods scammers use to gather information or install malware on the victims’ devices. Never click on links from unverified senders
• Protect your personal information—Never share your sensitive information before verifying the legitimacy of the call, email, or text message. Contact financial institutions directly to check any claims and requests
• Move your funds to a highly secure savings account—FDIC insurance only protects your funds in case of bank failure. Transferring your cash reserves to a highly secure savings account like FortKnox protects your money against financial scams