With interest rates rising and stocks looking volatile, you might wonder what to do with money you could need for an emergency or an upcoming purchase.

One strategy might be to put it into an online bank savings account, which can pay more than five times as much interest as a traditional bank account, according to a study by DepositAccounts, an account comparison website. On average, online banks now pay 0.93 percent interest, but some pay 1.6 percent or more.

Though the rates are still lower than inflation, which is now just over 2 percent, online banks may be the best option if you want to reduce risk and have quick access to your money," says Nick Clements, co-founder of MagnifyMoney, which provides bank interest rate comparisons.

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As interest rates rise—the Fed is expected to hike rates three times this year—you'll also be better off having your money in an online bank savings account because these banks typically increase their rates more aggressively than their walk-in counterparts.

According to the DepositAccounts study, the rates offered by online banks have increased by 43 percent over the past year—three times more than the rate of increase at walk-in banks and credit unions.

That's likely to continue. "We're seeing an arms race by online banks to out do each other," says Greg McBride, chief financial analyst at the account comparison website Bankrate.com.

AbleBanking, for example, is one of the nation’s top-paying online banks. It currently offers a savings account with a 1.7 percent annual percentage yield (APY), far higher than the 0.01 percent yield offered at walk-in banks such as Chase, PNC, and USBank.

So if you deposit $25,000 over 12 months, the AbleBanking account would pay you $425 in interest. Do the same at Chase and you'd earn just $2.50. With a $100,000 deposit, you'd earn $1,700 at AbleBanking vs. just $10 at Chase.

Though you can earn more, online banks are no riskier than walk-in banks. Typically, they are federally insured and covered by the same regulations, says Ken Tumin, founder of DepositAccounts.

Why Online Banks Pay More

One reason online banks pay more than traditional banks is that they don't need to cover the cost of real estate, Clements says.

Another reason is to win customers. Online banks compete with each other for customers by raising rates that will keep them at the top of lists offered by comparison websites, Clements says. Traditional banks, on the other hand, aren't as aggressive when it comes to raising rates but hope to keep customers and get new ones by offering them convenience, such as access to branches and ATMs.

What to Look for in an Online Bank

Keep in mind that if you decide to open a savings account with an online savings bank, many require that their customers link their accounts to another bank. That way, if you deposit cash into a checking account at a walk-in bank, say, you can move those funds electronically between your online bank and traditional bank. Traditional banks can also be convenient to use for other reasons, such as ATM access and other bank services. 

If you're considering opening an online bank account, take these steps.

Check the interest rate yields. Compare online bank yields at sites such as DepositAccounts, Bankrate, and MagnifyMoney. Keep in mind that some sites list banks that advertise with them first, but don't necessarily offer the highest rates. One of them is Bankrate, but you can re-sort the list by APY. At DepositAccounts, look below the list of sponsors to see the banks with the best APYs. (You can also register with the site and the list of sponsors disappears.) At MagnifyMoney, the results are sorted by APY by default, so the top ones have the highest rates.

See how often the yields change. The banks offering the highest yields today may not offer the best ones next month. But you can check to see how consistently they maintain their yields at DepositAccounts. Some institutions, including Ally and Synchrony Bank, are usually among the highest payers, and others top the list only to later fall way below the competition, Clements says.

Read the bank's terms and conditions. Find out whether there are minimum deposit requirements to open an account or earn the top interest yield.

Also check for fees. Popular Direct, for instance, charges $4 in any month the account falls below $500, $5 if the account is inactive for 12 months, and $25 if you close the account within 180 days of opening it.

Look for restrictions on the number of withdrawals or transfers you can make. Many banks limit customers to six withdrawals each month, and some limit how much you can withdraw at any one time. AbleBanking, for instance, limits daily withdrawals to $25,000.

It's a good idea to know how the bank handles closing an account, should you decide to do that. Closing an account at the wrong time can cost you, notes McBride. At some banks—including Dollar Savings Bank, Salem Five Direct, PopularDirect, and UFB Direct—if you close your account before any accrued interest has been paid to you (usually once a month), you’ll lose it for that period. 

Look for account features. Find out whether you can use the account to pay bills and withdraw money at nearby ATMs—and whether you'll be charged a fee for using those ATMs. Also see whether you can designate beneficiaries in case you die. Some banks make this easier than others, Tumin says.

Avoid long-term CDs. In addition to high interest on savings, online banks offer significantly higher yields on certificates of deposit. But with yields rising across the board, you may want to think twice before locking money up in an online banking CD. Interest rate yields on standard savings accounts may quickly catch up to CD yields. If you invest in a CD, Clements recommends that you limit the maturity to 12 months or less. 

Keep tabs on the yields the bank offers. Check yields at least every few months to make sure your account is still competitive, Tumin says. But one caution: To attract new customers, some online banks—including CIT Bank, Popular Direct, and Salem Five Direct—raise their yields but don't pass along those increases to existing account holders, says Tumin. Check your account to see how much interest you are being paid and compare it with what the bank is advertising. If you aren't getting the advertised rate, ask for it and you'll probably get it, notes Tumin. That's a different practice than at most banks, which typically apply their yields to all account holders automatically.