High Yield Online Savings
If you're looking for a high yield online savings account, your best bet is probably to go with one of the pure-play online savings banks. Without the need to operate expensive branches, purely online banks can offer higher rates to their customers. Further, since most people tend to access their savings accounts less frequently, there's less of a need to be able to conduct business in person in bank branches, or have ready ATM access. Thus, a branchless online bank makes a lot of sense if you're looking for high interest savings.
Online Bank Choices
There are a number of online banks out there advertising high yield online savings accounts, but our favorites are the
ING Direct Orange Online Savings Account,
and the from Wilmington Trust. Of these, the
WT Direct offering pays the higher rate, but you must have a minimum balance of $10,000 to get it. If your balance is high enough, it's an excellent value. Otherwise, the ING Orange savings account pays fine rates no matter what your balance is.
An Exception to the Rule
One exception to the rule that traditional Banks pay low rates is the personal savings account offered by
Washington Mutual Online Banking 
. They offer a high yield online savings account as part of a bundled deal with a free online checking account. It pays an excellent rate, which rivals even some of the better rates paid by internet-only banks. However, you must use their checking account along with it to get it. Not that that's such a bad thing — the attached checking account is a fine deal, with free checks for life, no hidden fees, and access to WaMu's huge nework of ATMs and local branches. It is the best deal we've found amount traditional banks for high yield online savings.