Sunday, March 26, 2006

Enough with 0.6% Savings Rates...

The national average on bank savings accounts is still a paltry 0.57%. If you have $1,000 in savings with your local bank - they are likely spending more in postage than the whopping $5.70/year in interest you are earning.

However, I've been surprised how many people are unaware of the really impressive savings rates offered by large online divisions of international banks.

I'm not promoting either of these banks, but the reality is that if you have meaningful funds to allocate to savings you really should be earning a more attractive rate than the measly 1% that the corner branch offers. Check out -

1) HSBCDirect - They currently are running a promo through 4/30/06 where they are paying 4.8% - yeah you read that right 4.8% - on new and existing deposits. This is a separate division of HSBC and is not an offer available through your local HSBC branch, you have to make deposits online to be eligible for this rate. However, since the stock markets have averaged returns less than 4.8% for the past 5 yrs with a great deal more risk than an FDIC insured bank account, this is a pretty attractive spot to allocate at least a portion of your assets.

2) INGDirect - an early player in online banking, they have let HSBC take the lead on interest rates, but their 4.75% on new deposits and 3.8% on existing funds is still more than 6 times the national average.

The application process for these banks is remarkably tedious, but banking online is a breeze after the initial set-up and the near 5% yields make it worth the effort.

At the very least you could tell your local branch that you saw a 4.8% savings rate online and that if they don't improve their rates soon, you'll be a former customer.

Cheers from Grindstone Financial!


rug daniels said...

Hey how about they also have very good rates

The Artful Blogger said...

Good point - Emigrant's rates are comparable to ING and HSBC, but they are considered a regional bank and I wasn't sure anyone had ever heard of Emigrant. Emigrant Direct is the online subsidiary of Emigrant Savings and can be found at They offer a rate 4.5% on deposits.