I had previously written about selecting high yield on-line savings accounts using HSBC and ING Direct as examples. The following were the key criteria I used, and which bank was better in each category (updated analysis):
1. Interest rate or Annual Percentage Yield (APY) they offer – HSBC normally offers a higher APY than ING, but that differential has been reducing. The lowering of APY rates, due to Fed rates cuts to revive the economy, is affecting all savings accounts which are seeing much lower rates than a year ago. However, HSBC and ING should still be market leaders in the online savings account space thanks to their global reach and operations.
2. No fees. Always. If an online savings account is charging you account maintenance or other similar fees, move on. HSBC and ING direct are both good in this aspect than they don’t charge any fees for depositing or withdrawing funds. Another reader comment received on this topic was fees around bank transfers. Most most major US banks offer free transfers when transacting to and from online savings accounts. If they are charging you a transfer fee or wire fee, then find another bank.
3. Ease of use. ING has a very simple and easy to use interface. HSBC’s is a little more clunky and slower, but does have some good additional features. From my previous post’s reader feedback/comments, most people found ING to have a far superior user interface and the transfer of funds between ING and your checking account was much faster than HSBC provides. I agree, and ING is now the clear winner in this category.
4. Other features. Most online banks that offer high interest rates can offer these attractive rates because they have low fixed costs – no branches or account frills. However some, like HSBC, do offer a higher than average rate plus branch access and an ATM card. This can be useful for folks who prefer to deal with issues face to face, get cash out faster or who deposit a lot of checks.
5. FDIC Insured. Always check this for any bank you have an account with and make sure you are aware of FDIC guidelines when it comes to how much money is protected in your bank accounts. Both HSBC and ING are FDIC insured.
With the drop in HSBC’s APY, I think the selection factors now make ING Direct the better choice for most people. You can sign up for a FREE ING Direct account here. With stock markets providing terrible returns this year, a risk free online savings account may be the best investment choice in the interim.
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