HSBC Extends 3.5% APY Online Savings To Sept 15

HSBC sent around a big cheery email to let everyone know that they’ve extended the promotional 3.5% rate on their online savings account until September 15th.

The rate was set to expire in August. That’s in the upper limit of what’s being offered out there. Via Bankrate, the only one that I can find with no fees and for balances under $10,000 is “Flagstar Bank,” which, while FDIC-insured, I’ve never heard of and it has a very simple website. Then there’s FNBO, which has a lower interest rate, but it’s compounded daily instead of HSBC’s monthly, ultimately giving a higher yield. (hat to commenter bonzombiekitty).

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  1. YeaYuh says:

    Have a mortage with Flagstar, they just update the website software for the banking side a few months ago.

  2. ZakiaTurtle says:

    Provident Bank also has an online savings account that yields 3.5% with
    no apparent timeline or restrictions.

    http://www.provident-direct.com/

    They have a few local branches in the MD/DC area and I’ve been pleased
    with them so far.

  3. bonzombiekitty says:

    You’re confusing interest with APY. HSBC has 3.5 APY until September, FNBO Direct has a 3.5 APY without any intro period. FNBO has a lower interest rate, but it’s compounded more often than HSBC, giving a higher yield.

    I use FNBO, and have been very happy with them. Very simple, direct, no-thrills banking, no minimum, with a high return (at least compared with other banks)

  4. Bramble73 says:

    My credit union just started offering a checking account with a 5.25% APY on balances up to $25,000. Not an introductory rate either. You just need to have at least 12 point of sale debit transactions a month, direct deposit, and electronic statments. No minimum either. I’ve seen a similiar deal offered at a couple of other local credit unions.

    I don’t usually use my debit card, but I will for that sort of interest.

  5. nrich239 says:

    Naturally, consumerist runs a story about a better interest rate after I just moved my savings to ING for a better rate….. oh well. That’s my typical luck

  6. howie_in_az says:

    HSBC’s ACH is really slow. Additionally, they don’t seem to support ‘subaccounts’ like ING does, which is a shame because I’d like to use it. Otherwise, I’ve been with HSBC for a little over a year now and they’ve been fantastic.

  7. cjdtech says:

    Not sure what the confusion is, but FNBO Direct is also at 3.5%. It’s also compounded and credited monthly.

  8. blackmage439 says:

    Wow, Consumerist. This article is all sorts of wrong.

    I sent in an email to tips@consumerist.com a few hours ago about how HSBC slashed their online savings account interest rate FROM 5.05%, and then extended the promotion. The original date of August 15 was NOT in relation to the current 3.50% rate. Claiming so is false. Quite frankly, the new deal is a scam, and borders on false advertising. Unfortunately, it’s within the realm of “we can change the details of our promotion at any damn time we wish.”

    Also, HSBC’s online savings account is compounded DAILY, not monthly as you claim.

    Wrong, wrong, WRONG! Consumerist, I expect better.

  9. Ben Popken says:

    @blackmage439: Nope, you’re wrong. The rates haven’t been 5.05 for quite some time. They went from 3.05 to 3.5 on June 2nd, and it was billed as a promotional increase good through Aug 15. And under compounding method for HSBC on Bankrate.com it says “M” which stands for monthly.

    But thanks for screaming, that made your comment all the more thrilling.

  10. bonzombiekitty says:

    @blackmage439: They were going off my post when it comes to compounding. According to Bankrate, it’s monthly.

  11. @nrich239: The HSBC rate is temporary. I don’t think .5 percent will break you, since that rate will only last until Mid-September.

    ING seems to consistently have some of the highest rates, and they stay pretty stable. I’m with ING right now, and have no plans of moving, especially considering they don’t make you do a whole bunch of gyrations per month to maintain their rate.

    Flagstar is a real bank too – I have my mortgage through them.

  12. Landru says:

    Before moving all of your assets to HSBC Direct, you might have a look at Bankrate.com’s Safe & Sound rating. ING Direct is better:
    [www.bankrate.com]

    HSBC Direct is the operating name of HSBC Bank USA, National Association

    ING DIRECT is the operating name of ING Bank, fsb

    Also, anyone thinking they might be better protected because they are “international” banks, please note that both are US banks, located in Delaware.

  13. cyclade says:

    @howie_in_az: The ACH/transfer process at HSBC Direct is outrageously slow (it seems to take about four full business days for transactions to process – wtf is up with that?), particularly when compared to Emigrant Direct (usually the next day – too bad their rates keep plummeting) and my “brick and mortar” checking and mortgage banks’ online transfer systems (which can be immediate or take up to a day).

    That said, if you’re considering an online savings account, they’re a decent outfit provided that you don’t make frequent transfers in and out to pay your bills.

  14. Ben Popken says:

    @blackmage439: From June 2nd. Note highlight.

  15. Subliminal0182 says:

    I’ve found another online bank similar to ING Direct-OnBank. It’s pretty basic-3.5% on savings (no minimums), and 60 month CD 5.15%. Best of all it’s a division of M&T Bank (kind of major east coast bank). Found it through bankrate.

    No I’m not a spokesman for OnBank ;P

  16. blackmage439 says:

    @ Ben

    Ok, the 5.05% is my mistake. The commercials I had been seeing up until this weekend were for the 5.05% rate. Probably just left-over commercials that hadn’t been pulled. My appologies.

    [www.hsbcdirect.com]

    However, I stand by the compounding. Click the link above. Select “Products”. Click “How is my interest calculated on an Online Savings Account?”. The FAQ says it uses a daily rate to calculate your interest gains.

  17. StockBroker says:

    Every time I see their commercial on TV with that pig, I get a craving for a BLT.

  18. johnva says:

    @Bramble73: There’s likely a cap on the amount of money that can earn the 5%+ rates. Which makes the deal a whole lot less appealing, and probably negated the by the loss of rewards I would suffer by switching to a debit card for that many transactions instead of using my 5% rewards credit card.

    @cyclade: I liked EmigrantDirect, but their rates are pretty bad right now. And I’m a bit worried about their financial health. I moved my money out of ED for those reasons.

    People, be careful about banks’ financial standing right now if you have in excess of the FDIC limits. Even if you’re under the limit, realize that it could be a pain to get your money out if the bank does go under (remember the debacle with the holds on IndyMac checks)?

  19. 44 in a Row says:

    However, I stand by the compounding. Click the link above. Select “Products”. Click “How is my interest calculated on an Online Savings Account?”. The FAQ says it uses a daily rate to calculate your interest gains.

    I’m not a finance or numbers guy, and I’m probably not explaining this right, but I think part of the confusion here lies in the difference between paying interest daily and compounding interest daily. HSBC pays interest daily based on your balance that day — they can’t just calculate it once at the end of the month, because otherwise you could just, say, deposit $10k on the day before the period ends and get full interest on it, which clearly doesn’t make sense. So HSBC calculates interest payments daily, but it only gets compounded — added to the principal — once a month.

  20. howie_in_az says:

    @blackmage439:

    How is my interest calculated on an Online Savings Account?

    HSBC uses the “Daily Available Balance” method which applies a daily periodic rate to the available balance in the account each day. Available Balance is the balance in your account each day minus (-) any deposited non-cash item (e.g., checks) for which we have not yet received credit.

    I have an HSBC account, and they put money in it at the end of each month based on the average amount in the account for that month.

  21. johnva says:

    @44 in a Row: Yep, most of these online banks calculate interest daily, and credit/compound interest monthly.

  22. Bramble73 says:

    @johnva: As I said in my first post you get the 5.25% on balances up to $25,000. The difference over the course of the year between 5.25% and 3.60% (The highest savings rate on bankrate right now) is over 400 dollars. If one makes 12 less then 10 dollar purchases with their debit card a month instead of a credit card offering 5% rewards, they would lose about 72 dollars worth of rewards a year to make over 400 dolars in interest. Works out to be a good deal to me. Assuming of course that you can find a credit union that’s offering this sort of deal deal. A search of ‘credit union “5.25 APY”‘ turned up several different ones with similar checking account with this high of interest.

  23. ShortBus says:

    Flagstar is a regional bank based in Michigan. You may not have ever heard of them, but they’re reputable around these parts. My sister has a mortgage with then and I coincidentally just talked to them today about financing for a home I have a offer pending on.

  24. blonderengel says:

    Say good-bye to HSBC and various others.

    This is how it starts:

    1. We don’t need capital;

    2. We could use some capital, but we won’t sell shares, we’ll just sell some assets, and we’ll lure customers with great offers.

    3. We need to sell shares and raise capital right away; fuck the customers…

    4. Frantic phone calls to FDIC…

  25. johnva says:

    @Bramble73: Sorry, I missed the $25,000 limit in your post somehow. A lot of the credit unions I’ve seen with similar offers had upper limits of $5,000 or less.

  26. gliscameria says:

    Wow, and inflation is only like 10% a year!

    So you’re only losing 7% of your money!

    What is the point of saving when inflation is higher than your intrest? Even if it’s not quite 7%, it a hell of a lot higher than 3.5%.

    Finance/buy things that don’t lose their value, like precious metals, gold, silver, copper jacketed lead… =)

  27. Frank Grimes says:

    @gliscameria: Umm, guess again maybe. The current rate of inflation is 5.02%.

  28. peter_in_paris says:

    @gliscameria: The price of precious metals is not stable. To say that they don’t or won’t lose their value is not true. In fact, I can’t really think of anything of value that isn’t subject to the whims of the market…

    As for the point of saving when inflation is higher than your interest rate: wouldn’t you prefer to at least TRY to stay ahead of inflation as opposed to putting your money under your mattress and earning nothing? The fact that you can’t beat inflation this year isn’t a logical argument against savings accounts.

  29. bonzombiekitty says:

    @Frank Grimes: That, and inflation is not constant. Inflation may be 5% now but could be 2% next month. There’s a chart of the inflation rate since 2000 at [www.inflationdata.com]

    Glancing at the chart, it looks like the average rate is in the 3 to 3.5 range.

  30. poopmasta says:

    “Also, anyone thinking they might be better protected because they are “international” banks, please note that both are US banks, located in Delaware.”

    HSBC is based in the UK.

  31. poopmasta says:

    Keep in mind HSBC will allow you to open temporary accounts in say Tokyo or Shanghai and allow you to transfer funds on the fly online and you can avoid the currency conversion fees when you withdraw in cities where you create temporary accounts.

  32. yaos says:

    The catch with HSBC is that you can only transfer 2 million dollars per month.