HSBC’s new 3.5% savings rate
HSBC Direct, the online-only division of mega-bank HSBC, this morning raised its savings rate to 3.5 percent. While that doesn’t sound like a high rate, it beats most others available now.
I think it’s a good idea to have your emergency fund of three to six months of expenses stashed in an account like this. They’re also good for squirreling away money for specific short-term savings goals, such as buying a house or saving for a car.
Other online-only banks that traditionally offer high rates are EmigrantDirect (currently 2.75 percent) and ING Direct (3.0 percent). Rates change regularly, but you won’t go wrong stashing cash in one of these three online banks. These divisions of regular banks can offer higher rates because they have no branches, tellers and other expenses because they’re online only.
All three banks have FDIC insurance, meaning your money is safe up to $100,000 even if the banks go belly-up, which is pretty unlikely anyway. The main drawback of these accounts is you often don’t have instant access to your money. Usually, you have to electronically transfer money from the savings account to your checking account, which can take a few business days.
Another option for even higher rates is to go with a rewards checking account. Read more about those accounts here. To further research savings rates, go to Bankrate.com.
