Word must be getting around the office that I’m up on the current personal finance issues in the world. A coworker who I don’t normally work with came to me to ask my opinion the other day. She’s saving for her wedding, seven months from now. The soon-to-be bride, who received some money earmarked for the wedding, had heard about ING Direct and wanted my opinion.
I steered her away. Even though I keep a lot of my savings at ING Direct, I generally don’t recommend them anymore. They have great customer service to be sure, but there are better places to stash cash, offering better short term returns. I suggested two safe options. Obviously, with such a short time frame, the stock market was out.
For savings, I suggested HSBC Direct, which is currently offering a 5.05% annual percentage yield. To compare, ING Direct just increased their APY from 4.4% to 4.5%. HSBC Direct has been easy enough for me to deal with. The log-in security issues are a bit annoying, but this seems to be a trend spreading throughout all online financial accounts. Although I did not tell her this — this site is supposedly anonymous so I don’t bring attention — I maintain a list of online savings account interest rates.
I also suggested 6-month CDs. The highest APY offered on 6 month CDs, according to BankRate.com, is 5.51%. That’s significantly higher than HSBC Direct, but early withdrawals can draw penalties. I would have to know more about her financial situation to determine if she has enough emergency cash to allow her to tie up the funds for six months.
Maybe I’ll get invited to the wedding.
Updated June 16, 2011 and originally published November 30, 2006. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.