ING Direct has served me well for a long time. For a few years, their interest rates were the highest available, and their sign-up and referral bonuses simply added to the gains. I used all available referral bonuses in 2005, so I no longer have these to distribute. Also, their interest rates have been sagging for many months now.
Banking Deal: Earn 1.75% APY on an FDIC-insured money market account at CIT Bank.
HSBC Direct has consistently been at the top of of the list, and I’m considering moving my cash. HSBC Direct and ING Direct calculate their interest similarly, making the comparison easy. Both banks accrue interest daily and compound monthly. Regardless, the advertised APY provides a means to easily calculate potential interest income, rather than using a complex interest calculation.
Right now, HSBC Direct’s APY is 5.05% and ING Direct’s is 4.35%. There is a 0.7 percentage point differential between the two rates. With my $12,040 currently in ING Direct stavings accounts, the 0.7 point difference, assuming I neither deposit nor withdraw money, results in an advantage of $84.29. It would be more realistic to assuming I will save more than I will spend from this account, so that interest advantage will increase slightly.
Unfortunately, HSBC is not offering any bonuses right now to sweeten the deal.
But the choice to switch isn’t obvious. Is ING Direct’s ability to maintain “subaccounts” (I can separate my ING Direct into separate baskets of funds with different titles for my own edification) worth the $84.29 I’d miss my not changing banks? Probably not, but it is handy.
Currently, my ING Direct account is split into different pools for my emergency savings, car fund, relocation fund, vacation fund, and money earned with my online businesses. I’m not excited about the prospect of combining all of this into one pool of money. I once heard the suggestion of combining the money at the bank but maintaining a split in my money software, but this would disable Quicken’s online banking reconciliation features.
Some people may also be interested in HSBC Direct’s offer of an ATM card for use with their savings account. I most likely would not use this feature as I don’t know of any HSBC ATMs in my area, and I won’t pay the fee for using their card at an ATM owned by someone other than HSBC.
I will probably make the shift. ING Direct has made me happy, and I like the company’s “personality,” but they’re simply not being competitive enough. Over the past year, HSBC Direct has proved itself a worthy competitor. As of 10.21.11 ING Direct’s savings rate is 0.90% APY and HSBC’s savings rate is 0.80% APY.
Update: Here is my decision.
Updated September 24, 2015 and originally published July 11, 2006.