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Unfortunately, another not so great financial trend (besides the stock market dropping lower and lower!) is continuing, the drop in interest rates for high yield savings accounts, the majority of which are online bank accounts.
Today, both ING Direct and HSBC Direct lowered the interest rates for their online high-yield savings accounts.
ING Direct has lowered their rate from 2.20% to 1.85%
HSBC Direct has lowered their rate from 2.45% to 2.25%.
Should you chase after the highest rate?
That depends on what is important to you. I have had an ING DIRECT account since 2002, and have been happy with the account and ING’s service since that time. I do have one other online money market savings account, but I have yet to open up other accounts to “chase the highest rate“, mostly due to the fact that I prefer keeping things simple.
One thing I do know, is that even the 1.85% ING offers is 18.5x what my regular bank savings account offers (a pathetic 0.1% !)-which is tied to my checking account. So for me, the important thing is just having a high yield savings account, whichever one you choose and stick with, as opposed to settling for practically nothing with a local bank branch savings account. Compared to an 18.5x difference, a 20% difference between ING and HSBC is not so huge. There are other online banks that offer comparable or slightly better rates, so look around and try them out if you are looking for the highest return for your money.
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{ 5 comments… read them below or add one }
I’ve been an ING Direct customer since 2004, the ease of the system and the still high rate (relatively) have kept me a loyal customer. Plus the fewer banks that have my info the fewer people have access to my info.
Plus I don’t think HSBC will be able to keep up their higher rate over ING forever.
I’ve also been an ING customer for years now. Their customer service is top notch. And I really don’t have the time to chase after a few tenths of a point.
@Weakonomist- I agree, I am not a big fan of signing up for a bunch of different accounts just to get a higher rate- too many places with my info. doesn’t seem like a great idea..
@FFB- Same here- I don’t have the time or the inclination to do that to get a slightly higher rate.
The rates are even going to go lower…so 1% APY is not too far away.
You called it Andy! ING dropped to 1.65% today. I hope 1% doesn’t come too quickly, though!