Pragmatic Finance

If you are a rate chaser you’ve probably already heard that HSBC raised the interest rates on their online savings account to 4.80% APY. They had this rate for a promotion that ended after April and have not been one of the leaders since. What is interesting to me is about a month and a half ago I read an article at the New York Times that discussed the incredible growth of online savings accounts. If the site makes you register to view it you can always go by Bugmenot first.

What stuck out in the article were a few quotes by Kevin Newman, the head of personal financial services at HSBC Bank USA. He said that HSBC didn’t feel compelled to offer the highest rates any longer because they felt that online savings accounts customers were much more loyal than say credit card users who would change products looking for the best rate. I am very surprised he would say that, even if they believed it. Heck, after becoming frustrated with the number of days to transfer funds to an external account I was already considering changing banks. Those comments confirmed to me that I should find another account as my primary online savings.

This latest rate increase moves them to the top tier of rates. This increase is particularly interesting to me. I wonder if they saw too many people moving money out and changed their tune. I kinda agree that his logic will probably be right when the market is saturated and the average joe has an online savings account. But right now most who do have one are financially savvy and willing to consider other banks if they see higher rates or beter services. I, myself, assumed after reading that article that they would stay near the middle of the pack from now on. So I moved my money to the money market savings at GMAC Bank which not that long ago was also raised to 4.8%.