HSBC Direct Reduces Interest Rate to 4.5% APY

It was just announced that HSBCDirect is reducing the interest rate on its Online Savings Account from 5.05% to 4.50% APY. While not crippling I actually have enough money sitting in my savings account that I can see what affect the drop in the rates will do to the monthly interest I collect.

Last month i earned $174.12. The interest rate has basically gone done about 10% so I am going to miss out on about $17 in monthly interest in this account. Anyone who has a large number of 0% balance transfers is going to feel the sting more than me.

So what am I going to do differently? Probably not much. I am going to continue working to my savings goal for a house downpayment. I'll still keep putting the money in my EmigrantDirect which is still paying 5.05% APY.

If interest rates continue falling I may be inclined to finance a higher amount of the house when we purchase it and lock into lower fixed interest rates. I could then take the extra money I saved and pay down a higher interest rate mortgage I have on one of the two rental properties.

Update:EmigrantDirect reduced their rate to 4.75%. Still better than ING Direct and HSBC Direct

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Comments (13)

Yeah I just noticed my ING go down... (as you all probably already know)

But at least mortgage rates are down. I don't own, but if they go down low enough I'd think about buying a 1 bedroom. I'm already seeing foreclosures in my area.

I anticipated such a drop from HSBC (and EmigrantDirect very soon), so I opened a new 5.7% CD last week for my 0% APR balance transfer. I'm planning to open another CD for anything more than I need for an emergency fund.

Perhaps its wise to invest in Euros at a european bank. You will have a higher interest rate, and within some time you will have a huge exchange profit. The dollar will tumble..

Presidential Bank is still paying 4.5% apy on checking balances up to $25K and 5.25% apy on savings balances up to $35K. has an updated list of banks that pay the most. They have a credit union (SECU) that appears to be paying 7.5% apy on a 7 month CD. YMMV

I am moving my money to 6 month/1 year CD's. The interest rate yields are still flat so the short-term CD's are still yielding what the long-term CD's are yielding.

Brandon J
Money for Military

yeah my BT is taking a pretty big hit from this. Wish I would have locked in that CD. Shoulda coulda woulda :)

Speaking of balance transfers...

A warning out there to anyone with a BofA balance transfer/cash advance. If you pay your minimum payment online from a 3rd party checking account, but then add any other Bank of America product (like EasyChecking or a brokerage account), then they will automatically and without telling you un-activate your credit card automatic bill payment from the 3rd party. This resulted in a missed payment! (cringe)

This happened to me last month after several sequential months with no hitches, and I had to spend 2 hrs. with an account manager reversing my late fee ($40), finance charge ($180), and getting back on the 0% offer that they bumped to 12% after I missed the online payment.

It has all worked out in the end, but be wary that these bankers aren't dummies, and will try every little trick (even if unethical!) to get you to start paying their fees and interest charges. I pride myself in spotting good 0% offers, and have done this for over 2 years now, but am more aware than ever that the pitfalls to get you is the one you can never expect.

I just never expected them to go so far as "re-classify" me as a different customer type, and in so doing reverse my online banking billpay settings. Sheesh!


I noticed that ING's rate dropped on the same day the Fed Announced the reduction in rates.
ps..2Million, have you read the great early cash out article in Smart Money Magazine. Excellent reading about punching out early of your primary career. Very motivating.

to update, presidential bank has lowered their rates. now 4.9% savings and 4% checking.

also consider that if you open a fidelity brokerage account, you get $100 and the cash reserves sweep money market account has a 7 day yield of 5.16% today which has been dropping slightly in the last week. Fido also gives you free billpay, checkwriting, a free amex gold, and spartan index funds with total expense ratio capped at 10bp.

otoh, secu appears to be paying 9.36% apy on their 7 month cd instead of the 7.5% initially reported. looks dead as they are diluged with apps. should have climbed in last saturday.

2 mill, I think the goal in investing is to maximize the risk adjusted return. The return of the secu cd is a great example because it yields 9.37% before tax and is ncua insured, so there is zero risk to principal. limit 200k. obviously this is not a market rate, but these anomalous opportunities flash from time to time.

WAMU also offer 5% apy saving account for new customer open online. I have ING in the past but they drop the rate too..

If I not mistaken E*Trade still has %5.05 on their savings account with no minimum. I say if not mistaken because I haven't gotten anything from them saying otherwise.

Following the advice in a CNN article about two weeks ago, which predicted that online interest rates would fall, I put about 75% of my savings into a 1 yr CD at 5.65%. About a week after I did that, my bank lowered it's interest rate. Whew!

Emigrant Direct has just dropped to 3.60%APY..Shame on them

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A personal finance weblog of my journey to reach my goal of $2 million + the value of my primary residence.
Current Net Worth: $1,938,393


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