Dedicated to Deposits: Deals, Data, and Discussion

4.00% 6-Month Online CD at HSBC Direct

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HSBC
Update 11/25/08: This 4% 6-month CD is no longer available. Please check HSBC Direct's website for the latest rates.

HSBC Direct has just increased the yield on its 6-month Online CD to 4.00% APY. HSBC Direct just recently started offering online CDs. They claim to have easy account management. I haven't tried to open one, but it appears not to be as easy as ING Direct. However, one thing similar to ING Direct is a very small minimum deposit requirement. HSBC Direct's minimum CD deposit is only $10.

Some of the CD details listed at HSBC's FAQ Overview Page include:
  • 10 calendar-day grace period when you can close CD without a penalty
  • Early withdrawal penalty equals 30 days of simple interest
  • At maturity the interest will be posted to your account
You can open CDs online and fund it electronically. This Account Opening FAQ describes the details:
If you are a new HSBC Direct customer, you can send an electronic bank-to-bank transfer from a non-HSBC account, or mail us a check or money order. If you are an existing HSBC Direct customer, you can fund your HSBC Direct Online CD using one of your existing HSBC Deposit Accounts or mail us a check or money order if you wish to fund your HSBC Direct Online CD from an non-HSBC account.

One thing I don't like about the account opening process is that the interest rate doesn't lock at the time of the application. According to HSBC, "your account will receive the interest rate and annual percentage yield in effect on the date it is opened. CDs cannot be opened before the application process is finalized."

It appears that managing the CD can't be done all online. According to HSBC's Managing Your CD FAQ Page, you have to call to transfer money out of the CD during the grace period. Beneficiaries can be added to a CD by sending the beneficiary's name via BankMail. Only one beneficiary can be added to an Online CD.

HSBC Direct's online no-minimum savings account continues to be competitive. The current yield is 3.25% APY. Please refer to my Online Savings Account review for more details.

HSBC Direct is part of the HSBC Holdings plc which is one of the largest banking groups in the world (see background). The US arm is HSBC Bank USA, N.A. It's FDIC insured. One interesting note is that it currently only has a 2 star safe-and-sound rating (below peer group) at Bankrate.com based on 6/30/08 data.

Thanks to the reader who mentioned this new CD special in the finding the best deals post.
  Tags: CD rates, HSBC

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Comments
11 comments.
Comment #1 by Anonymous posted on
Anonymous
HSBC is a safe bank and a safe bet.

1
Comment #2 by Anonymous posted on
Anonymous
Wow! A $10 dollar minimum deposit CD. I don't think I have ever seen one that low...That's like 20 cents earning on the 6 month deal. Think they do a hard credit pull on that? lol

1
Comment #3 by clyde (anonymous) posted on
clyde
I had to go check the $10 part myself. It's true. I'm going to open a $10 just for giggles, since I already have a savings account with them (short app for the CD).

1
Comment #4 by Anonymous posted on
Anonymous
Thanks, Banking Guy. This is a remarkable deal, great for a person without huge money who wants their money on a short leash. I don't think I've seen the equal of this deal elsewhere. I am currently an HSBC customer. It's a good bank. Doubt those who apply today for a CD will have problems with the rate. Later on, well, sure it could become a problem down the line. But for today, respectable rate, short term, unbelievably low minimum: what's not to like! Usually the little guy gets left out. Not this time.

1
Comment #5 by Anonymous posted on
Anonymous
Hi Banking Guy, thanks for the info. Perhaps something of "the basics" may be good to review with readers in these trying times. This week I experienced a bait-and-switch tactic from Countrywide. I'd wanted to renew an existing CD and the rate they quoted me on the phone was different to what they actually renewed the CD in their system. They tried to renew my CD at a LOWER rate! When I called to ask them to correct the transaction they held me off in 24 hour cycles (multiple times!) as they "submitted a work order to deposit operations" to correct the rate. This took place until I was at the end of the 10 day renewal period and decided to close the account with them. Buyer beware: ALWAYS check that the rate you are quoted is actually the rate that you receive.

1
Comment #6 by Anonymous posted on
Anonymous
Beware! Don't use money for a HSBC account for the 6month cd or your rate of return will only be 1.75% Had to learn the hard way. You earn more interest by leaving it in the HSBC on-line account if that is the source of your 6month CD investment. BEWARE. I'm canceling my 6month CD and paying the 30 day early withdraw penalty.

1
Comment #7 by Anonymous posted on
Anonymous
Some details; APY is only good online and qualifying deposits must be new money. New Money means funds not previously held by any member of HSBC Group within the past consecutive six months. A penalty may be imposed for early withdrawal and is equal to 30 days of simple interest. Minimum balance to open and obtain APY is $1,000.

1
Comment #8 by Anonymous posted on
Anonymous
I just checked my 6 month CD with HSBC that I opened with money I had in my HSBC savings and it is earning 4%.

Is the new money requirement a recent change?

1
Comment #9 by Anonymous posted on
Anonymous
Anonymous, at 10:10 AM, October 21, 2008
- not sure what you are talking about there. You used money that was in the cd before the cd matured????

1
Comment #10 by Anonymous posted on
Anonymous
if you go to hsbcdirect.com it doesnt mention new money, i just transfered money from an hsbc account to open the cd.

1
Comment #11 by Banking Guy (anonymous) posted on
Banking Guy
A reader provided the following comment regarding his experience opening this 6-month CD:

You may not get the advertised rate from HSBC. I opened a 6-month CD at HSBC based on an excellent advertised interest rate. Before I funded it I double-checked the rate. They decided to lower the rate substantially while the funds were being electronically transmitted, and they locked in my CD at a 3.1% APY instead of the advertised 4%. I would never do business with an organization like this again.

1