HSBC Direct Hikes Savings Account Rate
HSBC Direct appears intent on keeping its online savings account competitive. The Bank just increased the rate of its savings account by 21 bps to 2.01% APY. This applies to all balances up to the maximum allowed account balance of $2 million. HSBC Direct does list balance tiers for the savings account, but currently, all tiers earn the same APY.
In July, I first reported on the “rebirth” of HSBC Direct and its savings account. When I first learned of the account in late June, the account was earning 1.60% APY. In early July, the rate increased to 1.70% APY, and then just after mid-July, the account rate increased to 1.80% APY.
As I mentioned in that July post, I first started to write about HSBC Direct and its Online Savings Account in 2005. Before the 2008 financial crisis, HSBC kept the Online Savings Account rates very competitive. Most noteworthy was in 2007 when HSBC Direct offered a promotional 6% APY. The Online Savings Account became less competitive after 2008. In 2010, HSBC Direct became HSBC Advance. Like other online savings accounts, the rate fell after 2008. However, the HSBC Advance Savings Account rate fell much more than others. The rate was at 0.80% in early 2012. The rate fell in 2012 and 2013 until it reached 0.05% in late 2013. It remained at this low rate until 2016 when it reached a bottom of 0.01%. As a comparison, Ally Bank’s Online Savings Account rate never fell below 0.84%.
Important Features Listed in the Disclosure
Below is a summary of the important features of the HSBC Direct Savings based on the HSBC Direct Savings Terms and Charges disclosure:
- Minimum deposit to open HSBC Direct Savings is $1.
- Balance tiers of $15k, $50k and $100k are listed, but currently all tiers have the same APY.
- $350,000 is the maximum when funding the account or making additional daily deposits/ withdrawals with an electronic transfer to or from another financial institution.
- Maximum account balance is $2 million.
- No monthly maintenance fee
- Requires that the initial funding deposit be New Money
- Interest is compounded monthly and credited monthly
- ATM/Debit card is not available for HSBC Direct Savings
- If you close your account before interest is credited, you will not receive the accrued interest.
There’s not much documentation describing HSBC’s Bank to Bank Transfers. HSBC uses the same name for ACH transfers (Bank to Bank Transfers) as it did before 2010. The old system had a few issues such as slow transfers. Using HSBC’s online chat service, I received several details about the service. Based on the CSR’s answers, the new service appears to be better.
- Using Bank to Bank Transfers online, you can transfer up to $350,000 daily both in and out of your HSBC account at once. There is a $2,000,000 limit per rolling 30 day period. Please note you can't have more than $1,050,000 pending at any time.
- The link that is used for the initial funding is not saved. Once the account is opened, the link would need to be added again for ongoing Bank to Bank transfers.
- An unlimited number of links to external accounts can be established.
- Links to external accounts can be established through trial deposits or instantly by providing that bank’s login credentials.
- Bank to Bank transfers can take around 2-3 business days to fully transfer.
- Incoming funds from Bank to Bank transfers are available the same business day that HSBC receives the deposit.
- Customers are allowed to push or pull funds using another bank’s ACH service.
HSBC Direct CDs
HSBC Direct is also offering online CDs, but the rates are currently not competitive.
HSBC Direct accounts are nationally available. Only online applications are allowed. HSBC isn’t allowing existing HSBC customers to convert their existing savings account into this new HSBC Direct Savings account. Both new customers and existing customers must apply online at HSBCDirect.com, and the account must be funded with money new to HSBC.
According to the CSR, the application process is all online. It does not require receiving or returning anything via snail mail. That’s an improvement from the old system.
POD Beneficiaries and Trust Accounts Are Not Available
HSBC Direct accounts cannot have POD beneficiaries, and trust accounts cannot be established. Only the basic individual and joint accounts can be established.
As an internet division of HSBC Bank USA, N.A. (HSBC), HSBC Direct operates under HSBC’s FDIC Certificate and shares its financial history.
HSBC is the 14th largest bank in the U.S. based on assets. As of March 31, 2018 data, HSBC has just under $180 billion in assets and just over $134 billion in deposits.
HSBC/HSBC Direct has an overall health rating of "B+" on DepositAccounts.com, with a Texas Ratio of 3.54% (excellent), based on June 30, 2018 data. HSBC has an excellent capitalization level of 13.27%, a result of holding $178.62 billion in assets, with $23.71 billion in equity. Deposits have shrunk dramatically in the last year which may be one reason for HSBC bringing back HSBC Direct. Total non-brokered deposits have fallen $7.89 billion, resulting in a decline of 6.57% for the year. Please refer to our financial overview of HSBC/HSBC Direct (FDIC Certificate # 57890) for more details.
How the HSBC Direct Savings Account Compares
When compared to 213 Savings Accounts and 183 Money Market Accounts tracked by DepositAccounts.com that are available nationally with similar minimum balance requirements (minimum balance of under $10k), eight savings accounts and one money market account have higher rates than HSBC Direct Savings Account's rate.
The above rates are accurate as of 9/10/2018.
To review the best liquid rates, both nationwide and state specific, please refer to our Savings Account Rates Table and our Money Market Rates Table.
However, I recently discovered that HSBC has not really entered the 21st century yet. Adding my wife, who is also a long-term HSBC customer, as a joint owner to my existing checking account took about 3 phone calls and 2 chats, in total probably over 3 hours.
When I explained to the HSBC CSR that at some other banks with online presence this can be done in about 2 minutes with a few mouse clicks (click to make the account joint, wife gets a request in her online login, clicks 'yes' and done), the CSR got mad and claimed that this was not a secure method. Like, calling HSBC and guessing at various verification questions is any more secure???
But, other than that recent experience (and the fact that my old HSBC Direct savings account still pays 0.01%), I've been a relatively satisfied customer over the years, mostly due to the low restrictions on the bank-to-bank transfer feature.
However, you will not receive the 1.8% rate, according to the representative I'm currently talking to (she says .01% due to funding the Direct Savings with a transfer instead of "New Money"). She seems to be more knowledgeable (and speak better English) than the others I've talked to. However, if you wait on the Direct Savings and keep the money in the Advance account for 90 days, you can pull it out immediately along with the $325 ($350 minus the $25 charge for closing the account before 6 months has expired) and move it to the bank it originally came from. You can then use the same money to open a Direct Savings account (now considered "new money" due to being transferred from an outside bank) and get the 2.01% APY. Considering you just made the equivalent of 13% APR over the three months you had your money in the Advance checking (assuming you fund with exactly $10,000), it's really not a bad deal. IF you want to continue dealing with their customer service. After the 90 days, I might just move it all back to Marcus and hope they raise their rates to stay competitive. Never thought I would hear myself say, "I can't wait to experience that classic Goldman Sachs customer service again."
"Unfortunately direct savings account doesn't have an option to add beneficiary.
You can add a joint account holder who can act like beneficiary."
Note that Capital One 360 did not allow POD designations for a long time. I just got a mailed card from Capital One bank stating that POD are available and can be added to their accounts online. Another innovation that is rather late in being implemented.