ONLlNE SAVINGS ACCOUNTS... PROS AND CONS... ?????

Question

HSBC offers an online savings account with an APY of 3.50... theres is no minimum balance and no monthly maintenance fee... and it could be linked to a checkings account... and you would be given an ATM or Debit card that you can make deposits and withdraws...

they also offer a traditional savings account that has only an APY of 0.10 you must maintain a minimum balance or else there is a service fee...

so my question is what would make someone choose the traditional savings account over the online savings account... ?????

there has to be something right? or else no one would open the regular savings account...

i already tried reading all the info on the website and they don't really advertise the CONS of the accounts...

and im new to banking so it must be one of those general information that banks asume you already knows... right???

can anyone explain... because this sounds to good to be true...

Answer 1

A lot of people are uncomfortable with the idea of on-line accounts but it's clear from the terms you provide that HSBC is doing its best to discourage people from opening traditional accounts.

Answer 2

Generally on-line banks pay more interest than banks that have branches.  Less overhead for one thing.  I lived in Illinois and most of my money is in Penn and Nebraska.

Answer 3

If you want to go to online and telephone banking, think about switching to HSBC's subsidiary, First Direct.  They are really helpful and efficient, and my online savings accounts with them (linked to a cheque (current) account) attract interest at 4.65% APR.  You can pay into First Direct through any HSBC branch  and, obviously, withdraw from the current account at any ATM.

Online savings accounts offer the "proper" market rate of interest, linked to what the banks can get for themselves by reinvesting depositors' money.  They are, of course, fully computerised so all work involved in transferring in and out is done by you.  Ordinary savings accounts mean that the work to be done in moving the money around has to be done by the bank's staff, so the interest rate is lower in order to pay for the bank to move your money around for you.  0.10% sounds oddly low.  It's usually about 1% below the online rate.  Are you sure you were not looking at the terms for one of HSBC's current accounts?

Answer 4

I don't know that I understand the difference between an online savings account and a traditional one as it seems they allow you to access your money the same way with both.

As long as there is a physical bank that you can go to and get your money out it seems like it's the same type of account.  You might want to check what their restrictions are such as how often or how much you can withdraw...  

Regardless, be wary of where and who you put your money with.  I have been with Wachovia for 13 years since they were many other names or since they bought the other bank I was with.  Never had any problems and I have that WayToSave savings account.  You might want to check that out.

Answer 5

that's true for online savings; the real reason why both savings account still exist despite the obvious difference is that not all customers have an access to online banking, others prefer going to the bank personally to make transactions. Online savings is somehow a newly offered savings compared to the traditional savings which has long existed. so it is basically a bank strategy to promote customers to doing or using online banking.

just a suggestion, if you want to open online savings (that would really be a good idea), just make sure to link it to your current checking to earn that interest rate coz the bank might only give the traditonal savings rate or assess a monthly charge if it is not link at all-call their cust service to do it.

check also other banks aside from hsbc (bank of america, wells fargo, wamu, chase)which has an online savings of better rate or better service.