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Review Of HSBC Direct High Yield Online Savings Account Bank

Published 1/5/09 (Modified 3/22/11)
By MoneyBlueBook

Review Of HSBC Direct High Yield Online Savings Account Bank

When it comes to choosing the best high yield savings account, many of us look for different things - placing greater weight on certain bank features than others. For myself, when I'm deciding which bank presents the top savings opportunity for my money, I tend to go with the bigger financial institutions - banks that have been around the block a few times and have proven themselves capable of surviving, even thriving during the worst economies. Perhaps one of the oldest, largest, and most established financial institutions in the market today, and one that has indeed joined the "too big to fail" community of super giants, is British banking conglomerate - HSBC Bank. Founded during the mid 1800's by the British and based in Hong Kong and Shanghai during the early years, the HongKong and Shanghai Banking Corporation grew out of a pressing banking need to facilitate the rapidly growing trade between China and Europe. After the handover of Hong Kong to China, the British banking giant moved its corporate headquarters back to England, and shortened its name to HSBC Bank. To this very day, HSBC continues to maintain a significant presence in East Asia where it had its roots, but has significantly expanded the reach of its multi-national operations, making its banking presence felt in other parts of the world, including Europe and the Americas.

Bigger Is Better - In Terms Of Reputation, Full Service Features, and ATM Branch Convenience

Currently, HSBC is one of the largest banks in the world, if not the largest according to rankings. By some estimates, based on a composite of factors such as sales, profits, assets, and market value, financial publications such as the Economist and Forbes Magazine have actually ranked HSBC Bank Holdings as the world's���� largest banking group and even the world's #1 company according to size. Such a dominating presence in the banking sector is important because it brings a certain degree of trust and security to those consumers and small businesses who entrust their life savings and investments with the company. While bigger is not always necessarily better, larger banks with a significant history over a longer period of time tend to offer a better indicator of how the bank will continue to run its operations in future years. Certainly amidst the current credit crisis and the ongoing failures of regional banks, having your savings account funds managed by the world's banking leader (namely HSBC) offers a greater sense of confidence and stability in the financial safety of your precious liquid assets. Bigger banks, and in particular - older banks, offer a historical track record for us as consumers to draw from - allowing us to project whether a bank's customer service or promotional interest rates are just one time gimmicks, or long lasting offers. In the case of HSBC bank, they've proven themselves to be not only a reputable bank with a long storied history, but one that has consistently offered competitive banking features and top interest rates for its customers.

Why Open An HSBC Direct Online Savings Account?

The HSBC Direct online savings account is one of the most popular high yield savings options for consumers in the market today. The bank has recently been touted by financial pundits such as Kiplinger's Finance as the Best Overall Online Savings Account - praised for its quick customer service, free ATM card feature, $1 minimum balance requirement, and consistently high interest rate.

HSBC Direct's popularity among customers is primarily because of its instant brand name recognition due its association with parent company, HSBC Bank. While most people have come to know the parent HSBC Bank for its extensive worldwide network of bank branches and ATM locations, the Internet-based HSBC Direct has only recently made a strong global push to become a bigger player in the online banking space. However, since its emergence several years ago at the start of the whole online virtual banking movement, HSBC Direct has developed into one of the best online banks, cementing its status as one of the most popular and consistent big-name marketers of online only savings accounts with very appealing interest rate deals. By promoting an Internet-only high interest savings option, retail banks like HSBC are able to bypass the expensive overhead expenses of maintaining brick and mortar branch locations, and pass on the cost savings to customers in the way of higher interest rate yields. As a quick overview, here are some of HSBC Direct's most appealing online banking features:

1) Convenient Network Of HSBC Bank Branches and ATM's - Those pondering which high interest savings bank to go with may want to seriously consider a virtual HSBC Direct savings account. With HSBC Direct, not only do you get the high yield rate perks of an Internet bank, but you get to enjoy the benefits of HSBC's large worldwide network of bank branches and ATM locations, benefits only found with large banks. While HSBC's physical banking presence in the United States definitely has more room to grow, it already has a significant entrenched presence in many places in the world, especially in Europe and East Asia. With access to the branch network, HSBC Direct account holders have free access to ATM cash deposits and on-demand withdraws with their free HSBC ATM card, benefits provided after bank account activation upon request.

2) Check Writing Option Available - While HSBC Direct does not offer a checking feature, you are free to open a new HSBC checking account to enjoy HSBC's regular full service check writing privileges. Once your HSBC checking and HSBC Direct savings accounts are linked up, you are free to transfer balances around quickly and conveniently as your check writing requirements demand.

3) High Yield Interest Rates For Savings Accounts - Perhaps the most prominent reason why you ought to choose HSBC Direct as your primary online savings account is to take advantage of its consistent track record of offering competitive high interest yields for its savings deposits. The HSBC Direct high yield savings account was one of the first Internet-only accounts to promote a very high interest rate, and still remains fairly competitive with other offers to this day.

4) No Set Up Charges, No Monthly Fees, And No Minimum Balance Requirements - HSBC Direct accounts have no monthly fees and no minimum balances, which is what you ought to expect from a top ranked online savings bank. Thus, you can literally deposit just $1 into your new HSBC Direct savings account should you desire without worrying about getting slapped with unexpected maintenance charges.

5) HSBC EasyView - HSBC Direct offers online customers free access to its account aggregation service powered by Yodlee. With HSBC Easy View, you can access all of your online investments, banking accounts, credit cards, mortgages, and loans - and keep tabs on all balances and transactions with just a single password. It's the online tool that I use to monitor my daily balances and track my net worth updates.

6) Unlimited Linked External Accounts - Certain online savings banks place a limit to the number of linked ACH accounts you may have, however, HSBC Direct places no restrictions on such matters. While you will need to verify account ownership of all new linked accounts via a series of trial deposit tests, you are free to have an unlimited number of linked accounts for easy and relatively quick electronic ACH transfers.

7) Accessible Customer Service - HSBC Direct's customer service is generally prompt and accessible (ranked by Kiplinger in 2006 as having the best customer service overall among online banks). Because HSBC offers a large network of bank branches, you are free to visit an HSBC location for extra customer service as needed. However, most day to day questions can easily and quickly be handled and resolved via its online messaging service or via its toll free 24 hour, 7 days a week customer service telephone help line (1-800-404-4050).

8) Full FDIC Insurance Coverage - As with all FDIC insurance member banks, HSBC and HSBC Direct account holders receive full FDIC insurance coverage for their checking, savings, and CD deposits up to the full protected limit of $250,000. In an otherwise unstable financial market, many view FDIC insured bank accounts as the safest place to put your money.

Process Of Opening A New HSBC Direct Savings Account

The HSBC Direct new account signup process is pretty typical of most online savings accounts as it's comprised of a web-based application process and a short waiting game for account paperwork processing. To apply, visit the HSBC Direct online application page to begin. Simply follow the application directions and provide the following identification information:

  • Your full name, your Social Security Number(SSN), your driver's license number, your mailing address, and any other relevant info that is requested.
  • You'll also need to provide your employer's name and office address when prompted to do so.

For online identity verification, the HSBC Direct online application will also provide you a series of a short multiple choice test questions pertaining to data found on your credit report that only you should know. Such test questions may include the name of your current home mortgage lender or the amount of your monthly student loan payments. Obviously for this portion of the application, HSBC Direct will need to automatically run a credit report check to pull the desired data in order to formulate the appropriate test questions. The credit pull made on your credit report is for identity verification purposes only and not for the purpose of extending credit. For those worried about the potential negative hit on one's FICO credit score that comes from a bank or lender's hard credit inquiry - fear not. HSBC Direct only performs a harmless soft credit check during the online application process, and only for identity confirmation purposes. The inquiry will indeed show up on your credit report as a routine credit inquiry, but your FICO credit score will not be negatively impacted in any way.

Thereafter, you will need to provide a funding source for your newly opened HSBC Direct savings account. The vast majority of applicants will likely select the online ACH electronic transfer option for which you'll need to provide the ABA routing and account numbers of your funding bank. Such routing and account number information can be easily found on the bottom of your bank checks or requested from your bank or credit union. After selecting your desired funding amount (HSBC Direct only requires a minimum of $1), you will need to verify ownership of your newly linked bank account through a series of two trial deposits into the account that you want to fund your HSBC Direct account from. The trial deposits usually take a few days to execute.

While there is no actual paper work that you will need to mail in, once you have provided your identity information and have properly submitted the electronic funding request, you will need to wait a few days for your new account setup information to be manually mailed to you by HSBC Bank via postal service. For security reasons alone, HSBC Direct has chosen to forgo instant online account activation in favor of a final address verification process. Ultimately after a few short days, two letters will be separately mailed to your mailing address, one containing your new customer ID and the second one containing your new account password. After you have both letters, you can begin to bank online by activating your savings account via the HSBC Direct Internet Banking Activation page.

Extra Information and Resource:

  • HSBC Direct ABA/Routing Number for direct deposits and ACH transfers: 022000020

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7 Responses to “Review Of HSBC Direct High Yield Online Savings Account Bank” 

  1. Eric Newton says:

    Personally, I'd like to stick to banks that i "think" are US based... Isn't HSBC a more Asian based institution?

    Great article though, thanks! Congrats on hitting the self employed world... I've been out in the wild for about a year myself now, and its amazing how much more energized I feel and the amount of money, I feel like I'm no longer constrained only but my own will to just look around and take job opportunities...

    Cheers

  2. Raymond says:

    Eric,

    Actually, HSBC is a British bank believe it or not. Yeah...that Hong Kong part threw me off initially as well. Until recently, I had always assumed it was a Chinese bank...but the bank's based in England. However, with globalization and the rise of multi-national companies, it's getting harder to say what country a particular corporation is from.

    Isn't self employment great? No more bosses, no more annoying commutes, no more road rage. I do miss having co-workers and engaging in the proverbial water cooler chit chats though. But the freedom and independence I gain are worth the price.

  3. Elizabeth says:

    I have had one of these accounts since 2005. I was a college student at the time looking for a way for my money to grow. I have mutual funds and stocks but I wanted money that would be fluid so I figured this would be a perfect option. Even though the interest rate has gone down (darn fed.) significally since I have opened the accout I am still happy with my choice. Transfering between my different banks is easy, ability to use the local HSBC ATM makes cash deposits easy, and the service line if you have any questions is very helpful.

  4. Tom says:

    I opened an online account on Jan 3. The initial funding moved on Jan 5. By Jan 6 I received my telephone PIN in the mail. I thought things were going well. And then the trouble started. While I was supposed to receive my OnLine user ID in 1-2 business days, I actually didn't receive it until Jan 13. And while I was supposed to receive my online password in the mail in 5 business days - I still don't have it. I called customer service, the only thing they could do is cancel the old password and issue me a new one, by mail, which I should receive in 7-10 business days! It may very well take A MONTH, before I can actually use this account. Unbelievable for an "OnLine Account"

  5. Marc says:

    I've been depositing into an HSBC direct account for months now and have yet to use the ATM or Branch options - done everything via ach transfers.

    I wanted to confirm a claim made above - Are there truly no ATM fees and can I go to branches? I remember hearing that, due to the way HSBC is structured, HSBC direct is technically some type of subsidiary of HSBC and, as a result, branch access was limited and ATM fees WERE charged!

    Can anyone point me towards documentation that verifies the claim above? I can't find it!

    Thanks,

  6. West says:

    Can anybody verify it HSBC charges for incoming and outgoing ACH transfers to other online savings bank? There are other options I would like to explore with higher interest rates but none of them offer the local presence that HSBC has in the nyc area. If i can transfer my funds to an external account and take advantage of a higher interest rate, that would definitely be the way to go

  7. JJ says:

    West to answer your question, HSBC has $3.00 transfer fee per transaction. This is from the Terms and conditions section #18. The following Service Charges apply to all Consumer Checking and Savings Accounts when completing a transfer from HSBC to another financial institution. These charges do not apply to a customer that owns an HSBC Online Savings Account, HSBC Premier, or Domestic Private Banking account.

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