I have $2,000 to put into savings. Where to?

[Well Spent]

Hi,

I have saved up $2,000 in my bank savings account over time. I want to transfer it to a higher interest savings account to keep as an emergency fund.

HSBC is currently offering 6% interest on new $ deposits until April 30, then 5.05% thereafter. Should I put it there?

Or should I put it into a Money Market account? What's the differences/benefits?

Also, I will be getting a $10,000 check soon from my student loan to pay for tuition & other school-related expenses from this spring semester through summer 2008. Should I also put this $10,000 into the same account as the $2,000?

[sweeps]

The lines between an MMA and a savings account have blurred, so it's not very useful trying to draw distinctions.

HSBC is a good choice. You can see a comprehensive list of savings/MM accounts in the sticky thread at the top of this forum.

Sure, I don't see any reason why you couldn't throw the $10k in the savings account too. I'm surprised that you were given student loan money for so far in the future -- I think most college students wouldn't be responsible enough to save their money that long.

[disneysteve]

Originally Posted by sweeps

The lines between an MMA and a savings account have blurred, so it's not very useful trying to draw distinctions.

This is true. Traditionally, money market accounts paid higher rates, but that is no longer true. Some money market accounts offer check-writing privileges, but that isn't true of all either. Today, what they call the account really doesn't matter. All that matters is the rate, the minimum balance, the fees (if any) and the convenience factor.

[mrvirgo]

Well Spent
A year ago, last March. when I opened my HSBC on line savings account, it took 17 days from start to finish. They are not the fastest bank on the Internet. If you already have a account with them, park your cash with them at least until the end of April. If not, you'll have to decide if around 30 days interest, even at 6%, is worth the bother. I hope this helps.

[Ima saver]

If that money is your emergency fund, I would just put it in a bank with the highest interest being paid. In my case, I can keep my cash locally and earn over 5% with check writing privileges.

[Raisecapital01]

I never knew that there were banks paying 6%. I will definitely move my money to an account like this.

[Well Spent]

I'd really like to put it in one of the online banks. I've been thinking of HSBC because of the 6% interest promo until April 30 but I may be interested in ING Direct or Emigrant Direct, too.

The $2,000 is my emergency fund and the $10,000 is my school expenses $. I would like to put them in the same account (to keep my life simple) that earns 4-6% interest. I'm fine with having to wait 4 or 5 days to access the money when I need it.

I guess my question, then, is whether you would recommend I go with HSBC, ING, or Emigrant? Or a different one?

[mrvirgo]

I opened my IngDirect online savings in April of 2003 and never had any problems with them. Phone calls are answered promptly and the reps speak American Ënglish. I pulled all but $5.00 out when they dropped to 4.50% and put it into Citibank's online safvings at 5.00% When they took a dive a few months ago to 4.75%, I moved everything to HSBC to take advantage of the promo. After April 30th, HSBC will most probably go back to 5.05% which would tie it with Emigrant Direct. ED is fast moving money but it's hard to link accounts with them. If I remember correctly, you have to send them via snail mail a voided check to link an account. I have an open account with them for $5.00 just in case they pump up their interest rate in the future.
So, I say go with HSBC especially if they have a branch in your city and if you want to link multiple accounts or do bank to bank transfers. Currently, they are offeinrg a free checking account + a $25.00 bonus if you just happend to be able to use a(nother) checking account. And they are security fanatics! You can be sure no one will ever access your account. .

[Aleta]

It's not a bad idea to leave a little money in a few of these accounts. As Jeffrey says that ever so often they run promotions and I think its on new money deposited. Look for the one that is giving you the better interest rate. The 5.05% at Emigrant Direct is not a bad rate and it's insured. Vanguard Prime Money Market is now paying 5.08% and it isn't insured (Not that that should be a problem with someone like Vanguard). There are people who feel better knowing that their funds are protected.

[PRICEPLUS]

I startes withING and now have Emigrant. I did not have to use snail mail to open the account and the linking was pretty easy!

[My English Castle]

Yeah, I've never had a problem with ing and I like the secuirty and simplicity of their website.

[bigsaver]

For online accounts, I would avoid ing as their rates are low unless you have enough friends to maximize the signup bonus. HSBC and emigrant are the same rates when the HSBC teaser rate of 6% disappears at the end of April. HSBC and emigrant will then be 5.05%. If you want higher with a $1 minimum, you can try igobanking at 5.30%. They were pretty easy to setup and I have had no problems with them.

I would AVOID e-loan, now at 5.25%, as they majorly screwed up my account. Also, you need 5,000 dollars to start up and need to then keep a minimum of $500. I would avoid e-loan like the plague.

There is another I think called amtrust that is 5.36%, but I have not had a chance to try them out yet. If anyone has tried them out, let me know.

Another strategy is to use the online banks and link to treasurydirect.gov to buy treasury bills, where your money is 100% insured and only tied up for 30 days at a time. The nice thing with treasury bills is you pay NO local and state income tax. I think they have been around 5.2%, so if you live in a state with a high income tax like California, your true yield will be quite a bit higher than 5.2%. My Money Blog - Personal Finance and Investing Blog has a good review of high to do this kind of setup which is a very good way to get a decent return while keeping your money liquid. Thus, you link the online bank with treasurydirect.gov and thus will continually be earning interest on your money.

[b4freedom]

My pocket!

Thanks!

j/k... HSBC is the place to put it. Always allow a week when transfering it.

[Homebody]

I wouldn't call 1/2% lower at ING LOW, yes they are lower, but unless you have a gob of money, it's not that much...

Anyway I have an account at ING, but just opened one at ED for my mother and it was very easy.

All the banks in my area are paying about 1-2%, so online banks are way better here. 2 of my 3 daughters also have ING savings.

I will probably open another at ED by the end of the year.

[th_tan]

I would go with HSBC, the 6% promotion is an excellent offer, and I believe 5.025 afterwards.

[disneysteve]

Originally Posted by Homebody

I wouldn't call 1/2% lower at ING LOW, yes they are lower, but unless you have a gob of money, it's not that much...

This is a good point. I think some folks tend to go a little overboard chasing the absolute highest rate. If you have a substantial sum to invest, a few tenths of a percent can make a difference. But if you are just parking $1,000 or so, you could be talking about a difference of only $5/year in interest. Sure, $5 is $5, but is it worth your time to keep switching, have extra 1099s to deal with at tax time, etc.

On the other hand, if you are looking to open a new account, why not go with the best rate? It doesn't make sense to intentionally choose a low rate if you are starting fresh. But I'm also not sure it makes sense to keep switiching accounts everytime someone else offers a tenth higher.

[anonymous_saver]

I have an account with HSBC, Emigrant, and ING.

I would not go to ING because of their lower rates (their website is really easy to use though).

I would not go with HSBC because they take much longer than the other online banks to complete a transfer, plus they don't add interest at the beginning or end of a month, they do it based on when you open the account. I also do not like their website.

I would choose Emigrant, they have consistently had the highest rates (except for the 6% promotion through HSBC) over the other companies listed. They have good customer service, and their transfer times are really speedy! I just transfered $3,000 in Emigrant a day ago, and it is already earning interest for me, if I had gone with HSBC it would have taken me 5 days!

By the way I still keep at least $1 in each of these accounts at any one time, just incase they greatly raise their interest rates.

Congrats on saving!

[KellyJef]

I would go with HSBC.

I have found the website extremely user-friendly.

I have made a deposit Saturday morning at my local branch and was able to go home and transfer the deposit over to my online account that same evening. And vice versa.