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HSBC Direct Savings Account 2020 Review

| Money Rates Columnist.

HSBC Direct, a division of HSBC Bank, offers online savings accounts with competitive interest rates and no monthly fee.

If you're interested in opening a new high-yield savings account, read on to learn more about what HSBC offers.

HSBC Direct Savings Account Essentials

The HSBC Direct Savings Account offers several features you may find helpful for meeting your savings goals, including:

  • Competitive interest rates
  • $0 monthly fee
  • $1 minimum deposit requirement
  • Member FDIC insurance coverage to protect your savings
  • Mobile check deposit
  • Online transfers to easily move money between bank accounts
  • 24/7 mobile and online banking
  • Live chat customer service assistance
  • Automated telephone banking
  • Checking account and CD accounts online are available as well

Since this is an online-only savings account, you can get started saving with HSBC Direct in a matter of minutes.

MoneyRates Editor's Analysis: Pros & Cons

When comparing any online savings account, it's helpful to look at both the advantages and potential disadvantages before making a final decision. Here's a closer look at the pros and cons of the HSBC Direct Savings Account:

Pros:

  • Earn an annual percentage yield that's 22 times higher than the national average APY for savings accounts
  • Pay no monthly fee to maintain your online savings account
  • Open an account with as little as $1, which is great if you're just getting started with saving

Cons:

  • Since this is an online-only bank, you don't have access to branches or ATMs; instead, you're limited to managing your savings online, via mobile banking or by phone

HSBC Direct Online Savings Account Rates

Online savings accounts often have an advantage when it comes to interest rates, allowing them to outpace what traditional banks offer.

The HSBC Direct Online Savings Account is similar to other high-yield savings accounts in that respect, with its competitive APY. According to the HSBC website, it's 22 times higher than the national average rate paid to savers.

When you look at the HSBC Direct Online Savings Account alongside other online savings accounts from competitor banks, this account holds its own.

There are some banks offering high-yield accounts with a similar (or slightly higher) APY, however. UFB Direct and Comenity Direct, for instance, both offer higher rates for online savings accounts, but one should compare tiers and features as well. Overall, HSBC offers a rate that remains on par with other online banks.

HSBC Direct Savings Account Monthly Fees

Fees can work against your efforts to save if you're paying back the bank more than what you're earning in interest. Some of the most common banking fees you may run into with a savings account include minimum balance fees and monthly maintenance fees.

Fortunately, the HSBC Direct Savings Account charges no monthly maintenance fee to save. In fact, there are no hidden fees at all. Compared to a traditional bank which may charge $5 to $10 per month just to have a savings account, a $0 monthly fee is a real plus.

Other Savings Account Fees

Aside from the monthly fee, there are other fees to consider when opening an online savings account. For example, one of the most important to keep in mind is the excess withdrawal fee.

An excess withdrawal fee can be triggered if you make withdrawals from a savings account that are over the limit allowed by your bank.

Fortunately, HSBC Direct charges no excess withdrawal fee when you take money out of savings for any reason.

There are, however, a few fees to be aware of with this account. Though less common than monthly maintenance fees or excess withdrawal fees, it's still important to know when you could be charged any of the following:

  • Account closing fee: $125; applies when you close a new account within 180 days of opening
  • Balance verification letter fee: $20 for the first verification letter; $5 for each additional verification
  • Charge-back fee: $10 for each check or deposit that's returned to your account as unpaid
  • Legal fee: $100 for each legal notice received that requires HSBC to put a hold on your account
  • Wire transfer fee: $10 per incoming wire transfer
  • Cashier's check: $12 per each check issued from your savings account

Again, these fees are less common, so you may never have to worry about them if you don't run into any of these situations. But it's helpful to know what they are so you're not stuck with any surprise fees.

Additional HSBC Direct Savings Account Features & Benefits

The HSBC Direct Savings Account doesn't come with a lot of extra bells and whistles. But it does offer some additional features to help you manage your account. Those features and benefits include:

  • Online banking access
  • Mobile banking access
  • Mobile check deposit
  • Online transfers so you can move money in or out of a linked checking account or savings account
  • Live chat customer service assistance

All of these can make growing your savings easier. For example, mobile check deposit means you can add money to savings right from your cell phone.

One thing you don't get, however, is a debit card. Since this is an online-only savings account, you won't be able to visit a branch or ATM to manage your account.

That's something to consider when looking at various savings account options. If you don't mind not having the option to go to a branch or ATM for debit card transactions, then this may not matter to you as much.

Are There Other Ways to Save with HSBC Direct?

Any time you're shopping around for a new bank, it's always good to look at what other products you might be able to use to your advantage. In addition to an online savings account, you can also open a checking account or a certificate of deposit with HSBC Direct. (Credit cards aren't an option, however.)

HSBC interest-bearing checking account

The HSBC Direct Checking Account is an interest-bearing, online-only checking account with a $0 monthly maintenance fee. This account does include a debit card and you can make fee-free withdrawals at U.S. HSBC ATMs. It takes just $1 to open an account.

This could be a good option if you want to keep your money available to spend or pay bills while also earning interest. Interest-bearing checking accounts are becoming a rarity as more traditional banks phase them out. Though, it's worth noting that this account doesn't include paper checks which could make it a little less convenient for paying bills.

HSBC CDs

If you're interested in saving money that you don't necessarily need right away, you might consider an HSBC Direct CD.

CDs are available with terms of 6, 12 and 24 months. All three earn interest; but overall, the HSBC Direct Savings Account offers the best APY. There's also a difference in the minimum deposit required to open a CD account.

Instead of getting started with just $1, you need to have at least $1,000 to make an opening deposit into an HSBC Direct CD. If you have sufficient money to save, you could open a CD ladder with one CD of each term.

How to Open an HSBC Direct Savings Account

You can open an HSBC Direct Savings Account online. To apply for a savings account online, you need to meet the following requirements:

  • Be at least 18 years old
  • Have a social security number
  • Be a current U.S. resident and have at least two years of residency history
  • Have a valid U.S. ID, which can include a driver's license, non-driver ID card or learner's permit (passport or permanent residential card/Green Card can also be used)

You also need to give HSBC the routing number and account number of the account you want to use to make your opening deposit.

This is similar to the account-opening process at other online banks, in terms of the type of information you need to share. Once your account is open and funded, you can begin managing your savings online or with the HSBC mobile banking app.

Is an HSBC Direct Savings Account Right for You?

The HSBC Direct Savings Account could be a good option if you're looking for an online savings account that features competitive interest rates. It's relatively easy to open your account online and with only a $1 minimum deposit, this account could be convenient and accessible if you're a beginning saver. No monthly fee and no excess withdrawal fee are also great features to have if you'd rather avoid steep banking fees.

You may want to consider a different online savings account if you're interested in having debit card access to savings or you're looking for a slightly higher APY, which some online banks can offer. When looking at different savings account options online, pay attention to the opening deposit requirement, the fees, the APY you can earn and how you'll be able to deposit or withdraw money.

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