High yield savings accounts

Recently several banks have started offering high yield savings accounts. These online savings accounts pay upwards of 4.25% interest rates on deposits. These are real bank accounts that are FDIC insured. As one advertisement from HSBC pointed out, these high yield savings accounts are an investment disguised as a savings account. These interest rates are competative with other risk free assets (such as treasury bonds), and offer better liquidity to boot.

Depending on the bank you have different methods of depositing and withdrawing money from these accounts. Typically you would use the ACH system (electronic check) to make deposits and withdrawals from your main checking account. HSBCdirect is unique in offering withdrawals and deposits from their ATM network. The most interesting of these accounts are Emigrant Direct and VirtualBank, which offer the highest normal interest rates, and HSBC direct which offers ATM withdrawals and a lucrative promotion.

• HSBCdirect: Is offering a 4.80% APR promotion on new accounts
• Emigrant Direct: Offers 4.50%
• VirtualBank eMoney Market:Is offering 4.60% APR on their eMoney Market Account