Tuesday, June 20, 2006

Savings account interest rates jump higher.

Continuing the recent trend towards even higher savings account yields. Sveral banks have raised rates this months, in some cases even exceeding the yeild on the 90-Day TBill. Because bank deposits are FDIC insured, they are backed by the full faith and credit of the United States, same as treasury bonds. Savings accounts are 100%risk free, and the returns are getting very competative with other investments.

  • OneUnited Bank is offering 5.00% on their Unity Savings Account. The account comes with a free ATM card. One United is unusual in that interest is compounded and credited quarterly, rather than daily and monthly as with most online savings accounts.
  • HSBCdirect has raised rates to 4.80% and also provides a free ATM card. HSBC is also unusual in that they allow for depositing checks by mail.

To give a sense of scale about how much these accounts are affecting the banking industry, Citibank reported gaining $3 Billion in Deposits since March of 2006. Of these deposits, 2/3rds were new money.

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