HSBC Direct Unveils Online Checking Account… Sort Of

For a while now there have been rumors that HSBC planned to enter the online checking account arena, competing with the likes of Capital One 360′s Checking. Instead of using the apparently taboo words “checking account”, HSBC Direct announced today the Online Payment Account, which has the following major features:

  • $1 to open, no minimum balances
  • Yield of 2.50% APY
  • Three non-HSBC ATM fee rebates per calendar month
  • Link with unlimited external accounts
  • Online Billpay Service
  • Can send paper checks via BillPay, but no checkbooks
  • Instant transfers to/from HSBC Online Savings account available, but account not required

However, I also got an e-mail from them saying you can’t apply for it until May 31st, and there is no mention of it on their main page. Weird.

My initial impressions? If you use the HSBC Direct savings account already, I’d definitely sign up for this. Why not? You get more features, and there are no minimums. One possible use would be when you needed cash, you could just go to an ATM, move money over from Savings -> OnlinePayment account, and then withdraw to take advantage of the ATM rebates. For people who rarely receive or write paper checks, this could fill a void and allow them to go completely electronic.

But really, how awesome would it be if they just added Billpay and ATM rebates to the Online Savings account, or even better, just made this Payment account pay 5.05% interest?! How hard it is to merge them together instead of adding more complexity?

Personally, I still both write and receive enough paper checks each month to prefer my current Washington Mutual bank setup or even my old Presidential Bank setup over either ING’s or HSBC’s paperless checking accounts.

Comments

  1. I was definitely hoping for something a little better, either on the interest front, or the feature front. I do have an HSBC Direct Savings account, but at the moment, I don’t use it for ATM withdrawals. My wife is like you and still writes a lot of checks, so that’s a non-starter. Presidential Bank is actually local to us, so we will probably just use them, since their savings AND checking rates are better.

  2. Independent George says:

    Savings accounts prohibit you from making more than six withdrawals per month, making bill pay and ATM rebates impractical. This limitation increases liquidity, allowing them to offer a higher interest rate on the savings accounts; since balances on checking accounts tend to be more volatile, requiring smaller reserve ratios, and therefore lower interest rates.

  3. heather says:

    Because HSBC has world-wide branches, wouldn’t this be a good option for people who travel a lot?

  4. Sounds to me what you might prefer over the HSBC account is GMAC Bank’s MMA which combines a high-yield savings w/free check writing and ATM. It has a good track record for competitive rates (currently at 5.3%), allows you to write 3 checks per month, and also gives you 4 free ATM withdrawals from any ATM per month. The main drawback is the 6 transaction limit per month (i.e. 3 checks and 3 outgoing ACH transfers, but you get unlimited incoming transfers).

  5. Online Payment Account is good option to be linked with Online Savings Account. Now, with instant transfer, I can make direct deposit of my paycheck to OSA and transfer to OPA wehn needed for billpay. This would eliminate 3 day transfer time. Also, this would give some extra interest.

  6. I see no reason why you couldn’t sign up for this as well as an HSBC checking account if check writing is important to you. Since I already have the checking account, I think I’ll wait until they offer a sign-up bonus like they did with the checking account (link) and the online savings account (link).

  7. I looked into Wamu’s 5% savings account and it now seems to require a $300 minimum balance or else they charge you $4 bucks a month (rip off alert)…and they aren’t advertising it in bright banner ads on their website anymore. Kinda annoying…does this mean that those who opened up previously now have a $300 minimum?

  8. Why not go with 5.2% APY Salem Five Direct Checking account along with 6.0 % APY FNBO Savings account. I think those two are the best combo right now

  9. SavingEverything says:

    But really, how awesome would it be if they just added Billpay and ATM rebates to the Online Savings account, or even better, just made this Payment account pay 5.05% interest?! Good question. I think it could attract customers and to stay. Unfortunately, banks never want to make things easy and simple. All they want is profits; from low interest, to monthly fees (if you fail to meet monthly account requirements; whether billpay or transactions or balances), to bank service fees.

  10. This looks like a good combination – so I tried to sign up to try it out. Just like every other account I apparently raise some red flag somewhere, and I’ve got to go through more verification. I always answer their credit-report based validation questions accurately – I’m not sure what about me fails the automated application.

    Does anyone here have experience with HSBC’s billpay? Is it any better than WaMu’s? If it’s good, HSBC might be good enough to ditch BOA over. There are no ATMs locally (same with WaMu, sadly), but the refund of the ATM fees would be sufficient…

  11. I have an 5% HSBC savings account already, but I’m *NOT* going to open this new Online Payment account. I like treating my savings deposits as write-only — money goes in, and stays in. When it reaches a threshold, a portion gets moved to a Vanguard Index fund. Here’s my setup:

    Bank of America Checking -> HSBC 5% -> Vanguard Index Fund.

    For me, it’s a psychological barrier. If I create a barrier or inconvenience to easy withdrawals, I’m better at saving consistently.

  12. How about the Schwab Investor Checking? It gives 4.25% interest, free paper checks, unlimited ATM rebates, and no minimum balance. The downside is you have to have an investment account with Schwab… so probably not a good deal unless you already use Schwab.

  13. Independent George is right – and it’s not just that it’s the increased liquidity that lets them have higher interest rates… this is all set by federal legislation.

  14. Craig: When I signed up last year with WaMu online savings they had the option of either $300 minimum or a monthly automatic transfer from checking to savings. You might want to call and ask. I took the transfer route, it took me half a year before I got around to putting more than $300 into my WaMu online savings and I wasn’t charged one cent.

    -Alex L

  15. I really wish all this online banking was avaialbe to me last year–I was abroad in Hong Kong, where HSBC had a ton of branches. I probably paid many dollars in ATM fees since I was operating mostly on cash withdrawn from my home accounts.

    Since I use HSBC, I’ll probably sign up for this, though I’m not sure I really need it.

  16. I just contacted WaMu customer service and was told that because my accounts were open online and because they are linked together that the $4 fee will be waived. I assume that is true for everybody.

  17. If you cant maintain $300 in your savings account they why bother having a a savings account in the first place?

  18. Thanks for the replies about Wamu. I generally try to keep $100 or less in checking (and the rest goes to Vanguard) so maybe the savings account is not worth the effort, but maybe it would force me to keep some excess liquidity available…Thanks again all.

  19. Why bother? INGDirect’s Electric Orange offers up to 5.30% on checking…. and doesn’t use off-shore representatives.

  20. Shawn:

    More like 4% APY for most of the people that read this blog, I’m sure. I certainly am not keeping >$100k in my checking account.

    For everyone else, HSBC will offer better APY, with the caveat that they have to transfer money out of their HSBC savings account when they need it. Having a high yield money market with instant transfer to the checking is nice.

    Assuming I time things well, I’d make out a lot better with direct deposit to HSBC savings, transfer just the amount needed from savings to checking, and billpay from checking. Money stays in savings the longest amount of time, gets the most interest, but is available if I need it.

  21. [double post? last try just disappeared]

    Shawn:

    INGDirect’s EO offer is only better than this if you have more than $50k in your checking account. If you’re below that mark, you’ll get a better yield by managing your money between the two HSBC accounts (money market and checking). Direct deposit into savings, and then only withdraw what you need when you need it from the savings to the checking.

    In my case, there’s almost 20 days between when my paycheck goes in and when my bills need to be paid. A setup like HSBC offers would allow me to milk every penny off of that in interest. Plus, the instant transfer would allow me to be more aggressive about how low I keep my checking account (at the moment I keep it higher than I’d like just in case I need cash for some reason).

    I think HSBC has more ATMs, if that matters. I also don’t see (didn’t look too hard) anything about refunding ATM fees on ING’s site.

  22. Steve the K says:

    I am tempted to try it. I write so few checks — less than a handful a year.

    However, my primary online bank, NetBank, is being bought out by EverBank. In the meantime, I’m moving my direct deposit and bill pay to my local bank checking account. After the buy-out and things settle down, I can move back. EverBank pays 3.41% APY on their checking account WITH checkwriting and ATM fee reimbursement.

    I’ll be holding my horses and wait and see.

  23. Independent George says:

    Here’s a question – how does one apply for that HSBC checking account? I see their ad on their site, I click it, and it takes me to their regular checking accounts.

  24. MK the Obelix says:

    Has anyone opened Online Payment Account ?? How do you get the account number ?? I am guessing it is by US Mail. Is that right ??

  25. Yea..this salemfive looks like an awesome deal ..Am I missing something?

  26. Fidelty brokerage account has billpay, free checks, and a NTF MMFs > 5%, no fees. Only think missing is free ATM, but I use a local bank for that anyway and depositing checks anyway.

  27. Craig, I work at WaMu and as long as you setup your Savings account online (in conjunction with the WaMu free checking account) you have no fees to pay for the savings and no minimum balance requirement. People are getting confused, and rightfully so, about the $4/month-$300 min. balance. The $300 min. balance req. applies only to savings accounts opened inside a branch. My guess is we are trying to compete with online banks such as ING and HSBC and that is why the different account fee structure between the “Online Savings” and the B&M savings. It is definitely confusing alot of customers in the process though.

  28. Trent Bigelow says:

    Thanks for keeping me in the know on this. I just applied for both online accounts. I’m excited to bank with HSBC given how easy this is and they’re one of the most green and socially responsible banks out there.

    But I totally agree with the idea of simplicty in merging the two together as one account and just adding a hold/reserve feature for cash you don’t want to be able draw out…

  29. Hsbc stole the money i deposited online to a savings account . They closed that account and moved the money to another account i cant get into. I have been one year trying to get my money back out. They said they moved it for security reasons. The only security you need to worry about is a bank that steals your money.

  30. Did they give you anymore details? I just opened an online saving with HSBC! Have you gotten your money?

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