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Advice on High-Yield Savings Accounts

S

Saluki Alex

macrumors 6502
Original poster
Feb 26, 2006
283
0
Illinois
I'm currently in college, with a part time job and really want to start putting money into savings. I used to have quite a bit, but the first two years in school depleted it quite rapidly, pretty wastefully at that. :rolleyes:

I'm now at the point that I have a better handle on my spending and budgeting so I know I can contribute a portion of my paycheck into savings. It should also be noted that I'm at school on a full scholarship so I don't pay for school or room and board, which also means that I don't currently have any student loans and shouldn't have any once I graduate in 2010. Meanwhile, law school will most certainly cost me quite a bit.

Overall though, I'm really interested in a High-Yield Savings Account. I had a savings account with the bank that I have my checking account with, but am looking for something with a better interest rate and less ease with which I can quickly access the savings account.

HSBC Direct is the primary bank that I've been looking at, along with ING Direct. Does anyone have any advice on either of these banks, or with other banks offering high-yield savings accounts?
 
I use ING direct, had an account for about 2 years. Their site is very easy to navigate and I've never had any issues with fund transfers to/from my 'regular' bank.
 
I quick calculation you can do is to divide 72 by the interest rate and that will give you how many years it will take you to double your money.

eg I get 7% interest.

So

72/7%=10.3 years to double my money.
 
ING has been good to me, but lately Washington Mutual has been offering savings accounts with similar rates, as long as you already have a checking account.

The advantage of a savings account with your regular bank is that transfers happen immediately - ING takes some time.
 
I've been with HSBC Direct for about a year. As long as you don't have to call customer service for anything, you're fine. Their CS is completely incompetent and none of them speak a word of English
 
I've have an account with HSBC and am very happy with them so far.

I have been with them over 30 years, well sort of. I started with another bank who then in turn merged with HSBC some years ago.

Anyhow, they provide good service, have a decent easy to use website that is very secure, and have a decent interest rate. That's been my experience.
 
Thanks for all the input, I'm going to do a little more research before I decide. I may take a look into mutual funds as well, I'm not quite sure yet. My mom works at a bank and is going to help me look into the matter further.

Any other advice is greatly appreciated.
 
I use HSBC, and have no complaints. They have a good interest rate, and it's a nice place to put my money and forget about it.
 
Saluki Alex said:
Thanks for all the input, I'm going to do a little more research before I decide. I may take a look into mutual funds as well, I'm not quite sure yet. My mom works at a bank and is going to help me look into the matter further.

Any other advice is greatly appreciated.
Click to expand...

The only problem with some of the mutual funds are the tax hit some of those accounts can take ... which may not equal the income.
 
I have a WaMu online savings that gets 3.30%. HSBC is about the same right now as well.

You could always set aside money in stocks/bonds/mutual funds/CDs or IRAs.
 
I want to stress again, look into CD's...Certificates of Deposits. Easy and sounds what you are looking for.
 
BigPrince said:
I want to stress again, look into CD's...Certificates of Deposits. Easy and sounds what you are looking for.
Click to expand...
Good idea as well.

I think that getting a good bank that you can use for a long time is a great way to start. A good bank will have CDs and other investment vehicles available.

In the FWIW category, there are probably many in the stock market right now that wish that their investments would have bad a 0% RoR over the past 6 months because of the huge decline, so even a small 3.3% RoR through a savings account can be good.

As you learn about investing you will see that it is good not to put all your eggs in one basket. Nothing is a sure thing except death and taxes. Diversify as they say. :)
 
BigPrince said:
I want to stress again, look into CD's...Certificates of Deposits. Easy and sounds what you are looking for.
Click to expand...

I'm well versed in CDs, as I stated, I grew up around banking most of my life because of my mother. CDs are not an option for me at the moment because I don't have enough startup money to buy one, my plan was to get a high-yield savings account and once I had enough money, I'd pursue other options in addition to the original account.

I do appreciate your help though.
 
BigPrince said:
My next CD comes in after 5 months, it made 281.50.
Click to expand...
While knowing the amount you earned, the annualized yield would be more useful for comparison sake.

For example, if you invested 10,000 and took away 10,281.50 after 12 months, that would be a 2.78% annualized yield. Where as if you invested 20,000 over 24 months, that would be a 0.7% annualized yield.
 
Saluki Alex said:
I'm currently in college, with a part time job and really want to start putting money into savings. I used to have quite a bit, but the first two years in school depleted it quite rapidly, pretty wastefully at that. :rolleyes:

I'm now at the point that I have a better handle on my spending and budgeting so I know I can contribute a portion of my paycheck into savings. It should also be noted that I'm at school on a full scholarship so I don't pay for school or room and board, which also means that I don't currently have any student loans and shouldn't have any once I graduate in 2010. Meanwhile, law school will most certainly cost me quite a bit.

Overall though, I'm really interested in a High-Yield Savings Account. I had a savings account with the bank that I have my checking account with, but am looking for something with a better interest rate and less ease with which I can quickly access the savings account.

HSBC Direct is the primary bank that I've been looking at, along with ING Direct. Does anyone have any advice on either of these banks, or with other banks offering high-yield savings accounts?
Click to expand...

Some thoughts.

1: I use ING Direct and have had no problems whatsoever. I really like the ability to have several buckets at the same bank.

By this I mean: Let's say you budget $200 a month towards a vacation. At the same time, you put $333 a month into a separate bucket so that next year you'll have $4000 to put into your Roth IRA in one chunk. You can do that nicely.

2: Interest rates will suck in the USA for some time. They will eventually begin going back up, but it will be a while before you have access to really great rates. So, take the crappy rate and just make sure you don't pay any account fees to the bank you choose as it will eat any interest you earned.

3: I would avoid CDs because the interest rates will go up, and you don't want to have your money locked away from those new rates. Next time rates are really high, consider CDs to lock in the long term rates during the next period of falling interest rates.

What I do: I keep $500 in my Wells Fargo account for emergency savings which I can access instantly. Their rates are practically criminal, they're so low. I keep the rest at ING which takes a few days to move over. And in case of a SERIOUS emergency that even the $500 won't cover, I can always take an ounce or two of gold over to the local coin shop and have a pile of cash if I really need it.
 
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