Comments on: HSBC Direct Interest Rate APY

By: jim

jim — Mon, 07 Jul 2008 17:49:00 +0000

Nope, the rate is just guaranteed from when you open until 8/15. There’s no guaranteed rate on savings accounts.

By: Brendan

Brendan — Mon, 07 Jul 2008 17:26:33 +0000

So, question: The rates are guaranteed through August 15. Does that mean if you sign up by 8/15 you’re guaranteed 3.50% for however long you’d like? Or that you’ll only have 3.50% until 8/15, at which point the rate will drop?

By: saladdin

saladdin — Thu, 05 Jun 2008 00:39:18 +0000

Also, go over to my money blog. Jonathan has a “Interest Rate Chaser” calculator.

saladdin

By: saladdin

saladdin — Thu, 05 Jun 2008 00:37:22 +0000

“I don’t know what is the rationale behind 6 day turnover for transferring funds to HSBC.”

Have you used ING or any of the online savings? 6 days is very legit.

saladdin

By: VG

VG — Wed, 04 Jun 2008 18:01:01 +0000

I don’t know what is the rationale behind 6 day turnover for transferring funds to HSBC. If the source account is linked in HSBC’s bank-to-bank transfer site, then the turnover is only 2 business days. So one would make up lost interest in 7 days for funds transferred from a 3% earning account and in 18 days from 3.15% earning account.

By: EL

EL — Wed, 04 Jun 2008 00:24:13 +0000

Steve and Jim,

Thanks for the interest rate analysis. I took a stab at it also — figured I’d better put in the effort.

I converted the APY for both into a Daily Periodic Rate and then calculated the future value of $100 sitting in the old for 60 days v/s at HSBC for 54 days.

I’m going to move my cash (currently earning 2%). I figure on each $100 I’ll save $0.17 over 60 days.

I could be wrong, but I don’t want to stare at the math anymore!

By: jim

jim — Tue, 03 Jun 2008 19:24:56 +0000

I have never heard anyone complain about them though people don’t often complain about banks, the exception is sometimes Emigrant Direct (site is sometimes slow, down).

By: Anna

Anna — Tue, 03 Jun 2008 18:48:03 +0000

Doesn’t HSBC also give interest on their checking accounts? That’s something I’m interested in, so this might just be what makes me take the leap and switch to HSBC. Does anyone recommend them? Since I’m pretty happy about WAMU so far I wouldn’t want to regret it later.

By: Baz L

Baz L — Tue, 03 Jun 2008 17:44:51 +0000

I’m curious…how come rates are going up?

By: CC

CC — Tue, 03 Jun 2008 17:32:22 +0000

I have an HSBC acct and received email today about the rate increase, so yes current customers get the increase as well.

By: Steve

Steve — Tue, 03 Jun 2008 13:11:18 +0000

Here is my try at the math:

Daily Interest Formula = ((P*i)-P)/365

P = Principle
i = interest rate

Interest Earned over a period of D Days = (((P*i)-P)/365) * D

So, lets say the turnaround time to move money from one bank to the next is t days

The formula I used is

Money earned at existing bank = Money earned at HSBC

And for easy use, lets say principle is 1 (it can be any number)

Money Earned at existing bank where p is 1 = ((i-1)*d)/365

Money Earned at HSBC where p is 1 is = ((1.035-1)(D- t))/365 =(.035(D- t))/365

Setting them equal is

((i-1)*d)/365=(.035(D- t))/365

(i-1)*d = .035(d-t)

i-1 = (.035(d-t))/d

i = (.035(d-t))/d + 1

So, if the money would sit in your existing bank for 60 days, and in HSBC for 54 (6 day turnover), the interest rate at the existing bank would have to be 1.0315, or 3.15%….anything less, and you would be better off moving your money to HSBC.

Since Jim is normally correct, and my answer is different than his, please check my math and assumptions.

By: Haley

Haley — Tue, 03 Jun 2008 00:56:42 +0000

So if I’ve already got an HSBC direct account, does my interest rate go up too?

By: jim

jim — Mon, 02 Jun 2008 21:36:28 +0000

I believe, and I could be wrong on this because my math is terrible, the newer rate has to be 365/(365-n) times better, where n is the number of days lost. You have to compare interest rates in APYs (since that will control for the compounding period).

So, if you assume six days, HSBC’s rate has to be better by 365/359x better than ING. ING is 3.00%, 365/359x 3% (1.03) is around 4.72% (correction via Miller, thanks man) if you assume the difference remains for one year.

Someone check my math? (again?)

By: EL

EL — Mon, 02 Jun 2008 21:19:20 +0000

OK, so now I have to know…

What interest rate would I have to be earning at the other bank to make transferring the funds worth it (assuming 6 days transfer time – 3 from the “old” high-yield savings to a checking account, then another 3 to HSBC)?