As a continuation of my previous entry, I’m going to review four online savings accounts: Etrade, INGDirect, HSBCDirect, and EmigrantDirect. As I mentioned before, stashing your hard earned cash in an online money market account can help add a couple extra bucks to your savings without risk.

Etrade

Etrade offers full-brokerage accounts in addition to the standard money market account. This means that you can open IRAs and stock portfolio accounts all under one convenient interface. For the longest time, Etrade has offered comparable interest rates to that of other online accounts. At the time of this writing, however, the savings account rate is a measly 0.95%. This rate is still 3-4x what your regular bank (Citibank, Chase, Bank of America) would offer. The redeeming qualities of Etrade include its slick interface and expedient transfers. The web interface is neatly organized according to the type of account you have with them. The monthly account summaries are simple to interpret; you’d be surprised how confusing some bank statements are. Account transfers on Etrade are FAST. Accounts are credited by the evening after you make the transfer, although you may not necessarily be able to draft funds immediately. Your balance begins accruing interest the day you make the deposit. Withdrawing funds directly from Etrade is also convenient; they offer an ATM debit card that is valid at any U.S. ATM machine. Etrade does not have an surcharges on ATM use, and they will reimburse any fees incurred from the other end as well. Overall, Etrade Bank is a good deal.

INGDirect

INGDirect has subsidiaries throughout the world, although the U.S. branch is located in Wilmington, DE. Its Dutch counterpart received a huge bailout several months ago during the banking crisis. Currently, it offers a 1.5% interest rate on its savings accounts. ING’s web interface is fluid, and is easily navigable. The login security is well-designed, with keyboard and graphic validations. Account transfers usually take 3-4 business days to process, so your money doesn’t accrue interest during this period. For instance, if I transferred money into my INGDirect account on Friday, it probably won’t show up until Thursday. This translates into 6 days of lost interest.

This ultimately doesn’t add up to much, but there is still a difference. For instance, assume that the interest rate is 2%. If you deposited $1000 every two weeks for the year (23 deposits total), you’d lose out approximately $7.56 in interest for the year if it took 6 days to process a transaction. ($23,000 will accrue approximately $1.26 daily at 2% annual rate, if you roughly estimate using simple interest). Interpret this however you choose.

Withdrawals from INGDirect must go through your regular checking account, so there is no way to pull money directly out of your money market account unless you have an Electric Orange checking account through ING.

HSBCDirect

HSBCDirect is an online subsidiary of HSBC Bank, which also has branches throughout the world. The U.S. headquarters is located in Buffalo, NY. While the online bank is a separate entity, you can withdraw cash through any of HSBC’s ATM’s without penalty. They currently offer a generous 1.65% interest rate on their money market account, and 2.3% on a 12-month CD. The higher interest rates are generally welcoming, although some analysts say that a higher interest rate may indicate financial turmoil. (A bank in need of cash may offer higher interest rates to draw in more investors) I don’t know what to make of it, since these money market accounts are all FDIC insured (backed by the gov’t). HSBC’s web security is akin to that of INGDirect’s–reliable verification. Its web interface, however, is lousy. The interface is functional, but awkward. The website launches a pop-up window when you make account transfers–this is usually shot down by my popup blocker and Adblock. The accounts also require 3-4 days to process a transfer, just like INGDirect. Nonetheless, they offer decent rates.

EmigrantDirect

This bank is an online subsidiary of Emigrant Bank. I know that there are branch locations in NYC, but I believe the physical bank has no relation to its online counterpart. Prior to the economy bust, EmigrantDirect offered some of the highest interest rates in the country. Its money market rate is currently at 1.65%. Its web interface is nothing spectacular, although it is functional. Transfers also take 3-4 business days to process. Overall, decent service.

Summary

Any of the aforementioned four online banks are a decent bet to start some savings. If you have extra unneeded cash, you could stash it in one of the CD’s that these banks offer. Remember that these interest rates change on a daily basis, so don’t make your decision solely on the numbers. The customer service on all of these banks are reliable; they reply in a timely fashion. However, don’t expect the level of service you’d get from a physical bank. These are no-risk opportunities to help build your bank; they won’t make you rich, but will certainly add to your savings.

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