HSBC USA offers 6 pct yield on online accounts

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HSBC USA offers 6 pct yield on online accounts

Reuters
Sunday, January 28, 2007; 6:28 PM

NEW YORK (Reuters) - Ratcheting up competition among banks for depositors, HSBC Bank USA plans on Monday to temporarily raise the interest yield on online savings accounts to 6 percent, higher than its competitors.

The 6 percent annual percentage yield applies to "new money" that existing or new customers deposit into HSBC Direct accounts, and will be available through April 30, according to HSBC Direct's Web site. Thereafter, the yield will revert to the regular online yield, now 5.05 percent.

HSBC Direct is part of British bank HSBC Holdings Plc (HSBA.L) (HBC.N).

It is increasing payouts after a seven-month period when rates on U.S. bank deposits have largely stagnated, and in some cases begun to fall. That followed 17 consecutive U.S. Federal Reserve interest-rate increases.

Rising rates and increased competition have led many banks to boost deposit payouts, crimping lending margins. Most economists expect the U.S. central bank to leave rates alone on Wednesday when it completes a two-day meeting.

According to Bankrate.com, leaders in online deposit yields include Coral Gables, Florida's BankUnited Financial Corp. (BKUNA.O) and Old Bridge, New Jersey's Amboy National Bank, which offer 5.35 percent yields on some accounts.

Other online yields include 5.05 percent at EmigrantDirect and 5 percent at Citigroup Inc.'s (C.N) Citibank Direct, both of New York, and 4.5 percent at ING Group NV's (ING.AS) ING Direct, of Wilmington, Delaware.

HSBC, Citigroup and ING did not immediately return calls for comment.

Countrywide Bank, part of Calabasas, California's Countrywide Financial Corp. (CFC.N), offers a 5.40 percent online yield, but only if customers deposit at least $50,000, according to its Web site.

The practical appeal of a temporary 6 percent yield may be small for many depositors. People who deposit $10,000 of new money on the first day of HSBC Direct's promotion, for example, would earn less than $25 additional interest during the promotion than they could earn with a 5.05 percent yield.