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moneysense.ca, 12/08/09
Money Tip: Use HSBC Direct Savings as a main bank account
Current issue:
A recent post on Citizen’s Bank of Canada (see Citizen’s Bank Shutting down Free Chequing Accounts) elicited the following interesting tip on using HSBC Direct Savings Account as a main bank account:
HSBC’s Direct Savings account might be an option for some people. While you cannot write personal cheques on the account, you can do direct deposits and bill payments to and from the account (they will provide a VOID cheque for you to use to get things setup). It works really well for me. No more shuttling money between the chequing and savings account. The only missing piece is being able to write a personal cheque — I keep a President’s Choice Chequing account for that purpose.
HSBC currently pays a competitive interest rate of 1%. Thanks for the tip Yeroc!
moneysense.ca, 12/08/09
I already know I can use direct deposit with my ING account (although sadly I don’t get any so I have to keep bringing in cheques), and I have it connected to paypal so I can make payments directly from it. I wonder if there’s any way to pay other bills directly – maybe it can allow a pre-authorized debit? It would be nice to have online bill payment there too so I could avoid my chequing account.
HSBC also has a direct payment account, which (I think) has check writing ability. Seems like you could open up one of those in conjunction with the savings account and have every base covered.
Does anybody have any experience with that Manulife One sort of consolidated everything-in-one account? How are the fees associated with that account? I’ve obviously never had it but I’ve seen their junk mail in my mailbox from time to time. I thought it would be kind of a cool idea in concept if I had a mortgage – but I admit that I didn’t read it in detail before tossing the flyer into the recycle bin.
So HSBC gives you a savings account interest rate in a chequing account. While that does simplify things the extra 0.25% is hardly worth switching from a PC Financial account. Are there any other advantages?
I don’t think the all in one accounts saves any money for most customers and probably ends up costing them. The reason is that mortgages could be obtained elsewhere at cheaper rates than the M1 rate. Add in the monthly fees and the hurdle to overcome before saving money is pretty high.
http://www.canadiancapitalist.com/reader-question-on-manulife-one-account/
I have even found a fantastic article related to the similar with The Digerati Life. It also refer the same and can support this article totally. This can be found here http://www.thedigeratilife.com/blog/index.php/2009/03/12/hsbc-direct-online-savings-account-review-free-atm-bank-card/
When I was shopping around for a bank to handle my business accounts, I discovered this wonderful little Credit Union which offers no-fee accounts on both the personal and the commercial side. It is the Ukrainian credit union, I’m not Ukrainian myself and I have no clue how to properly pronounce their name…
http://www.buduchnist.com/personal/accounts.html
But my point is that Credit Unions are much more competitive than banks in this area and it would take some shopping around because many credit unions are very small (not many branches) so you would have to find one that is convenient for you.
The All-in-one accounts are great for consolidating debt, bringing it all into one home-equity secured loan at a rate that is usually prime + 1%. I believe Canadian Tire and National Bank both offer these without monthly fees. But really any HELOC that offers full chequing capabilities would work as well. The other advantage these accounts offer is that rather than paying interest (taxed), when you deposit money into the account it immediately lowers the overall debt so that the interest payments are reduced.
So, you could earn 1% taxable interest on $1000 in a savings account – about $70 after tax – while paying 3.25% (based on current prime rate) on a variable mortgage. Or, with an all-in-one account you would be reducing the mortgage by $1000 thus saving yourself $325. In either case you can withdraw that $1000 at any time but you would of course no longer earn/save interest.
The downside for some is that the mortgage has to be variable rate, and many people prefer the security of fixed payments.
There are several advantages that HSBC has over ING (e.g. bill paying being one) but the most important for me is that by transferring my funds from ING to HSBC three years ago, I could walk away from a company that is responsible for some of the most offensive advertising in the history of television. I used ING when I lived in Australia where their marketing strategy in honest and positive and am familiar with their equal simple approach in the US, but I won’t use ING in Canada until then abandon their in-your-face, be as offensive to my intelligence as possible ads. If we all turned our backs on ING and made the switch, maybe the execs at ING Canada would get the message and redesign their marketing strategy.
…what?
“Most big banks have a lot of service charges and most of their savings accounts have crappy interest” doesn’t really seem offensive, unless the ads have changed since I last saw them.
I have to say that I haven’t found ING’s advertising offensive. It’s possible there are a few ads I haven’t seen, but most of the ING ads I remember are either positive ads that encourage people to save or funny ads like the one they did with the TFSA that was called “Hug the Taxman” or something like that.
I have to say that I am surprised that Rob and Jamie don’t find the ING ads as incredibly offensive as I do. But I guess I find any ad that needs to resort to grossly insulting my intelligence by telling lies and half-truths offensive. Let me give you two examples from the ING series.
In one ING ad, a woman is seen almost screaming a complaint to camera about being charged for withdrawing money from her own bank account. Based on her walking down the street, one assumes that she has been charged for using an ATM. There are two half-lies in this scenario. Firstly, I have never been charged a dollar for withdrawing money from my own account in Canada. You only incur ATM charges if you withdraw money from a third-party ATM. ATM charges are entirely avoidable. That’s half-lie number one. The second misleading point is the implication that you don’t get charged for withdrawing money from ING accounts. Well, yes that’s true. Sort of. But then you CAN NOT withdraw money from ING accounts using an ATM so therefore there is no opportunity to be charged a fee for withdrawing money from an ING account.
The fact is that if you have an ING account, you have to transfer your money from your ING account to a trading bank account before you can access it. And then you are right back where you started, aren’t you?
Note that with my HSBC account, I can access my account through their branches (which, admittedly, are few and far between – I’d have to drive 10 minutes to my nearest branch in West Kelowna).
The second example of an offensive ING ad is the one in which the over-the-top host asks if there shouldn’t be a mortgage for savers; the implication, I guess, being that ING will look more favourably on potential customers for mortgages if they have a track record of saving with ING. The rest of the implication is that other banks don’t do this. Sorry, another lie. ALL banks will look more favourably on mortgage applicants if they have a banking history with them than if they just walked off the street to apply for a mortgage. They always have.
One could do this analysis with every one of their ads but you get the point.
As I said before, I find any ad truly offensive that resorts to this sort of in-your-face, screeching and almost wining dialogue full of lies and half-truths an insult to my intelligence. I just assumed others would be equally offended.
Frankly, the only ads I find more offensive than ING’s are the Grey Power ads, but that’s another story.
@Mark: The first ad you are referring to is fairly old. I don’t have a problem with the points you find offensive (for reasons I explain below) but it always bugged me that the ad still says: “None of the banks offer high interest”, which isn’t really true anymore. RBC and Scotia have high interest accounts that are competitive.
Still it doesn’t annoy me as much because I realize the ad is quite old. When it was first aired, ING did have free ATM withdrawals. I forget the details but I think they refunded the ATM fees of 1 or 2 withdrawals per month. The ad doesn’t specifically say ATM fees, so I thought they are now referring to other fees that are levied on some savings accounts even today. For example, take Royal Bank Day to Day Savings account:
http://www.rbcroyalbank.com/products/deposits/day-to-day-savings.html
First, it hardly pays any interest – between 0.02% to 0.10%. It does allow you one free debit per monthly cycle but beyond that you pay $1.00 each.
I tend to cut ING some slack. They were the first to innovate with high interest online savings. For many years, they were the only game in town. Their ad strategy must have worked — they gained a significant market share that today pretty much everyone offers a competitive online savings account.
I haven’t seen their mortgage ad, so can’t comment on it.
If I were to use the setup in the post (HSBC DS as main account with PC for personal cheques), are there any wait times or holds to transfer money back and forth between the two accounts?
To clarify regarding ING withdrawals:
1) ING used to have a deal with Canadian Tire long ago to put bank machines in their stores.
2) When ING ended this agreement, they introduced a “4 free debits” program where they would cover the Interac network fee for 4 monthly ATM withdrawals.
3) *At the time*, most bank ATMs charged the Interac network fee but nothing else; therefore ING customers could make free withdrawals.
4) At some later date, banks started rebranding all their machines – e.g. BMO Instabank, TD Canada Trust Fast Cash – in order to allow them to levy their own “ding” over and above the Interact network fee.
5) The result is, ING still covers the network fee for 4 withdrawals but there is still a second fee. If I’m stuck at a bank machine not my own, ING is cheaper to withdraw from because it’s 1 fee rather than 2.
ING now have their own ATM network:
http://www.ingdirect.ca/en/aboutus/bankingwithus/card/index.html
Scotia’s online-only so called “High Interest” savings account offers 0.75% with minimum $5000 balanse, while ING gives you 1.2% with no minimums.
The real option for no-fee checking accounts are credit unions, indeed! Check, for example, Coast Capital Savings: https://www.coastcapitalsavings.com/Personal/Banking/Chequing_Accounts/Free_Chequing_Free_Debit/
I have been doing this HSBC + PC for cheques (which I never write) for a some time now. When I signed up for HSBC, they had phenomenal rates, so it made sense for that reason alone. I was actually on the fence between HSBC and Citizens’s Bank. I guess I made the right choice.
Regarding Phil S.’s post about the Ukrainian credit union: there is more than one Ukrainian credit union. Does he mean the So-Use Credit Union? It is one of the Ukrainian credit unions but not the largest.