Update on HSBC Direct 6% APY promotion
HSBC Direct has attracted about 300,000 customers with $7 billion in deposits since it launched in 2005. By comparison, ING Direct, the largest direct bank in the U.S., has more than 4 million customers and more than $60 billion in assets.
Although they have been around longer, I was very surprised to hear that ING Direct has such a large lead over HSBC Direct considering that HSBC has consistently offered a better rate of return over the past year on what is essentially the same product.
When I wrote about the survey HSBC asked me to take in November, it appeared that HSBC was trying to attract new deposits for accounts with higher balances. They apparently decided to add to their coffers by instead giving all new money the 6% promotional rate.
Perhaps HSBC is trying to increase its assets by "Being like ING", since they are effectively copying the Winter Save Up Sale that ING Direct offered last year (4.75% APY on new deposits from 1/19/06 - 4/15/06)? Although HSBC did follow up with a "me too" promotional rate of 4.80% APY on all money from 1/30/06 through 4/30/06, they have really set the bar higher this year with this new 6% APY promotion.
My hope is that once May comes around, HSBC will continue to aggressively pursue new money by offering market-leading rates and perhaps re-institute the $25 account sign up bonus that they offered early in 2006. Either way, I will be enjoying the 6% APY until then...