E-banking, is there a catch?

I’ve been looking into placing money in an e-bank account because they offer incredibly high interest rates. For examples, at HSBC , savings account return 5.05%.

Not even Certificate of Deposits get close to this, let alone typical savings accounts. It is insured and looks legit. And I know the “no overhead” angle. But there’s a “too good to be true” aspect to it all.

Anyone have any experiences with this bank or other e-bank? Is it really as easy, pain-free, and lucrative as it appears?

I’ve had an ING account for a couple years. The only pain is that it can take a day or so to transfer money back into my checking account. I never know exactly when the money’s going to get there so if I have to do a transfer, I always do it a couple days ahead. No other complaints.

I put a decent chunk of money in an account at GMAC a couple of months ago. It was pretty painless and they have great customer service to walk you through any issues.

I have an internet savings account at home in Australia, but not with a separate e-Bank. It’s an add-on to my regular bank account, so I can only transfer funds in and out through my regular account. That said, I can manage it all via my online banking (or over phone banking), and transfer funds in a matter of seconds. And it’s fee-free with 5.45% interest!

I also use ING. I like it; it’s simple and easy and every now and then I get an email saying my interest rate just went up. It’s a pretty competitive rate (4.35%) and the only annoyance is how long it takes to transfer funds to another account.

Irresepective of what you decide about the savings account, you might want to go to www.bankrate.com - you can get better than 5.05% on a CD these days.

But you’re not gonna get a lot better than that and with the interest rates rising, do you really want to lock yourself into a fixed rate for a year or even six months?

I wasn’t trying to recommend any particular action - just suggesting that he not make a decision based on out-of-date information wrt CD rates.

Personally, I’ve tried both ING and HSBC. The thing I like about HSBC (besides the fact that they have no minimum balance and they pay a very high interest rate) is that you can get an ATM card linked to the account, thus making withdrawals pretty fast if needed…