# Online vs Regular Savings Accounts
**URL:** https://boards.straightdope.com/t/online-vs-regular-savings-accounts/504768
**Category:** Factual Questions
**Created:** [July 30, 2009, 1:01pm UTC](https://boards.straightdope.com/t/online-vs-regular-savings-accounts/504768 "2009-07-30T13:01:24Z")
**Posts on this page:** 10
**Page:** 1
### Author:  [@Hermitian](https://boards.straightdope.com/u/Hermitian)
#### Post date: [July 30, 2009, 1:01pm UTC](https://boards.straightdope.com/t/online-vs-regular-savings-accounts/504768/1 "2009-07-30T13:01:24Z")
I’ve had my money in two different online savings accounts for quite a while.
What baffles me is why their interest rates are so much better than “regular” savings accounts.
I was looking at the HSBC website today and they had a comparison of their rates [here.](https://www.us.hsbc.com/1/2/3/personal/savings/deposit-rates?code=MIW0000343&WT.ac=HBUS_MIW0000343)
The online savings account has 1.55% interest and the regular has .05% interest (why even bother?). They both only require $1 to open the account, and the regular savings account is even more restrictive about a balance necessary to obtain the AYP.
The online savings account’s rate is even better than most of the CDs! Why is that? Shouldn’t the CDs, which are more restrictive, have better rates?
I have owned the online savings account for almost two years, and have transferred money to it and out of it many times. It is FDIC insured and I have never been charge any fees whatsoever.
So, why are there rates so different and why would anyone ever chose the regular savings account?
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### Author:  [@muttrox](https://boards.straightdope.com/u/muttrox)
#### Post date: [July 30, 2009, 2:40pm UTC](https://boards.straightdope.com/t/online-vs-regular-savings-accounts/504768/2 "2009-07-30T14:40:23Z")
Online banks have much lower costs. No physical banks, no ATMs, drastically lower employee count etc. They can afford to give you better rates than a brick and mortar bank and still be profitable.
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### Author:  [@IAmNotSpartacus](https://boards.straightdope.com/u/IAmNotSpartacus)
#### Post date: [July 30, 2009, 3:08pm UTC](https://boards.straightdope.com/t/online-vs-regular-savings-accounts/504768/3 "2009-07-30T15:08:12Z")
> [@muttrox](#):
>
> Online banks have much lower costs. No physical banks, no ATMs, drastically lower employee count etc. They can afford to give you better rates than a brick and mortar bank and still be profitable.
The rates quoted by HSBC are for both brick-and-mortar accounts as well as online accounts. Thus, HSBC will still have the overhead regardless of what kind of account is opened. I suspect a handful of pennies each month are saved by not providing paper statements to the online savings account holders, but HSBC will definitely have a greater cost structure than an online bank like ING.
To be frank, it would appear this online rate is nothing more than a gimmick to get new customers to open accounts. HSBC offers money market accounts that pay less interest than this savings account, the highest tiered account requiring a $250,000 balance. This is almost certainly proven to be a gimmick when compared with the CD rates. Note the brick-and-mortar rates never compare to the online savings, no matter the term of the deposit, and it is not until you’ve a full year term CD in an online account that the interest rate compares.
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### Author:  [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)
#### Post date: [July 30, 2009, 5:24pm UTC](https://boards.straightdope.com/t/online-vs-regular-savings-accounts/504768/4 "2009-07-30T17:24:13Z")
> [@IAmNotSpartacus](#):
>
> The rates quoted by HSBC are for both brick-and-mortar accounts as well as online accounts. Thus, HSBC will still have the overhead regardless of what kind of account is opened. I suspect a handful of pennies each month are saved by not providing paper statements to the online savings account holders, but HSBC will definitely have a greater cost structure than an online bank like ING.
Not necessarily. In my experience, if a B&M bank sets up an online bank, it’s really a separate company under the same mark. So, you can’t go into a physical HSBC location and transact business there if you only have an online account, you can’t get money out of their ATMs, etc. I don’t know that HSBC does things this way, but Wamu (at least) used to. So the online operation has exactly the same costs as other online-only banks, and can effectively compete with them.
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### Author:  [@UltraVires](https://boards.straightdope.com/u/UltraVires)
#### Post date: [July 30, 2009, 5:30pm UTC](https://boards.straightdope.com/t/online-vs-regular-savings-accounts/504768/5 "2009-07-30T17:30:10Z")
You have more liquidity in a brick and mortar bank. With these online banks, it usually takes a day or two withdraw your money, whereas with a physical bank, you have access immediately.
I don’t think that this rate is promotional. I still get 1.4%APR at ingdirect.
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### Author:  [@IAmNotSpartacus](https://boards.straightdope.com/u/IAmNotSpartacus)
#### Post date: [July 30, 2009, 5:40pm UTC](https://boards.straightdope.com/t/online-vs-regular-savings-accounts/504768/6 "2009-07-30T17:40:41Z")
My online checking account with WaMu was opened through the same institutional thrift (not a bank, but that’s being pedantic) as my branch account. Same routing numbers on the checks and same ABA fraction (derived from the routing number). I never had any problems transacting business in person with this account. Both ATM withdrawals and teller visits.
Now of course, checking and savings accounts are different beasts subject to completely different rules and regulations.
But as **walrus** noted, depending on the bank, some limitations may be in place, and it does appear as though a customer could not transact teller business at HSBC with an HSBC-direct (online) account. It does look like they give full access to HSBC ATMs for deposits, and withdrawals, however.
> [@](#):
>
> Where do I do my banking?
>
> HSBC Direct operates exclusively online, so you can manage your account anywhere you can access the Internet. With the HSBC Direct ATM or debit card, you can use HSBC ATMs for many basic transactions as well.
[http://www.hsbcdirect.com/1/2/1/default/faq/top10?code=CSM0001142](http://www.hsbcdirect.com/1/2/1/default/faq/top10?code=CSM0001142)
Color my ignorance fought.
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### Author:  [@Doug\_Bowe](https://boards.straightdope.com/u/Doug_Bowe)
#### Post date: [July 30, 2009, 6:03pm UTC](https://boards.straightdope.com/t/online-vs-regular-savings-accounts/504768/7 "2009-07-30T18:03:40Z")
May I throw one thing in? The subject of online banking has been brought up on the Bob Brinker money program several times. To anyone attracted to better rates from the online banks, Brinker has one word of advice…Just make sure the online bank is covered by FDIC insuance.
[http://www2.fdic.gov/idasp/main\_bankfind.asp](http://www2.fdic.gov/idasp/main_bankfind.asp)
There’s the site to handle it.
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### Author:  [@thelurkinghorror](https://boards.straightdope.com/u/thelurkinghorror)
#### Post date: [July 30, 2009, 8:22pm UTC](https://boards.straightdope.com/t/online-vs-regular-savings-accounts/504768/8 "2009-07-30T20:22:57Z")
It’s true that many online savings provide better rates than CDs, even those offered at the same site. However, a little over a year ago I was getting 5.05% with an online savings, now I get 0.95% for the same account. I since opened a currently 1.85% account. If you had opened a long term CD, then the rates would not lower over that time period I think.
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### Author:  [@Hermitian](https://boards.straightdope.com/u/Hermitian)
#### Post date: [July 30, 2009, 9:40pm UTC](https://boards.straightdope.com/t/online-vs-regular-savings-accounts/504768/9 "2009-07-30T21:40:46Z")
> [@IAmNotSpartacus](#):
>
> To be frank, it would appear this online rate is nothing more than a gimmick to get new customers to open accounts.
As someone else has stated, I don’t think it is a gimmick rate, but it is not a guaranteed rate. I have had an account with them for almost 2 years and it has ranged from 5% to what it is now. It somewhat moves up and down with the Fed funds rate.
So, it looks like the only difference between the online and the traditional is that you can’t get teller service with the online version. Well, for twenty times the interest rate, I can go along with that. I never use tellers anyway.
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### Author:  [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)
#### Post date: [July 30, 2009, 10:05pm UTC](https://boards.straightdope.com/t/online-vs-regular-savings-accounts/504768/10 "2009-07-30T22:05:38Z")
> [@IAmNotSpartacus](#):
>
> My online checking account with WaMu \ I never had any problems transacting business in person with this account. Both ATM withdrawals and teller visits.
Bizarre. I had a WaMu online account too, but I had exactly the opposite experience. It didn’t show up at the ATM, and one time I tried to talk to a teller about it, and they told me that it wasn’t on their systems; I’d have to go online, or call one of their phone banks.
Even if they have a worse cost structure than the purely online banks, it still makes sense for them to have competitive online rates. Otherwise they’d pretty much cede that entire market.