Fed Rate Cut Lowers Savings Rates

I received a disappointing email tonight from HSBC Direct, where I still maintain a small Christmas Club account, that advised my interest rate on savings was being lowered in response to the recent federal reserve interest rate cut.

The new HSBC online savings account rate, 3.80%, is only slightly better than the ING Orange savings account (3.65%). The banks tend to leapfrog each other so I anticipate if the fed lowers rates again ING may keep their savings rate slightly higher than HSBC’s. Either way, the rates are certainly not going to help me reach my early retirement goals!

We are writing to inform you that based on the recent drop by the Federal Reserve, HSBC Direct has adjusted your Online Savings Account rate to 3.80% APY*. At 8x the national savings average**, you are still earning one of America’s highest savings rates.

HSBC Direct will continue to evaluate and respond to market changes so we can provide you with competitive rates. And if your rate changes, whether up or down, we are committed to always letting you know.

You can feel confident knowing your savings are with HSBC Direct. We’re part of HSBC Group, one of the largest financial institutions in the world, and have over 140 years of experience helping customers manage their savings.

We sincerely appreciate you saving with HSBC Direct.

Fortunately, I only keep a small Christmas Club account at HSBC, so the lower interest rate will have little effect on my monthly investment income. I keep my emergency fund at a local bank savings account because at this point I prefer convenience over interest rates. When rates go back up, and they probably will in the next couple years, I’ll move some of my emergency fund savings back an online savings account at one of the top online banks.


  1. Thanks for the head’s up. I’ll have to check and see what my emigrant direct account is at now. I’m sure it will be similar.