Wednesday, July 19, 2006

Getting high..... interest rates

When I was younger, I invested the little money that I had receieved from my grandparents in a savings account. A believer in the power of compounding interest, I hoped that my modest investment of a couple of hundred dollars would balloon into a nice sum, and I'd be set for retirement (or world domination). Unfortunately, my little brain did not take into factor inflation, so while my "investment" sat in my savings account at the bank, the actual value was decreasing because the interest rate was lower than the rate of inflation. Only in the past few months, in this brief period of my life where I had no obligations - outside of my jobs from 8-6 - I have become more financially savvy thanks to the information on this wonderful invention by Mr. Gore.

While many regular banks have interest rates around 1-2%, online savings accounts have interest rates of at least 4%. How can that be? Well, online savings accounts cost much less for the banks because they do not require some person at the bank to give you an application, help you fill it out, transfer funds, etc. It is all done online, so some super smart computer can plug the numbers in and watch the money flow in. I've found two online savings accounts that I like to use. Neither of them have any sort of maintenance fee, and the minimum balance is only $1.

The one I first started with is ING Direct. Right now, their interest rate is at 4.35%, which actually is one of the lower ones out of the online savings accounts. My more recent account is at HSBC Online. Their interest rate is currently at a whopping 5.05%. All of these rates fluctuate according to whatever some supersmart economist says, but interest rates seem to be going in an upward direction (good for my savings account, very bad for the loans I'm about to take out).
I've kept my ING account because as far as ease of use, they have been very good and reliable, plus I can get a bonus for referring people. The deal works like this: if you start your account with at least $250, you get a free $25, and I get $10. If you want to get in on it, you have to be referred, so send me an email at Most of my money, however, I keep in my HSBC account just because of the higher interest rate. I also got in on a promotional deal with them where I'm supposed to receive a $25 gift card sometime soon. If you sign up with ING using my referral, I'll send you the link to the HSBC gift card too, for absolutely free! So that's $50 in your pocket for absolutely nothing (you can stick that $250 in and take it out in about a week or two). And you are in fact, buying my friendship. Start investing in these, and you'll be well on your way to beating inflation, saving for retirement, and just maybe, taking over the world.
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