Get Your G's Together, G: #2 High Yield Savings Accounts ($25 Free!)

This is the second in a series of basic personal finance articles for students. The first can be found here.

When that big loan disbursement comes out at the beginning of each semester, where do you put it? Ok, I'm sure some of you go fill up the coffers of the local mall, but after that, where does it go? If you're like most people, you just stick it in your checking account. Easy access to write checks, pay bills, right? Ok, not bad, at least it's not under your mattress. You may even have a savings account at your bank that earns almost 1% APY if you're lucky. But you could be doing better.

I used to be like you. I had my extra money stashed in my savings account at my bank earning a measly 0.8% APY. Imagine my shock when I discovered that there were banks with online savings accounts that offer in excess of 5% APY. Think about it, instead of keeping that big hunk of cash sitting in your checking account, you could put it to work for you. It'd be earning interest while you sit around claiming to study, when in fact you're reading this blog.

Let's say you get $12000 for living expenses each year. If you just left it sitting in your savings account at 5%, you'd make an easy $600. Now you won't make exactly that much since you'll be spending it as the year goes by, but you get the idea. You could make a couple hundred easy bucks just by letting the money sit there while you go to class, watch TV, sleep, or do anything else. What about paying bills, writing checks? I'll get to that when I explain to you my two favorite High Yield Savings accounts.

ING Direct was my first foray into the field of high yield savings accounts. While the interest rate lags behind most of the leaders right now (4.50% APY), it does have a nice sign-up bonus of $25 if you're referred by a member and fund the account with an initial deposit of $250. That's $25 easy bucks just for parking $250! You can take the money out after you get the bonus because there is no minimum balance. If you want to get an account started, here are a couple referrals.
ING link 1
ING link 2
ING link 3


I'll be upfront, I get $10 as an affiliate, but you get $25. Without a referral, neither of us get anything, so this is a win-win situation!

After you sign up with ING, you open up an account where they offer higher interest, so that you can transfer your money as soon as you get the $25.

HSBC Direct is where I have most of my money now. Currently, it's at 5.05% APY (minimum balance $1), which is one of the best rates. There are other banks with higher APRs, but I have heard that the customer service isn't nearly as good, and they sometimes have problems with transfers, which is a scary thought. With HSBC, I have never had a problem, and whenever I call, their customer service is top-notch. Each month, I can make 6 transfers out of my savings accounts (the same as ING), so when I need to pay my rent check, I just transfer that amount to my rent a few days before I write the check, so it has time to clear (usually 2-3 business days). My credit card bills, I pay directly from this account, so I'm earning interest on my money nearly all the time! Another added bonus with HSBC is that they offer a set of free checks with their free checking, so if you ever have an emergency where you need to access this money immediately, you can use these checks.

For those of you wary about using a bank without a local branch, another great option is with Washington Mutual. They currently have a deal where if you sign up for their Free Checking online, you can earn 5.00% APY on a Statement Savings account (minimum balance $1). The advantage of Washington Mutual is that they do have branches in many locations, so if you like the idea of having a real bank to go to, this works as the best of both worlds. While I don't have an account with them, I may open one in the future because I really like their free checks for life deal.

You really can't go wrong with any of these options. They are all reputable banks, and you'll be earning more interest than a pair of hot girls making out at a bar.

I also found a couple of posts from other bloggers who have some experience with some of the other banks:
Poorer Than You - Emigrant
Broke-Ass Student - iGObanking

Whatever you decide, please pass the word along to your friends. If we're going to be borrowing money, we might as well make some money along the way, right?

Tags: ING, HSBC, high yield, savings, loans, financial aid