Thursday, October 20, 2005
HSBC OnlineSavings
I am in an account opening frenzy...I just applied for my HSBC OnlineSavings account which carries a $35 sign-up bonus for the rest of the month. I wasn't going to do it because I am sort of swimming in accounts right now, but HSBC is also my mortgage holder and I am trying to investigate paying my mortgage twice a month (without ridiculous fees that is) and they somehow tie online mortgage management to having an account. So, I thought I'd see if their savings account would...er..."count" and nab $35 in the deal.
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If you do go with the bi-saver mortgage program, keep in mind that you will not be paying your mortgage twice a month and magically save interest. Rather, you pay your mortgage once every two weeks -- big difference. If you do the math (52 weeks / 26 payments per year = 13 overall payments), you'll see that in effect you'll have two months a year where you make 3 mortgage payments. I made the mistake of signing up for this program because I didn't thoroughly research it before I bought in. You can get the EXACT same results by doubline your mortgage payment once a year.
ReplyDeleteI'm actually not sure it's exact (there has to be some small effect from the actual timing of your principal paydown)
ReplyDeleteBut I am not interested in twice a month to pay down principal. I am interested because I get paid twice a month and I am looking to even out my bills and savings. (which i could do myself by moving some savings around to cushion, but that's plan B)
I honestly can't believe that these mortgage companies charge people to pay their mortgage down faster (well, I *can* believe it but it still boggles).
The option I was looking at had a small fee ($1-$2) with each payment. I would still want to do the math, but that's not like paying $250 for "setting it up" like Wells Fargo kept trying to sell me.
Those offers are ridiculous in my opinion.
I highly recommend that everyone do the math on every single offer...these guys are never doing you a favor.
Well, just be sure to read the fine print. My program is with Bi-saver (they are the largest company to provide this type of service) and while they deduct your payments once every two weeks, they only credit your account once a month.
ReplyDeleteWow. That is *quite* a racket. I hope you have extracted yourself from that one!
ReplyDeleteHum... This looks interesting. I generally don't open accounts just for the bonus fees either, but I am thinking of doing some international travel and having an HSBC ATM account could be beneficial.
ReplyDeleteI took a close look at the Online Savings Accounts terms and fees. It looks like you need only deposit $1 to get the $35 bonus, but it does state that if you close your account within the first 6 months you will be charged a $25 fee.
Other saving accounts seem to charge a $1 monthly maintenace fee if your balance drops below $100. The Online Savings Account does not see to charge that fee.
The account lets you access your money via Telephone, Internet, and ATM but not via a Branch. So, if after 6 months you want to close your account you should be able to do it without visiting a branch. At least that is my interpretation after reading the terms.
If you are making the change to make it more convenient, you might want to consider just paying every two weeks when your paycheck comes. Then you will be paying off your mortgage quicker. You do want to have all your other debts paid first, however. There is no reason to pay of your mortgage quicker if you are still paying credit card debt, car loans, student loans, etc. since they are likely higher than the mortgage interest.
ReplyDeleteI get paid twice a month, not every two weeks, so that is why it's a cash flow issue and not a pay down equity faster issue for me at this time.
ReplyDeleteOnce I have enough of a cash cushion, regardless of my pay cycle, I will either pay twice weekly (on my own) or just add a mortgage payment at the end of the year.
It's a great idea, just not one that fits my situation right now :)