Online Banking Roundup: WT Direct vs. HSBC, ING, and Emigrant

I recently ran across a new online bank known as WT Direct. They’re apparently affiliated with Wilmington Trust FSB, and they’re offering 5.26% APY. There’s no minimum deposit required, and this rate is good on any balance for 60 days, after which you have to maintain a balance of $10,000 to get the high rate - otherwise it drops to 0.6%. Yikes! If you slip up and dip below the $10k threshold, you’ll certainly pay the price. On top of this, they have a less than stellar Bankrate Safe & Sound rating…

While their homepage trumpets a four star rating in 2006, WT Direct currently scores a single star on the Bankrate Star Rating. In case you’re not familiar with this metric, it basically reflects institutional solvency. The rankings top out at five stars (Superior), and they were rated as “Sound” a year ago, but… Their one star rating means that they’re currently considered to be amongst the “Lowest Rated” banks. At least they’re FDIC insured… You might need it!

So what about the other options out there?

My personal favorite is HSBC Direct. HSBC offers 5.05% APY with no fees and no minimum balance, and a pretty good online interface. This is where we keep the vast majority of our liquid savings.

Next up, ING Direct. ING lags behind a bit in terms of interest rates at 4.5% APY with no fees and no minimum balance. That being said, they have a slick online interface, and they really shine when it comes to creating sub-accounts for tracking your money.We used to use ING fairly heavily, but ultimately switched to HSBC for the substantially higher rates. We still have an account there, however, and use the sub-account feature to manage our kids’ bank accounts.

Finally, I would be remiss if I didn’t mention Emigrant Direct. Like HSBC, Emigrant pays 5.05% APY with no fees and no minimum balance. While their online interface is serviceable, it’s nothing to write home about. Moreover, they lost my trust a little over a year ago when they shut down their web site over a weekend for a planned upgrade and then struggled for a week or two to get back online. As far as I’m concerned, locking people out from accessing their funds (even if it’s unintentional) is the cardinal sin of banking, so they’ve lost our business and we likely won’t be going back. That being said, I do have to admit that I’ve left $10 on deposit there to keep the account open just in case we have a change of heart.

I know there are other options out there, but in this case I’m really only focusing on the new kid on the block as well as those online savings banks with which I have firsthand experience.

So just to summarize:

HSBC Direct - Two thumbs up. Great rate, solid interface.
ING Direct - Less competitive rate, but great for managing multiple subaccounts.
Emigrant Direct - Great rate, serviceable website, but shaky performance in the past.
WT Direct - Excellent rate, high minimum, poor Bankrate.com ratings.