Direct banking is a great way to turbocharge your savings account. Direct bank providers tend to offer significantly higher interest rates than your local bank. They are able to offer better rates of return because they don’t have physical branch locations and all of your transactions are done online, by phone, or by mail. This reduces their overhead and operational costs, which they pass on to their customers in the form of higher interest rates on deposits.
I compared Emigrant Direct, ING Direct, and HSBC Direct when I was setting up my account. At the time, HSBC was offering the best rate, so that’s who I went with. They were offering over 5% APY when I signed up, but that number changes frequently, so check with each of these banks, and others, to see which one offers the best rate now.
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