Canadian High-Interest Savings - A New Hope

In my ongoing effort to get the most for my dollar, I've written a couple of posts about the high-interest savings account options available to Canadians. I'm actually doing more than just writing: I currently have online savings accounts with ING Direct, HSBC Direct, Canadian Tire Financial Services and ICICI. My $755.31 Emergency Fund is split across these four institutions as follows:

• ING: $453.63 at 3.75%


• HSBC: $101.20 at 3.50% (becomes 4.05% October 10 4.25% October 11 - the date was my mistake, and the rate increase was updated this afternoon)


• Canadian Tire: $100.26 at 5.50% (reverts to 4.0% in December)


• ICICI: $100.22 at 4.50%

I use ING as my primary savings institution, so I'm most familiar with them, but I'm in the process of testing out the functionality of the other accounts, to determine where I find the best combination of service and rate. Today, I'll talk about the process of setting up an account with each of the four institutions.

ING Direct

The process was fast and simple. I filled out their online application, after which I was given instructions to send them a cheque (made out to myself), so that they could create a link to my chequing account. The cheque cleared my account in a few days, at which point I called in to activate the account and setup my online access. That was it; I was up and running, and could begin creating sub-accounts and moving money to and from ING. My initial deposit was held for five business days, but interest immediately began accruing the day they received the cheque.

Rating: 5 out of 5

HSBC Direct

The initial application process was straightforward. As with ING, after filling out their online application, I had to send them a cheque in order to create a link. Whereas ING's offices are located in Toronto, HSBC is located in British Columbia, so it took much longer for them to receive and cash the cheque. Once the cheque had been deposited, they sent out a welcome kit with instructions for calling in to activate telephone and online banking. After speaking with a representative, I had to login to telephone banking to enable web banking, at which point I was finally able to check my account online. The process was slow and cumbersome, and there seemed to be a substantial delay before interest began accruing on my initial deposit.

Rating: 2 out of 5

Canadian Tire Financial Services

The application process was fast and painless. As with ING and HSBC, sending in a cheque created a link to my chequing account, at which point they mailed me my welcome package. I had to call in to verify my identity in order to set up online banking, but this was a simple phone call with a very helpful representative. As with ING, interest accrued on my initial deposit from the date they received the cheque.

Rating: 4 out of 5

ICICI

The process was very similar to Canadian Tire: submit online form, mail cheque, and wait for welcome package. ICICI sends the customer ID and web PIN in separate mailings for security purposes. However, the instructions they provide for logging onto the website are not correct. They neglect to mention that, before using the website, it is necessary to call in to have a representative activate your customer ID, at which point you can login and change your PIN. As with ING and Canadian Tire, when I logged in, my initial deposit was there, and interest had been accruing since receipt of the cheque.

Rating: 3 out of 5

Winner: ING Direct

In terms of opening an account, I would have to say that ING Direct has the most convenient process. They are the only institution out of the four that does not mail out a "welcome package" before allowing you to login to your account. With ING, as soon as my cheque had cleared, I was able to call in and activate my account. This is far more elegant than the other three, all of which essentially have an extra waiting period built in. Waiting for the welcome letter is the only knock against Canadian Tire; aside from that, their setup process is on par with ING. ICICI loses additional points for the misleading instructions in the welcome letter, and HSBC Direct is just too slow.

Next time, I'll talk about the website interfaces, and the process of moving funds in and out of the accounts.