Does Your Bank pay 202% Annually on Savings?
Recently, I wrote that HSBC Canada is entering the fray to fight for its customers' savings dollars - an area in Canada that has long been neglected by the Big Banks.
Now they've gone a step further.
If you open a new savings account with HSBC by June 30, 2006, it will pay you not only the 3.10% interest rate, but will also kick in a $25 bonus just for opening the account.
By way of example, if you had $10,000 on deposit for one year earning 3.10% you would earn $310 of interest. An extra $25 boosts your effective yield up to $335, or 3.35%. Interesting.
Even more interesting is what happens if you open the account with the minimum required in order to snag the $25 bonus - a mere $100. The bonus is paid by August 15 - and I see no restriction on moving the money out afterwards (though it seems a bit extreme for the sake of $25, we're after annualized returns here). The $25 on $100 is a 25% return - but if it's paid on August 15, 2006 - a mere 46 days after the last day for opening a high-rate account to get the bonus - then the annualized return is an incredible 202% or so.
But it's still only $25. Oh well, saying that your bank paid you 202% interest on your savings account sounds a lot better at a cocktail party!
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