Online Savings Rates are Dropping

As expected, the Fed recently cut interest rates again and we're starting to see the cut's impact on savings rates. My HSBC Direct account recently cut my interest rate by a quarter point and most online banks are following suit. I wrote about online savings accounts a month or two ago and recommended 3 banks - HSBC, ING Direct, and Emigrant Direct. All have recently cut their rates.

• ING Direct went from 4.2% to 4.1%
• Emigrant Direct went from 4.75% to 4.65%
• HSBC went from 4.50% to 4.25%

So...what should you do about this? You can always look for CDs which typically offer higher yields than savings account but tie your money up for a period of time and charge a penalty if you have to touch the money before the period is up. You can also consider moving your money from one account to another - chasing the highest interest rate. That, however, has a cost to it as you're not making any money while the funds are in transit from one online bank to another. To see how much that's going to cost you and determine whether it's worth your while to move the funds, head over to My Money Blog (the name of the site - not MY money blog) and use their "Ultimate Rate Chaser Calculator" - a great tool to demonstrate how much money you'll lose moving money around and how long it'll take to make the money back.