Released: March 30, 2006

Banks compete with online savings accounts

Source: By John Waggoner, USA Today

Citibank has begun offering high-yield Internet savings accounts to try to grab a slice of the increasingly popular online banking market.
Citi’s e-Savings Account offers a 4.5% yield with no minimum balance required. “It’s not the highest rate, but it’s very competitive,” says Greg McBride of Bankrate.com.

Savers can also get CDs and other products through Citibank Direct, Citi’s new Internet bank. Citibank is the banking arm of financial giant Citigroup.

Citi faces competition. HSBC Direct started its online savings account last year. It yields 4.8%. ING Direct’s savings account, now yielding 3.8%, began in 2000. Both have been highly popular with savers. Citi, whose consumer banking profit fell 9% last year, wants a piece of the action.

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