A reader commented on my recent post on a new online savings account called Hubert that consumers should be aware that new financial products come with the risk of disappearing in short order. Looking back at a survey of online savings accounts done a few years back, I find that at least one – Citizens Bank – has disappeared completely.
If you are opening an online savings account simply to park your cash and are transferring in and out of your chequing account, the risk of closure may not be a huge issue because if the account is being shut down all you have to do is transfer money out and open an account at another institution.
But some online savings accounts allow you direct deposit and bill payments. If a bank account set up for direct deposits and bill payments closed down, it takes time and effort to port everything over to a new account. Case in point: Citizens Bank launched a free chequing account with much fanfare and shut it down in less than a year. A customer who went to the trouble of opening an account and setting up direct deposits and bill payments would have been sorely disappointed with having to make arrangements all over again at another financial institution. So, when it comes to new financial products there is something to be said for sticking with the tried and tested.