ING Direct hasn’t been the interest rate leader in years. In a world where some banks are offering yields above 5% on money market or savings accounts, ING Direct sat squarely at 4.5%. Nevertheless, I still have the bulk of my savings there. I am too lazy to chase around for the highest rates every time there is a change.
I do have some money in HSBC Direct and Emigrant Direct, where my cash is earning upwards of 5%, but I find ING’s interface much more user-friendly.
This morning, ING Direct dropped its interest yield on savings from 4.5% to 4.3%. Assuming a steady $20,000 balance, that’s $40 interest (possibly only about $30 after taxes) “lost” due to this change. The “Electric Orange” checking account saw a larger drop: from 4.0% to 3.5% for the lowest balance tier (under $50,000).
With the Federal Reserve Board lowering the federal funds rate by 0.5 percentage points, ING Direct could have theoretically lowered their yield more.
Lower interest rates in savings and lower interest rates for borrowing encourage people to take their money out of the bank while allowing individuals to qualify for less expensive loans. I expect other banks that offer high-yield savings accounts will soon follow ING Direct’s suit. Those who locked in CD rates may consider themselves lucky. As of 10.21.11 the savings rate is 0.90% APY.
Updated September 23, 2015 and originally published September 19, 2007. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.