What is going on with iNG Direct ?

[tj]

Yet another decrease:

Interest Rate Change to 1.095% (1.10% APY)

4 drops since January..

[amplifier]

I'm sure it's my fault, I chose to switch to them this past December.

[SP-diceman]

Deflation.


Thanks
SP-diceman

[natureexplorer]

Better than almost nothing at most banks.

[anthau]

When Vanguard Prime Money Market Fund is yielding 0.01%, I'm not going to blame ING for besting it by 109 bps while also offering FDIC insurance (though my report of the yield spread may be slightly off--it's too early for me to convert SEC 7-day yield to APR).

Edit: Nah, I think I'm OK.

[tj]

Where is the deflation coming from? US keeps borrowing and printing money.

How can evantage afford to offer 2%?

[anthau]

How can evantage afford to offer 2%?

Subsidies.

[simplesimon]

Where is the deflation coming from? US keeps borrowing and printing money.

Just because the government is printing money doesn't necessarily mean inflation is imminent. The printed money needs to be put into the money supply and right now banks just aren't lending.

[DartThrower]

Where is the deflation coming from? US keeps borrowing and printing money.

How can evantage afford to offer 2%?

Deflation comes from the fact that there is low velocity i.e. the money is there but it's not changing hands very fast. This is what happens when people stuff money in a mattress or banks put it in reserves without lending. Right now we have some inflation but it is extremely low and seems like deflation.

How can evantage afford 2%? Maybe they're trying to gain market share. Just a thought. I wouldn't think they could afford a large differential for too long though.

[nisiprius]

It's very annoying. When they do it twice in one month it catches my attention. It's almost enough to make me start looking around to see whether the gap between ING Direct and the other high-interest Internet banks is widening.

It plummeted during The Great Crash of Everything, then it was sorta-kinda stable for just long enough for me to start to relax, now it looks like it's falling quickly again.

I don't pay much attention to these things, but I thought the Fed had just raised interest rates by a hemisemidemiquaver or something? Heaven knows the credit card companies are raising their rates. Isn't it funny how banks always raise the rates they charge you at the same time as they're cutting the rate they pay you?

[mickeyd]

Surely you guys understand that online banks and other interest rate whores will jack up their savings account rates as a short-term marketing ploy in order to suck in as many folks as possible. When they have reached their marketing goal, they will then reduce the rate as low as possible and hope to hang on to as many new customers as possible.

It must be a successful ruse as most of them take advantage of the method from time to time.

[Ice-9]

hemisemidemiquaver

Word of the day. Oh I am going to use this the first chance I get.

http://www.urbandictionary.com/define.p ... demiquaver

[Harold]

I actually thought it was hemidemisemiquaver.

http://www.merriam-webster.com/dictionary/hemidemisemiquaver

[cubedbee]

Surely you guys understand that online banks and other interest rate whores will jack up their savings account rates as a short-term marketing ploy in order to suck in as many folks as possible. When they have reached their marketing goal, they will then reduce the rate as low as possible and hope to hang on to as many new customers as possible.

It must be a successful ruse as most of them take advantage of the method from time to time.

Surely you realize that despite the fact that various online banks take turn offering the absolute highest savings account rates, they all still kick the crap out of brick and mortar banks even after their rates drop? I too was a little perturbed by ING's recent multiple decreases, and so looked into opening an account at every bank within a couple miles of me. Rates ranged from 0.05% to 0.5%.

[DartThrower]

When they have reached their marketing goal, they will then reduce the rate as low as possible and hope to hang on to as many new customers as possible.

It must be a successful ruse as most of them take advantage of the method from time to time.

I guess "inertia" is not just a principle of physics. Fortunately we have the internet available to shop around and get those extra basis points if we want to do the work. Inertia is exploited in many other areas too, such as credit cards and insurance. (I haven't shopped around for a lower homeowner's rate in 4 years. Put it on the to-do list! )

[honkeoki]

I too was a little perturbed by ING's recent multiple decreases, and so looked into opening an account at every bank within a couple miles of me. Rates ranged from 0.05% to 0.5%.

Same here. I got all excited with the "support your local bank" movement until I looked at the rates they were paying.

Alliant CU is still paying 2% on their savings account:
http://www.alliantcreditunion.org/services/rates/

[Alphahead]

Where is the deflation coming from? US keeps borrowing and printing money.

How can evantage afford to offer 2%?

Deflation comes from the fact that there is low velocity i.e. the money is there but it's not changing hands very fast. This is what happens when people stuff money in a mattress or banks put it in reserves without lending. Right now we have some inflation but it is extremely low and seems like deflation.

How can evantage afford 2%? Maybe they're trying to gain market share. Just a thought. I wouldn't think they could afford a large differential for too long though.

Probably the result of a longer duration play that has payed off; as you said, it won't last too long before they have a similar yield.

[IndyInvestor]

I was thinking of moving my money to Emigrant Direct. Their dollar savings direct is offering 1.30% APR with a $1000 minimum deposit.

[wjwhitney]

I have accounts at ING Direct, Ally Bank and Emigrant Direct. I move money around if it becomes advantageous to do so. Here is a nice calculator to determine whether it's worth the trouble to go through the pointing-and-clicking required to transfer money online:
http://www.mymoneyblog.com/archives/2006/10/the-ultimate-interest-rate-chaser-calculator.html

[DTSC]

Just use Alliant Credit Union. 2.0% yield.

[natureexplorer]

Hey nisiprius, that's a great chart. Do you have it dating back further and/or maybe with another curve for the Fed rate on the same chart?

The only bank that seems to offer a significantly higher interest rate is Alliant CU, but they have some fineprint that is not to my tasting. I am also not sure about their track record. ING Direct has a long track record of near top interest rate. Or is there anything else out there?

For what it's worth, bond prices are also trading higher since the announcement by the Fed of an increase of one of the rates. So that is consistent with ING Direct slashing interest rates as well. Maybe the market was expecting a more agressive increase in interest rates.

[nisiprius]

I actually thought it was hemidemisemiquaver.

http://www.merriam-webster.com/dictionary/hemidemisemiquaver

:oops:
Way back when, when stock prices were quoted in binary rather than decimal, I always wondered if Wall Street insiders had short names for the fractions.... I can't believe they went around saying "thirteen-sixteenths" all day.

Surely you guys understand that online banks and other interest rate whores will jack up their savings account rates as a short-term marketing ploy...

Yes, and one of the reasons I opened an account with ING Direct and have stuck with them is that it used to be my perception that they didn't do that. I was also very impressed by the way they were johnny-on-the-spot raising rates when interest rates rose, while most banks follow rates down quickly but drag their feet then interest rates rise.

Hey nisiprius, that's a great chart. Do you have it dating back further and/or maybe with another curve for the Fed rate on the same chart?

No, I did it the good old-fashioned way: downloaded my personal online statements and typed numbers into Excel.

I've noticed that charts of bank interest rates are in fact curiously hard to come by.

[smackfu]

Surely you realize that despite the fact that various online banks take turn offering the absolute highest savings account rates, they all still kick the crap out of brick and mortar banks even after their rates drop?

True, but when's the last time that Ing Direct was actually the best? Years now?

[frogamigo]

I have historically been happy with ING and I will keep using them for the time being, but I have to admit that the rate decreases are making me cringe. I don't really want to chase rates, and ING's rates are better than most banks. *shrug*

[nisiprius]

I have historically been happy with ING and I will keep using them for the time being, but I have to admit that the rate decreases are making me cringe. I don't really want to chase rates, and ING's rates are better than most banks. *shrug*

Yeah. When my bank's rate gets to be around 1% lower than the "better" rates--not the very best ultimate highest rate I've seen, but the "better" rates--I get itsy, and if it gets to a year or more and they're still that much lower--then I get to the point where I actually will jump ship.

Well, let me see... Ally Bank is only paying 1.3% on their "online savings" account, and Discover Bank is only paying 1.35%, so ING Direct is only a little lower.

[natureexplorer]

Hey nisiprius, that's a great chart. Do you have it dating back further and/or maybe with another curve for the Fed rate on the same chart?

No, I did it the good old-fashioned way: downloaded my personal online statements and typed numbers into Excel.
I've noticed that charts of bank interest rates are in fact curiously hard to come by.

Here a chart for ING Direct online savings account interest rates dating back to January 2002: http://home.ingdirect.com/pop_up/rate_strategy_popup.html

I suspect that not a single other bank can compete with this track record. I'd love to be proven wrong though.

What the chart also seems to show is that the differential is at its highest during high-interest rate environments.

[Ice-9]

I suspect that not a single other bank can compete with this track record. I'd love to be proven wrong though.

Here's a similar chart for my bank's (Presidential.com) checking account dating back to 1999. That's right, not savings, but checking. $1000 minimum, no ATM charges on Presidential's side.

http://presidential.com/images/chart8.gif

Edit: replaced animated image with link to chart

[cubedbee]

I suspect that not a single other bank can compete with this track record. I'd love to be proven wrong though.

Here's a similar chart for my bank's (Presidential.com) checking account dating back to 1999. That's right, not savings, but checking. $1000 minimum, no ATM charges on Presidential's side.

http://presidential.com/images/chart8.gif

Edit: replaced animated image with link to chart

That's apples and oranges. You earn your chart's interest rates as long as you have at least $1,000 and no more than $25,000. ING rates apply to any balance.

[wannabe_CPA]

The fact is using any "decent" (one that doesn't pay less than a fraction of a percent) savings account is gravy. The "big win" is using a savings account to meet your immediate (1 year maybe 2) cash needs.

Money that I need in the future goes to the riskiest investment I can tolerate given the time frame I anticipate.

Retirement, decades away, throw it in stocks/bonds mostly stocks. I need this money to make some money, hopefully, in the interim and no savings account will cut it.

Replacing my car in 5 years, probably I bonds for now or maybe CDs and savings account as it gets closer. I can be a little risky in hopes of better yield since I have some time to leverage, but I'm mostly worried about preservation of principle.

My insurance bill due in 3 months, checking or savings account, it really doesn't matter.

How I invest the retirement money, provided I use a low cost diversified strategy that I'm willing to tolerate the risks of, is minutiae, as is the rate on the savings account. Just sticking the money back at all is the big win.

Still minutiae is sort of what a board like this is all about, but even at that I prefer to be persnickety about large amounts of money like retirement savings and not worry so much about small ones.

ING is a savings account that works for me and getting another .2% interest isn't necessary to accomplish my goals for what I use the accounts for, so I'm not worried about it until the yield is just completely unreasonable which in today's climate would be hard to do.

[smackfu]

I've noticed that charts of bank interest rates are in fact curiously hard to come by.

One odd place this is recorded is on FatWallet Finance, in the thread listing the best current interest rates.
http://www.fatwallet.com/forums/finance/783099/

The quick summary table has a "history" button on the bottom right that will show you older versions of the table.

[natureexplorer]

One odd place this is recorded is on FatWallet Finance, in the thread listing the best current interest rates.
http://www.fatwallet.com/forums/finance/783099/

Thanks for the link! By the way, the listing for ING Direct is incorrect. There is no minium balance and ACH works both ways, even on the savings account (in my experience at least).

[nisiprius]

...using any "decent" (one that doesn't pay less than a fraction of a percent) savings account is gravy.... My insurance bill due in 3 months, checking or savings account, it really doesn't matter...

How I invest the retirement money, provided I use a low cost diversified strategy that I'm willing to tolerate the risks of, is minutiae, as is the rate on the savings account. Just sticking the money back at all is the big win.

Still minutiae is sort of what a board like this is all about, but even at that I prefer to be persnickety about large amounts of money like retirement savings and not worry so much about small ones.

Well said.

People get into trouble by trusting advisors who put their whole account into Bear Stearns stock. People don't get into trouble by putting their short-term cash in a safe place, even if there is some other equally safe place that would earn them $86.91 more a year.

[MWCA]

Deflation. I am paying less on most things especially groceries. That and they can get away with it.

[natureexplorer]

Yep, the real return from ING Direct is probably better than during those high rate years (albeit probably negative in many cases after taxes).