What is going on with iNG Direct ?

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What is going on with iNG Direct ?

Postby tj » Thu Mar 04, 2010 11:55 pm

Yet another decrease:

Interest Rate Change to 1.095% (1.10% APY)

4 drops since January..
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Postby amplifier » Fri Mar 05, 2010 12:34 am

I'm sure it's my fault, I chose to switch to them this past December. :(
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Postby SP-diceman » Fri Mar 05, 2010 12:38 am

Deflation.


Thanks
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Postby natureexplorer » Fri Mar 05, 2010 1:15 am

Better than almost nothing at most banks.
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Postby anthau » Fri Mar 05, 2010 10:33 am

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.
Last edited by anthau on Fri Mar 05, 2010 10:40 am, edited 1 time in total.
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Postby tj » Fri Mar 05, 2010 10:37 am

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

How can evantage afford to offer 2%?
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Postby anthau » Fri Mar 05, 2010 10:46 am

tj wrote:How can evantage afford to offer 2%?


Subsidies. :)
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Postby simplesimon » Fri Mar 05, 2010 10:57 am

tj wrote: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.
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Postby DartThrower » Fri Mar 05, 2010 11:46 am

tj wrote: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.
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Postby nisiprius » Fri Mar 05, 2010 4:34 pm

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?

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Postby mickeyd » Fri Mar 05, 2010 4:53 pm

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.
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Postby Ice-9 » Fri Mar 05, 2010 4:55 pm

nisiprius wrote:hemisemidemiquaver


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

http://www.urbandictionary.com/define.p ... demiquaver
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Postby Harold » Fri Mar 05, 2010 5:02 pm

I actually thought it was hemidemisemiquaver.

http://www.merriam-webster.com/dictionary/hemidemisemiquaver
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Postby cubedbee » Fri Mar 05, 2010 5:04 pm

mickeyd wrote: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%.
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Postby DartThrower » Fri Mar 05, 2010 5:12 pm

mickeyd wrote: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! ) :roll:
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Postby honkeoki » Sat Mar 06, 2010 12:51 pm

cubedbee wrote: 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/
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Postby Alphahead » Sat Mar 06, 2010 1:11 pm

DartThrower wrote:
tj wrote: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.
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Postby IndyInvestor » Sun Mar 07, 2010 12:11 pm

I was thinking of moving my money to Emigrant Direct. Their dollar savings direct is offering 1.30% APR with a $1000 minimum deposit.
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Postby daytona084 » Sun Mar 07, 2010 12:41 pm

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
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Postby DTSC » Sun Mar 07, 2010 12:58 pm

Just use Alliant Credit Union. 2.0% yield.
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Postby natureexplorer » Sun Mar 07, 2010 2:43 pm

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.
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Postby nisiprius » Sun Mar 07, 2010 3:46 pm

Harold wrote: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.
mickeyd wrote: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.
natureexplorer wrote: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.
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Postby smackfu » Sun Mar 07, 2010 4:42 pm

cubedbee wrote: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?
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Postby frogamigo » Sun Mar 07, 2010 9:37 pm

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*
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Postby nisiprius » Mon Mar 08, 2010 2:30 pm

frogamigo wrote: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.
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Postby natureexplorer » Mon Mar 08, 2010 3:17 pm

nisiprius wrote:
natureexplorer wrote: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.
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Postby Ice-9 » Mon Mar 08, 2010 3:33 pm

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
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Postby cubedbee » Mon Mar 08, 2010 3:39 pm

Ice-9 wrote:
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.
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Postby wannabe_CPA » Mon Mar 08, 2010 3:55 pm

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.
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Postby smackfu » Mon Mar 08, 2010 4:01 pm

nisiprius wrote: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.
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Postby natureexplorer » Mon Mar 08, 2010 7:01 pm

smackfu wrote: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).
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Postby nisiprius » Mon Mar 08, 2010 9:52 pm

wannabe_CPA wrote:...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.

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Postby MWCA » Mon Mar 08, 2010 10:05 pm

Deflation. I am paying less on most things especially groceries. That and they can get away with it. ;)
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Postby natureexplorer » Mon Mar 08, 2010 10:08 pm

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