Dedicated to Deposits: Deals, Data, and Discussion

ING Direct Raises Long Term CD Rates

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ING Direct increased the rates on their 2 to 5 year CDs yesterday. However, the 1-year CD remains at 4.20% APY. The new 2, 3, 4, and 5 year rates are now: 4.50%, 4.55%, 4.60% and 4.65% APY. Previously, these rates were 4.30%, 4.40%, 4.40% and 4.50% APY.

ING Direct's 2-year 4.50% CD is now competitive with the top 2-year CDs in the country. Plus, they have other features that make it even more attractive such as no minimum deposit requirements and the ability to open a CD online. Note, when you open a CD online, they send you documentation by snail mail with the amount and rate information along with the official terms.

I've been wondering if ING may turn its attention more with competing on CD rates rather than on savings account rates. They seem content to let the high-rate chasers take their funds to EmigrantDirect or Presidential. With decent savings rates along with competitive CD rates, ING may be able to attract more long term money which would probably be more profitable for them.

Which Is Better: 4.5% 2-year CD vs. EmigrantDirect's 4% Savings

The 0.20% increase in the 2-year CD makes it an attractive alternative to the 1-year CD. Now the extra year buys you 0.30% over a 1-year CD. If you intend to leave the money alone for 2 years, it may do better than keeping it in shorter term products and waiting for rising interest rates. It depends on how high and how fast interest rates rise. If EmigrantDirect raises its savings rate 1% or more in the next year, you would be better off keeping it at ED. ED has gone from 3% to 4% in only about 9 months. So it's quite possible that they'll go from 4% to 5% in the next year (assuming the Fed continues its tightening policy).

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