ING Direct's Answer To EmigrantDirect?

Since EmigrantDirect raised its savings account rate from 3.50% to 4.00%, many ING customers have been hoping for a similar move by ING Direct. To the disappointment of many, ING only raised their savings account rate from 3.30% to 3.40%.

I had thought ING Direct may follow the 0.10% increase with another similar increase sometime this month. This would be similar to what ING did last spring of this year when the Orange Savings Account went from 2.60% to 2.80% and to 3.00% from end of March to early April. A similar rate change occurred around July and August when the Orange account went from 3.00% to 3.15% and to 3.30%. You can see these changes in this chart.

But instead of raising the rate on its Orange Savings Account, ING Direct added more CD options today. ING added CD terms of 6-months, 9-months, 18-months and 30-months. The 9-month CD has an APY of 4.00% which matches the rate of EmigrantDirect's AmericanDream Savings Account. Perhaps ING is hoping it can prevent customers from switching by offering them these CDs. I think ING would have a better chance if the CDs had better rates. Here's a table of ING's CD rates:

CD Term   APY
6 month   3.75% (new)
9 month   4.00% (new)
12 month  4.20%
18 month  4.30% (new)
24 month  4.40% (down from 4.50%)
30 month  4.55% (new)
36 month  4.55%
48 month  4.60%
60 month  4.70% (up from 4.65%)

You would think ING should have at least matched their 6-month CD rate with EmigrantDirect's savings account rate. Even though the rates are not the best, it does give customers more choices to match rates at other banks. Also, ING makes it real easy to open a CD. It can be done very easily online and there's no minimum deposit requirement.

If the 6-month CD had an APY of 4.20% instead of 3.75%, I think it would actually be a good alternative to EmigrantDirect. However, with the rates continuing to rise, EmigrantDirect will likley be 0.50% higher in 6 months. In that case none of these CD options look appealing.