Dedicated to Deposits: Deals, Data, and Discussion

Competitive 12-Month CD Rate at ING Direct - Available Nationwide

POSTED ON BY

ING DIRECT
Update 10/24/09: The 12-month CD rate has dropped to 1.75% APY. Please check ING Direct's website for the latest rates.

ING Direct raised its 12-month CD rate today to 2.10% APY. The rate had been 1.85% APY. The only other competitive rate is its 6-month CD which has a 1.55% APY. All other terms, even the 5-year term, are under 2%. The 2.10% APY may not sound like much, but unfortunately, it's very competitive for 1-year CDs in today's interest rate environment. Ally Bank just raised its 12-month CD to 2.05% APY today (see post). Perhaps there's some competition between the two. It's rare to see ING Direct with a top yield.

My Experience Opening an ING Direct CD:

In my opinion, ING Direct has the best interface for opening CDs and managing them. The only downside that I can see is that they do not allow beneficiaries. It has been about 4 years since I last opened an ING Direct CD, so I decided to give it a try again today. The only thing that appears to have changed is that you have to agree to accept electronic delivery of the disclosures. When I opened ING Direct CDs 4 years ago, they would send the disclosures by snail mail for each CD.

I have an ING Direct savings account and Electric Oranage account, so I first logged in and then opened the CD. I pulled funds from my Orange savings account. Note, this withdrawal counts toward your 6-per-month limit (for the savings account). So be careful about opening too many CDs. You might want to open multiple CDs since they do not allow partial withdrawals of principal.

The CD opening process was very smooth and quick. As an existing customer, you don't have to re-enter any personal info. You just have to select the CD options. I like how they clearly list the APY in the open-account pages so there's no doubt about the rate you'll receive.

Below is the list important features of ING Direct CDs:

Details for Opening an ING Direct Certificate of Deposit:
  • No minimum initial deposit
  • Allows joint and living trust accounts, but NO beneficiaries
  • IRA CDs with the same rates are available here
  • Can choose if interest is to be paid out or added back into the CD
  • If interest is to be paid out, you can choose to receive interest monthly or yearly and where the interest is to be deposited (ING Direct account or linked checking account)
  • Very easy to open if you already have an ING Direct savings account or Electric Orange account. Just log in and click open account on the top left.
  • New customers can open the CD using the online application. Funds would have to come from a checking account that would be electronically debited
  • Can be opened completely online. Before final submission, the confirmation page shows APY, term and funding source (no doubt about what rate you'll receive)
  • Can be funded from a linked checking account or from your ING Direct Orange Savings or Electric Orange account
  • Rate locks at the time the CD is opened online
  • If you are already a customer, the CD is immediately added to your account summary page
After the CD is Opened:
  • CD Details page shows APY, maturity value and today's early redemption value
  • CD maintenance page allows you change interest disbursement, how funds are handled at maturity (renew or close account and transfer money to linked account or ING account), close the CD (early withdrawal penalty would be applied) or add a joint owner
  • Early withdrawal penalty is 3 months of interest (regardless if earned) for 1-year CD
  • Partial withdrawals of principal are not allowed
  • Grace period at maturity is 10 calendar days after the maturity date
The only minor issue I have with ING Direct interface is that they don't allow online chat or secure email. Any account specific issues have to be handled by phone, snail mail or by fax. You can send regular email, but since it's not secure, you can't discuss account specific info.

Orange Savings Account

If you're going to open an ING Direct CD, it makes sense to first open an ING Direct savings account and take advantage of a $25 refer-a-friend bonus. Once you open an ING CD, you are no longer a new customer and are no longer eligible for the savings account bonus. The Orange Savings Account has no minimum balance requirements or monthly fees. I have a review of the Orange Savings Account in this post. The savings account interest rate is never near the top, but at least they keep it respectable (unlike ETrade Bank).

If you want this $25 ING bonus for the savings or checking account, you can email me at bankdeals at gmail dot com. Please include your first and last name, and let me know which account referral you want (savings or checking). Note, the bonus requires a minimum initial deposit of $250.

There's also a $50 bonus for existing ING Direct customers for opening an Electric Orange account. This promotion appears to still be valid. Refer to this post for more details.

FDIC/Financial Info

ING Direct's ratings for safety and soundness used to be strong, but they're now only average: 3 stars (adeqaute) at BauerFinancial (based on 6/30/09 data) and 3 stars (performing) at Bankrate.com (based on 3/31/09 data). It has been a FDIC member since 2000 (FDIC Certificate # 35489). ING Direct is the largest internet-only bank with $90.1 billion in assets and $74.8 billion in deposits. As a comparison, Ally Bank has $42.5 billion in assets and $36.6 billion in deposits.

Thanks to the reader who mentioned this new 12-month CD rate in the Bank Deals Hub post.

Update: Corrected info on IRA CD availability. IRA CDs are available through a different area of ING Direct's website.

Other Competitive Certificate of Deposit Rates

For those with at least $25,000 to invest into a CD, you can currently get a higher 1-year CD rate at Alliant Credit Union and MetLife Bank. Opening and managing the CD may not be as easy as it is at ING Direct, but they do have other advantages such as allowing beneficiaries. For links to these CDs and other top CDs, please refer to the following:
  Tags: ING DIRECT, CD rates, IRA rates

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Comments
9 comments.
Comment #1 by scott (anonymous) posted on
scott
I just got the email about the increase, Best part is I have 12 month CD maturing 10/5 and they give a .15% bonus for rollover, Wasn't going to rollover when the rate was 2% with bonus but changed my instructions to rollover now. I really like ING and am very glad to stay with them.

1
Comment #2 by brian (anonymous) posted on
brian
Nice post! However, one correction about your ING Direct information. ING does over FDIC insured IRA CD's and Savings accounts.....at the same terms and RATES as their normal products.

1
Comment #3 by Banking Guy (anonymous) posted on
Banking Guy
Brian, thanks for the info. I hadn't noticed the IRA CDs until I looked around their retirement section. I've updated the post with this info.

1
Comment #4 by Anonymous posted on
Anonymous
Of course, if you already have both a savings and checking account at ING, if you want to open multiple CDs, you can always make one large transfer from your savings to your checking account and then use the checking account to fund the CDs. There is no limit on the number of transfers from checking.

But thanks for the warning about the six transfer limit from savings! I bet I would have overlooked that.

1
Comment #5 by Terrin (anonymous) posted on
Terrin
Not allowing beneficiaries is huge. That means if you die, the money may never be found and if it is it will likely have to be probated which is a costly affair. I don't want my money going to the government.

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Comment #6 by Anonymous posted on
Anonymous
Even if you have beneficiaries named on the account, the bank is not going to go looking for them. In fact, the bank is unlikely to find out that you have died until somebody tells them.

Whether you have beneficiaries named on the account makes little difference in whether the money will be "found" or not. If you want to ensure that someone finds the money, then make that someone (your family, your lawyer, a trusted person) can get to a list of your accounts after you are dead. Beneficiaries aren't notified by the bank that you have opened an account and they might not even know that it exists. If they don't know it exists, they won't find it unless they have some reason to play detective after you have passed. You wouldn't believe how many people pass away and leave their families having to put together the pieces of their finances -- whether or not there are beneficiaries named on the accounts.

If you have absolutely everything you own (cars, real estate, investment accounts, etc) titled jointly with right of survivorship or with beneficiaries on the titles (where allowed), then your heirs can probably avoid probate in most cases (assuming that the joint owners/beneficiaries are alive, too (they weren't killed in the same accident, for example)). But probate for a simple estate need not be expensive. Most states have a small estate procedure that is not expensive if you don't need to hire an executor/administrator.

The only time when the government would get your accounts would be if nobody came forth to claim them. This could happen if no one knew the accounts existed (whether or not there were any beneficiaries named). Remember that it is also possible that the named beneficiaries might die before you or at the same time as you die. Hence it is important to have a will that describes how you want the accounts disposed of. And it is also important that someone be able to find the will and the accounts after you die. But even if you don't have a will, the accounts will still go to relatives as prescribed by your state law before they would go to the government.

In the unlikely event that your estate is large enough to be subject to an estate tax, simply naming a beneficiary will not avoid the tax.

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Comment #7 by Anonymous posted on
Anonymous
Anonymous at 8:38 PM makes some valuable points about what happens to your accounts after you die. This topic in itself is worthy of treatment in a post.

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Comment #8 by Frugal Frugalson (anonymous) posted on
Frugal Frugalson
Does anyone remember how long the similar ING CD rate bumps lasted in the Fall of 2008 (like this and this)? Based on past bumps, is ING likely to keep this rate around at least through the end of next week?

I'm considering doing this deal, but it will take about three days for me to shuffle my money around to fund it. Hopefully it will still be around by then...

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