ING Direct is offering a special 3-year IRA CD with a 2.00% APY. The rates for all other IRA CDs are low even by today's standards. This rate is only for an IRA CD. The non-IRA 3-year CD rate is only 1.25% APY. The rates are listed in ING Direct's IRA rate table as of 3/24/2011.
ING Direct CDs and IRA CDs with terms over 12 months have an early withdrawal penalty of 6 months of interest. I checked yesterday if this would apply for IRA CD holders if they're over 59½. According to the ING Direct CSR, the early withdrawal penalty applies regardless of age. Some institutions will waive the IRA CD early withdrawal penalty if the account holder is over 59½. I reviewed three institutions that have this feature in this 2009 IRA CD review.
To open an ING Direct IRA CD, you first must be an ING Direct customer with either an ING Direct savings account, checking account or a CD. You can open either a Traditional or a Roth IRA. Just like ING Direct's regular accounts, the IRA bank accounts have no minimum balance requirements and no monthly fees.
How It Compares?
For a nationally available CD, the best 3-year CD rate is 2.27% APY at Velocity Credit Union. This is available for both regular and IRA CDs. However, this is scheduled to end on 3/25/2011. The best 3-year CD rate at a bank is 2.15% APY at Tennessee Commerce Bank.
Other ING Direct News - Higher Overdraft Line of Credit Rate
Those who have an ING Direct Electric Orange account may have noticed an email from ING Direct regarding account changes. Its overdraft line of credit is changing for the worse. According to the email, "On May 16, 2011, the variable Annual Percentage Rate (APR) will change from 7.25% APR to 11.25% APR and the Margin will move from 4% to 8%." With the deposit rates going down, one might think we would see lower loan rates, but not in this case. Nevertheless, ING Direct's overdraft policy is still a good deal compared to other banks since ING Direct doesn't charge an overdraft fee.
A reader emailed me about an exchange he had with an ING Direct rep regarding this overdraft line of credit. When the reader told the rep that this rate looked like a credit card rate, the rep alluded to a future credit card rollout. This is just a rumor, but it does make sense especially with the new Fed regulation to take effect in July that will reduce the interchange fees on debit cards. I would think the large banks will put much more emphasis this year on credit cards instead of debit cards.
Who Will Buy ING Direct?
In 2009 the European Union ordered ING to sell the ING Direct USA by the end of 2013. In the last month, there have been rumors in the news about companies that are showing interest in this acquisition. As reported by Bloomberg, the latest one is General Electric. According to the article, "ING Direct’s consumer deposits may help diversify GE Capital’s funding sources."