Dedicated to Deposits: Deals, Data, and Discussion

Savings, Checking and CD Account Rates Fall at ING DIRECT

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Four weeks after the new Fed actions ING DIRECT may have finally responded. It has cut all of its deposit rates. Its Orange Savings account rate fell 5 basis points to 0.75%. The Electric Orange account rates also fell by 5 basis points. The rate for balances of $100K fell from 0.90% to 0.85%, and the rate for balances between $50K and $100K fell from 0.85% to 0.80%.

We haven't seen many rate cuts at ING DIRECT this year. The last time the savings and checking account rates were cut was in January. However, there was a surge of cuts late last year. This came after the Fed announced its mid-2013 low rate pledge in August. So I'm afraid there may be more cuts to come. Also, since ING DIRECT is the biggest internet bank, it may put downward pressure on all internet savings account rates. Here's how the Orange Savings account APY has fallen since February 2011:

  • 0.75% 10/10/2012
  • 0.80% 01/06/2012
  • 0.85% 12/03/2011
  • 0.90% 10/21/2011
  • 1.00% 02/24/2011

In addition to the savings and checking account rates, ING DIRECT CD rates were also cut, and these cuts were larger. All rates fell by 10 basis points. ING DIRECT CD rates were already low before these cuts. Now they're just ridiculously low. For example, the 24-month CD rate is only 0.40%, and the 5-year CD rate is only 0.90%.

Coincidentally, it was almost one year ago when I asked how low can CD rates go. At that time, ING DIRECT's 2-year and 5-year CD yields were 0.60% and 1.10%. They still have the same language on their CD page in which they say "guarantee yourself a high yield" and "High Interest - Safe place to grow a nest egg". If you want to double your money with a 0.90% rate (the current 5-year CD rate), it will take 78 years.

It's possible that ING DIRECT's merger into Capital One may be having some influence on the rates. On November 1st, ING DIRECT and Capital One, N.A. will legally become one bank. Last month I described how this will affect FDIC coverage for customers who have accounts at both banks.

Rate Cuts at Other Banks

For some reason, we are seeing an uptick of rate cuts this week. The latest one is at UFB Direct. Its money market account APY fell from 1.10% to 1.05%. The 1.10% APY had been the highest rate for a non-promo account that's available to new customers. The 1.05% APY remains the highest rate, but it's shared with 5 other internet banks which also offer 1.05% APY on a savings or money market account.

There have also been CD rate cuts at other banks. CIT Bank reduced its 5-year CD rates by 5 basis points. Its Jumbo CD APY is now 1.85%, and its standard CD APY is 1.80%. The highest 5-year CD that's nationally available at a bank is now 1.86% APY at State Bank of India NY. I still think CIT Bank is a better deal since CDs can be opened online.


  Tags: ING DIRECT, savings account, checking account, CD rates

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Comments
10 Comments.
Comment #1 by Anonymous posted on
Anonymous
And here we go!........... Capital One starts the decline of ING. Keep your hands on your money, Cap wants it.

6
Comment #2 by Anonymous posted on
Anonymous
forgot to add.... I just transfered most of my ING funds to Ally. Ally is paying .95% where ING is paying .80%. I will just keep ING for their IPhone app to deposit checks (I get several per month as I am a landlord).

2
Comment #3 by Anonymous posted on
Anonymous
Uh...my prediction:  Ally will be cutting rates by the end of the month.  Just a hunch...

1
Comment #4 by Interested Party (anonymous) posted on
Interested Party
Unfortunately, this must be the new normal. No more holding out hope for rates to move upwards in the next 5-7 yrs. This is truly unfortunate...

Interested Party

 

5
Comment #8 by Anonymous posted on
Anonymous
#4.......Actually it's only unfortunate for people who are depending on higher interest rates. It's not unfortunate for me personally, nor is it unfortunate for stock market investors, mREIT investors, mortgage refinancers, people buying new cars, etc etc. 

#6.....Really? That's your expert analysis?

3
Comment #5 by Anonymous posted on
Anonymous
I believe you are absolutely right.  Unfortunately, by that time most people will have burned through their savings to live on and will have little to earn higher interests on!

5
Comment #6 by Anonymous posted on
Anonymous
My interest rate prediction is that Bernanke is a crook and just wants to benefit his banker friends and decrease the value of money

4
Comment #7 by Anonymous posted on
Anonymous
The rates will go up when we run out of money.

4
Comment #9 by Anonymous posted on
Anonymous
Anonymous - #6, Calling Bernanke names is pointless. Monetary policy alone is not going to get the economy moving. A lot of people simply don't have the confidence to go out and make the long term financial commitments necessary to stimulsate economic growth. So, until the current infighting in Washington stops, I don't see a lot of great economic news on the horizon. What this country needs is some cooperation among its elected officials.

7
Comment #10 by Richard Garton (anonymous) posted on
Richard Garton
The 2nd time banks tend to be largely intended to present an opportunity to people who have a poor credit history. Yet, they may be certainly not completely free of price. People that utilize the 2nd chance financial institutions in many cases are needed to pay a greater charge, when compared to standard banking institutions. The reason being the associated accounts tend to be considerably at a higher risk. Customers may nonetheless, should pay the entire amount both on the opening of the account or even via little percentages at each exchange, with regards to the bank.

1