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ING Direct Rate Hike – 2.80% (still not gonna cut it!)

Looks like ING [3] has probably lost a whole bunch of customers so they are trying to keep what they have left by upping money market account rates to 2.80%. As MM at PFBlog pointed out [4], there are four banks offering over 3.0% so this move may not result in any changes in people’s decision making. I recently opened an Emigrant Direct account because of their generous 3.25% rate and haven’t looked back yet. And with the Fed also expected to raise rates by a quarter point today, this increase by ING isn’t as significant as it sounds.

But would you move your money from a 2.80% account to a 3.25% account? If you had $10,000 in there the difference is only around $45. If you had $1,000 then we’re only talking $4.50 in interest when Emigrant Direct’s [5] account opening process still has some kinks. So this stop-loss move may be successful on some level.

From my perspective, ING has to be willing to match Emigrant Direct and stop these shenanigans. With electronic banking, moving funds after the account has been opened is simple, safe, and fast. ING is just showing weakness by trying to stop people from leaving instead of increasing rates beyond Emigrant in order to gain new customers. ING doesn’t have brick and mortar banks… its rates should be better than Emigrant’s! (at least ING still has their $25 referral bonus [6])