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ING Increases Interest Rate to Meaningless 3.3%

Everyone’s talking about it: ING [3] raises its interest rate to 3.3% to correspond with the recent increase of the federal funds rate by the Fed… but does it really matter? If you keep up to date on the rates (and bother with the hassle of moving funds to the highest rate), your money is probably with Presidential (3.87%) or Emigrant-Direct [4] (3.5%) – so this rate hike doesn’t really matter to you. If you know about the rates but don’t particular care about the <1% difference, (87 cents on $100, but less after taxes) this rate hike still probably doesn’t matter to you because if you did care about rates, you’d be at Presidential/Emigrant…

ING has to increase the rate to 4%+ in order to get new customers because this is all that happens when they up the rate to 3.3%:

  1. Customers at a higher rate bank keep their funds there.
  2. Customers who read about this on blogs will invariably learn that Emigrant is 3.5% and Presidential is 3.87%, so if they’re going to plunge into an online bank they’ll go with one of those two.

The only thing they do is capture the folks who haven’t yet moved cash from ING to another, higher rate, bank. (one thing that I do like about ING is that you can open additional accounts in a matter of seconds online) ING – jack up your rate to 4.10% and you’ll get my emergency fund back (as long as Emigrant doesn’t beat you to it!).

For those of you who want the $25 for being a referral (I get $10), which is probably the only reason to go with ING right now, email me [5].

Now you know how I feel, but what does this rate hike mean to you (and where’s your money now)?