Has ING Direct Savings Lost Its Shine?
With all of the rate dropping on savings accounts in general, and specifically for ING Direct, I am starting to wonder if the ING Direct Savings account has lost its appeal compared to other internet savings accounts or even brick and mortar ones. Or is the market now just oversaturated and everyone and their brother already has an ING account?
My evidence for this is that in the past, even a few short months ago, when I posted my ING referral links, they were snapped up in a matter of days, sometimes hours. I quickly ran out of my own referrals, but was asked by readers for referrals so they could get their $25 bonus, so I started soliciting my friends to give me their unused referrals to post on my site. They were snapped up with equal fervor, until about two weeks ago. Suddenly, the referrals stopped being used very often and I stopped getting emails asking me for them.
I do still use my ING Direct account, mostly for the ease of use and the fact that it is still a much higher percentage rate than my primary brick and mortar bank. But I must admit even I, a fervent and dedicated ING user, has pondered the idea of looking for a new home for my emergency fund. I do not consider myself a rate-chaser, but I am starting to get a wee bit frustrated with the steady decline in the interest rate on my savings account.
However, if I had it to do all over again, I would still open the account, because I got a $25 bonus for opening the account with an initial $250 deposit, no strings attached except that I had to wait 30 days to withdraw that $25 bonus, so it was a very good return on my money. But now I think I might be looking for a new savings account possibly. Maybe. I’m not sure if changing banks will really matter in the long term, except that ING does seem consistently lower than many of the other bigger internet banks, so I ponder. I don’t want to be a rate chaser. But I guess I am tempted to chase rates a little.
What’s your take? Are less people opening new accounts because of the lower interest rates? Or is it simply that everyone who surfs the internet already has an ING account and has taken advantage of the $25 bonus? Weigh in with your opinion!
(As a note, I am not in any way, shape, or form compensated for the ING Direct Savings referrals I host for other people. They get the bonus. I just host them so that I always have some available for my readers or any people who find my referral page via a search. I do like ING Direct and their new customer bonus is still awesome and I see it as spreading the free money love.)
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March 24th, 2008 at 4:00 pm
I’m going to stick with ING myself. But I’ve only had one taker for my ING links…of course I just posted them two weeks ago. I should have started this back when rates were high and things didn’t seem like they were crashing. I think people aren’t as excited by that interest anymore. They may also be scared about switching to something that’s not brick-and-mortar right now.
However, I still think people should compare their interest rates with ING’s. Sure 3%ish isn’t fantastic, but mine was at .2%. 3% compared to .2% is amazing.
March 24th, 2008 at 4:10 pm
I’m in the same boat as you. I’m starting to think I need to look into different places to park my money. I love ING and that’s where my savings are going now but I need to keep my eyes peeled for anything better.
As for your referrals - I think ING might have re-set their referral links recently. I noticed on my account my past referrals aren’t there anymore. This could be why a lot of sites have recently posted their referrals which could help explain why people aren’t jumping on yours.
Also, compared with a few years ago, many more banks have online banking now. It used to be that ING was the different one but now they are the leader of sorts and others are trying to catch up.
March 24th, 2008 at 4:10 pm
As the Fed cuts rates, they go down everywhere, so every institution has lower rates right now, compared to recent history.
As for why people aren’t snapping them up, maybe your audience is saturated.
March 24th, 2008 at 4:18 pm
The rates everywhere are tumbling. I think it’s more that people don’t think it’s worth the effort of opening the account when the interest rate is so low.
The $25 bonus is nice, though, so in a low-interest economy it makes more sense to switch now than when the rates were higher.
There may be a bit of saturation decline, too.
I hope you see an increase…
March 24th, 2008 at 4:29 pm
I haven’t opened an ING account yet. I’m waiting until my taxes are done, so I know how much money I will have. I hope the $8000 I have saved up for them is enough to cover them…
March 24th, 2008 at 4:38 pm
Simple: More places offer the same or better rates. Hence, more competition. If there’s more competition, then there will be less people purchasing any one product even if the overall industry increased.
March 24th, 2008 at 4:39 pm
Like Scott said, if the Fed cuts the key interest rates, so does your bank (even online ones).
3% is still much better than 0.25% at a brick/mortar bank.
Also, other online banks might have a *slightly* better rate, but their sites suck (I’m talking to you HSBC Direct).
March 24th, 2008 at 5:04 pm
I have plenty of referral links, so if anyone wants one…lemme know!
I think Mrs. Micah is right–people might be more concerned about the online-only bank. Plus, low rates all-around are a bummer.
March 24th, 2008 at 5:19 pm
As I said in the post, I’m all out of referrals of my own and I’m not compensated for hosting my friends ones, so it doesn’t personally affect me if they aren’t snapped up like before. I just find it interesting and am wondering if it is saturation vs generally not jumping on the ING bandwagon anymore. And I’ll ask my friends for less links at a time so they don’t expire
I am staying put at ING for now, but I am starting to ponder a little.
March 24th, 2008 at 5:58 pm
I think interest rates for savings accounts are falling rapidly at all banks, thanks to the constant interest rate-cutting we’ve been experiencing in the past month or two. I have a checking and several savings accounts with ING, but I also have another checking account at Citibank. With the account I have, if you pay two bills a month with their online bill pay service, the savings account gets a pretty nice interest rate — definitely comparable to what ING is offering now. Of course, it is contingent on the two payments, but I bet other brick and mortar banks are doing this to keep customers… and when interest rates are pretty low everywhere, it doesn’t make much sense for someone to switch to an online account at that point.
March 24th, 2008 at 7:58 pm
I’ll be keeping my account at ING for the subaccounts, it makes life much easier.
HSBC’s website stinks but it’s perfect for an emergency fund as it takes so much work to get the money out.
March 24th, 2008 at 8:28 pm
I haven’t done ING yet, but might just to grab the $25 on $250 deal. That is unbeatable interest and I can use it as a secondary Emergency fund. I have had my main Emergency fund with Emigrant Direct since early 2005 and have been fairly happy with them. I had thought about opening a second savings with WAMU since they were offering 4% and I bank there anyway, but I just saw they dropped the rate down to 3 something.
March 24th, 2008 at 9:58 pm
I’m going to stay with my ING accounts. I feel very comfortable with this bank now, although I was quite leery about internet banking when I first deposited money several years ago.
I know the interest rate is low now,but isn’t that everywhere?
March 24th, 2008 at 10:21 pm
I think right now it’s just saturation, and eventually, your audience will grow to include people who want ING accounts (I hope so at least, seeing as you’re hosting some of my links ;)).
I’ve never been more satisfied with a bank than I have been in with ING, so I’m sticking with them until that changes.
March 24th, 2008 at 11:26 pm
I’ve opened up an account at E*Trade which has a higher interest rate than ING. Instead of taking out the $$$ I have at ING I just deposited $100 at E*Trade to open the account and switched my automated saving deposits too.
When / If I feel comfortable with E*Trade I might move my emergency fund there.
ING’s user interface is so great and easy it almost makes up for the lower interest rate … I said almost
March 25th, 2008 at 1:35 am
I’m sticking with ING. The sub-accounts have been tremendously helpful. I’m certain I have saved more money overall by having sub-accounts and it’s helped with budgeting. Agree with others that it’s oversaturation coupled with new should-savers still frozen in shock from the current economic uncertainty.
March 25th, 2008 at 3:30 am
I don’t think ING is any better or worse than they were; it may that not many people have money left to start accounts at this point or you don’t have new readers at the pace you used to.
FWIW, I’ve not had any takers for ING referrals on my site; I have had a few for Virtual Bank’s $20 bonus, however.
March 25th, 2008 at 9:19 am
I am keeping my ING regardless of what happens because like others have mentioned I love the sub accounts. ING is also easier to use than some of the other online banks I have used.
Plus right now it is my main bank and linked to so many of my accounts that it would be a real hassle to transfer everything over just in the hopes of maybe getting a better rate.
I simply compare ING to my brick and mortar (which I only use to get quarters for laundry and to deposit the odd check or cash someone gives me) and the rate there is point something…far less than ING!
March 25th, 2008 at 10:15 am
I do likey the subaccounts.
March 25th, 2008 at 12:04 pm
I have been thinking of this as well. I keep my emergency fund there and used one of your referrals back in January (Thanks Again!). But it’s been a bit sad to my interest rate drop .40 (3.4 to 3.0) in just the two months. However, based on the comments, it sounds like all rates are dropping so I’ll probably just stay with ING and wait for the day when it climbs again. It beats my hometown bank by a mile.
March 25th, 2008 at 1:22 pm
I understand your frustrations with the recent decline in ING’s APY, but I still view it as one of the best internet banks for savings accounts. If you look at the big picture, not just the past few weeks, their rates have been extremely competitive. The also have one of the most user-friendly interfaces I have seen. But again, I do agree with you. I too, have been tempted to chase rates recently!
March 25th, 2008 at 4:09 pm
I can understand the argument that all of the banks need to cut rates as a result of the Fed cutting rates, it just seems that they do so much more quickly than they raised rates to coincide with previous Fed rate hikes.
March 25th, 2008 at 4:54 pm
I am frustrated with it, too — especially because the rate dropped immediately after I signed up a few months ago, and has already dropped again. But it’s definitely not ING’s fault — the economy is not in good shape right now. Once we get out of this recession or slump or whatever you want to call it, I expect the rate will slowly creep back up. I’ve been really happy with the convenience of my ING account, so I plan to stay unless it drops to something really low like 1.5% when other banks are much higher.
March 26th, 2008 at 8:22 am
The “My Money Blog” site has a “Rate Chase Calculator” that helps you figure out if it’s worth the hassle of chasing a rate..
http://www.mymoneyblog.com/archives/2006/10/the-ultimate-interest-rate-chaser-calculator.html
March 27th, 2008 at 6:38 pm
I think it is both things you mention. Many of your visitors (those reading good personal finance blogs) have taken advantage of ING or something similar. And the advantage of the high yield savings has decreased so it is less appealing (the effort of getting 3% on a few thousand dollars is hardly worth the trouble. Where 6% seemed worth the bother. High yield savings are still the smart move. The only difference is right now that smart move is not as different from the sucker move it was recently.