ING Direct Lowered Interest Rates
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Got an email from ING Direct this morning with their new interest rates less than 24 hours after the Fed cut its benchmark interest rate. The ING Orange Savings account used to pay 4.50% APY. The new rate, effective September 19, 2007, is 4.30% APY. Meanwhile, yields for their Electric Orange checking accounts are also lowered:
- $0-49,999.99 earns a 3.50% APY
- $50,000.00-$99,999.99 earns a 4.90% APY
- $100,000.00 or more earns a 5.00% APY
It probably won’t be long before we see other online banks drop their savings rates to reflect the changes. When rates were going up, it could take banks weeks or even months before they made the change, if at all. Apparently, they won’t waste much time to reduce the rates.
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Trackbacks & Pingbacks
- Pingback by Top High-Yield Savings Accounts: Interest Rates And Some Thoughts on September 21, 2007 @ 7:45 am
- Pingback by Investing » ING Direct Lowered Interest Rates on September 21, 2007 @ 5:00 pm
- Pingback by HSBC Dropped Rate for Online Savings Account | The Sun’s Financial Diary | A Personal Finance Blog on Saving and Investing on September 26, 2007 @ 3:08 pm
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The drop appears illogical. The Feds drop the rate for the banks to borrow. This should boost the rate they offer for savings since their profit margin has increased. The banks are in the business of making money not teaching or following economic theory.
sl: What I think is that when we deposit money in the bank, we are lending them the money at the interest rate they pay us. If they can borrow the money at 4.75% from the Fed, there’s no reason for them to pay us 5.30% theoretically. So as the Fed funds rate is lowered, the banks could lower the interest rates they pay us as
well, though may not at the same scale.