ING Direct Lowered Interest Rates

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 of  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.

Update: Check out the latest online savings and checking account interest rates from major online banks for the best deal available.

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5 Responses to “ING Direct Lowered Interest Rates”

  1. sl |  Sep 23, 2007 at 8:51 am

    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.

  2. Sun |  Sep 25, 2007 at 9:51 pm

    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.