So 2008 has come to a close. I decided to log on to my ING Direct account to see what my year-end savings were and to check out how much interest we made in 2008. What do I see? ING has lowered their rates! The new rate is now 2.5% APY, down from 2.75% APY.
This is in large part due to the Federal Reserve lowering their rate recently.
So what to do?
I could search around other banks and see if I can find a better rate. I’m sure there are some out there. But I don’t want to chase rates every time they change. Truth is, I’m very happy with ING Direct. I’ve been a customer since 2004 when they were one of the few online “high yield” savings banks. Their customer service is great. I’ve called them a number of times and always got a representative who was friendly, helpful and informative. That’s a big deal to me! I also have my savings linked to pay some of my bills out of so if I changed accounts I would have change my bill/pay as well.
That’s not to say I wouldn’t change to another bank in the future. But to change my banking for some tenths of a percentage point isn’t worth it to me.
I wish there was some way it could be made more favorable to keep money in savings though. Interest savings rates are tied to Fed rates. The Fed lowers rates to encourage lending and spending. But for consumers now might not be the best time to use you funds to spend. We should be encouraged to save as well.
Maybe the government should not tax savings accounts? That might help to encourage consumer saving.
Still, it’s much better than what most brick and mortar banks offer as far as interest!
What do you think? You do have a high yield savings account, don’t you?
{ 8 comments… read them below or add one }
Ugh… I have an ING direct savings account and a GMAC direct savings account. GMAC just lowered their rate from 3.75 to 3.25…That 3.75 was the only reason I had a savings account in addition to ING.
@ Sara – I know! But it’s still better rates than the brick and mortar banks.
My husband and I started using ING for our emergency savings this year and love it.
In Canada the government has made a tax free option available starting now. You can hold the money in savings accounts, mutual funds, RRSP…it’s pretty flexible.
There’s a limit of $5000.00 per year that you can put in and not be taxed on the interest you earn. We’ve moved the bulk of our savings into these tax free accounts – one for me and one for my husband which means we can earn interest on $10 000.00 per year tax free.
ING started offering these accounts in fall 2008 even though they didn’t come into effect until 2009. ING had a great offer to pay back the tax we would have been charged as an incentive to start an account.
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@ Amy – That sounds awesome! We need that here in the states. 10K really isn’t that much but it does make for some nice emergency savings which is what many people need an incentive to save for!
I just got an email today saying that HSBC is lowering their interest rates again. I was really disappointed but agree that it is much better than brick and mortar. They are lowering it to 2.60% which sucks. But what can we do….I hope it doesn’t go down much more.
@ Melissa – Not that I’m trying to jinx anything but I remember years back ING going under 2% for a bit.
I also wish there were more incentives for saving. Perhaps if they didn’t tax interest as mentioned, more would save thus creating a better supported economy that encourages spending. imo
@ Jarod – I agree. We’ll see what happens with the new administration.