The war about saving rates is certainly getting hotter every day. Two weeks ago, I reported ING Direct is raising the APY of its saving account to 2.20%, outbeating the next competitor VirtualBank by 0.05%. Since then, VirtualBank fought back by raising APY to 2.21%, outbeating ING Direct by the slightest margin. ING Direct responded by moving its saving rate higher today to 2.25%.
Again, as I explained in the last post, if you are already a VirtualBank customer, you don't need to bother moving money now -- your interest loss during the moving will outpace the minimal gain on interest rate difference.
This war about saving rate will soon become costly. Think about ING Direct, which has total asset of $30 billion based on this September 2004 story from Business 2.0. Even though saving accounts may only amount to $10 billion, a 0.05% APY increase will still cost the bank a full $5 million a year. But without doubt, as Fed is pushing up Fed rate 25 basis points every few weeks, we can only start to see more banks participating in this chase for the top spot in best saving rates list. Happy saving!
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[2/28/05 Update: Both VirtualBank and ING Direct have raised the APY to 2.60%]
(This post is part of PFBlog Product Review series. Check out more reviews here.)