ING Raises Savings Rate to 4.35%. Thinking about making some changes.

They're still lagging the other major internet savings banks, Emigrant, Virtual Bank and Citi e-Savings.  But it is an increase.  I'm thinking about dumping some of my savings into a CD.  I have a lot of cash because I am saving for both a wedding and a down payment.  The wedding in early 2008, and the house probably sometime around then, perhaps shortly after.  Either way, it is too short a period to take stock market risk (have you seen the stock market lately?). 

I have found 6 month or 1 years CDs around 5.25-5.50%.  I wonder about the direction of short term rates over the next six month, however.  If you opened a 12 month CD a year ago, you would probably have gotten a rate of less than 4%.  It was higher than savings rates at the time, but now lags.  Will the same thing happen going forward?  I suspect that 12 months is too long, especially because the difference in rates is not more than a quarter point.  ING's six month CD pays 4.75%.  E*Trade Bank's six month CD pays 5.46%, Virtual Bank offers a six month CD at 5.40% and Citibank offers an impressive 5.50% APY on their six month CD.

I think it's time to move some money.

Comments

[financial freedumb]

Thanks for the reminder...time to move more money out of ING to HSBC...:)

I'm going to wait it out a couple of weeks before locking in a CD...Seems like the banks up their rates on CDs a couple weeks after their savings rates...I dunno, could just be inaccurate observation though.

[lamoneyguy]

I was thinking the same thing about the CDs. With the latest Fed increase only a day old, we may see rates move up a bit over the next couple of weeks. How about a 5.75% CD? We may see it soon.

[Bronco]

Rates certainly seem to be on the uptick-- I wouldn't lock in more than 6 months in a CD.

[Bronco]

LA MoneyGuy, on a related issue, what are your thoughts on buying short term treasuries, ie 3 or 6 months?

[lamoneyguy]

At this time, little difference from CDs. six month T-Bills yielding 5.23%. Don't have to deal with bank penalties, or accidentally rolling it over at the bank. In the end, they're pretty close to the same thing.

[Tom]

I'd probably just stick with GMAC's money market. They seem to keep up with all the other banks and never lower their rate. It's currently at 4.80%

Tom
gotalkmoney.com

[Medicated Money]

I would agree with the crowd and with the current changes in the rates going north, I would not be in anything longer then 6 months. What are your feelings of a CD ladder? I was thinking of looking in to it, but will probably just leave it at Emigrant Direct for another month or two.

-Medicated

[Chris]

some good info, I use Fidelity's Money Market Fund right now at 4.7%, but it goes up every few days

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