I have been a loyal ING Direct customer for many years. I am an early adopter of many things such as: Internet only banking (ING), home VoIP (Vonage), and online restaurant reservations (OpenTable). So I really enjoyed it when ING Direct started advertising and were written up in the book Mavericks at Work.

I felt pretty good about the fact that the national average for interest bearing accounts was about 0.53% and I was getting a whole 4.40%. I felt good about it until yesterday when I learned that ING Direct is really on the low end of high yield savings accounts. Here’s a short list of other options (unless otherwise noted these have no minimum balance requirements.)

Now, compare this against the 4.40% interest offered by ING Direct and I feel less than excited. In fact, I’m strongly considering switching my business from ING to Emigrant, something most customers are said to “never do”. According to a NYTimes article earlier this year, savings account customers are less volatile than credit card customers.

Unlike credit card users, who freely hop from one product to the next to get a better rate, savings account holders tend to be more loyal, Mr. Newman said. Thus, he said, HSBC Direct does not feel compelled to offer the very highest yield.

It seems ING Direct feels the same way and is now (5 months later) does not even make the top 5 of high yield savings accounts. In fact, when you google for those words, the ING Direct website does not make the first 10 pages of search! (I didn’t try to go deeper) Instead the competitors do: Comerica, Citibank, Emigrant Direct, Bank of America, GMAC Bank, E-Loan, MetLife Bank, Capital One, Ameriprise Financial, and the AmEx One card.

According to a BusinessWeek article on Where to Stash Your Cash:

Thanks to the Federal Reserve, cash holdings are attractive again. Since June 2004, the Federal Open Market Committee (FOMC) has gradually raised the fed funds rate (what banks charge each other for overnight loans) from 1% to 5%, causing rates on money funds to edge up also. Considering the recent tough talk on inflation by Fed members, interest rates could head even higher.

It’s a good article that goes on about online banking:

When picking a short-term cash repository, experts say you should consider both yield and convenience. It’s fairly easy to determine the current yield champs. Online services post rankings of the top-yielding bank money-market accounts and savings accounts (Bankrate.com) and money-market funds (iMoneyNet.com) each week. At the top of the rankings, banks and funds generally offer comparable yields. “They are neck and neck with each other,” says Greg McBride, senior financial analyst at Bankrate.com.

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