Banking/Savings Section

ING Direct Play A Cynical Marketing Trick - Go With The Nationwide Instead

December 2005

It only took a few years to happen but it was most probably part of ING Direct business model right from the start. Yes, the cynical, tried and tested marketing trick which works in 3 easy stages -

1. Launch a new savings account with a headline grabbing interest rate
2. Attract loads of money and then once enough money has been attracted.........
3. Slash the rate knowing full well that only a small percentage of money will actually leave, client inertia is the best friend of any bank or financial institution

Let's Give ING Some Credit Though

They did start a min-revolution in the savings market offering a nice simple online product with a great interest rate. Perhaps the reason that they're starting to cut rates is because they can. Their original business plan had a target of 1 million customers by 2006 but its already hit this level. And as we said in the beginning, when you've got the money and start making the interest rate less attractive, only a small percentage will actually take their money elsewhere.

Which Savings Accounts To Move To & Should You Actually Move?

• One of the ways to answer this question is to first see how much money you've got invested
• If it's less that £1000 then each drop of 0.5% in the interest rate is only going to be worth £5 (gross)
• In a situation like this it's most probably a wise decision to keep banking with ING especially as their software and overall service is still pretty good
• But with savings of over £1,000-£2,000 then it may well be worth moving especially if you've got more than £10,000 deposited
• See the table below for the best current rates

The other important factor to consider is that as interest rates on many if not all of the best buy savings accounts are always changing, are you the sort of person who's happy to keep moving their money around, say at least 1-2 times a year. If not, then our advice is to go with a bank that has a history of paying good rates and not playing games with its clients.

We've always been impressed with the Nationwide Building Society and have money with them paying a solid 4.75%.

Summary

The real crime with savings rates is not whether your bank drops the rate from 4.75% to 4.5%, rather it's the massive amounts of savings deposited in accounts that still pay less than 3%. In fact many accounts still pay less than 1%! If your money is languishing at less than 3% then spend 15 mins opening one of the accounts listed above or with a high street operator such as the Nationwide which pays 4.75%.

See Also

• The Nationwide
• Cahoot Bonus Savings Account
• ING Direct
• Find's List of Saving Account Links