In its early years ING Direct was a pioneer in the high-interest savings accounts space offering an interest rate that was far and away better than any of the banks. But for many years now, the best rates can be obtained not at ING Direct but at one of its new competitors.
Take high-interest savings accounts, for instance. ING Direct offers an interest rate of 1.35 percent on savings and RRSP accounts and 1.40 percent on TFSA accounts. But Ally, a competitor with CDIC coverage, offers a significantly better 1.80 percent on savings accounts. Peoples Trust, a small financial institution with no online access, offers 1.9 percent on savings accounts and a significantly better 3.0 percent on TFSA accounts. In fact, ING Direct’s interest rate on savings accounts is now so average that Canadians with discount broker accounts can get a comparable rate with high-interest savings accounts that are sold like mutual funds.
In an earlier post, I compared GIC rates available from ING Direct and Ally and found that Ally offers higher rates across every maturity and it remains true even today. Ally also offers a better rate for cashing out early compared to ING Direct. A quick check at TD Waterhouse shows that investors who can put up a higher initial investment of $5,000 can an interest rate that is 0.35 percent better for non-redeemable GICs at the discount broker.
This pattern can be observed in other products offered by ING Direct as well. Its THRiVE no-fee chequing account appears to be comparable to the competition. The Home Equity Line of Credit from ING Direct has an interest rate of 3.65 percent which even Royal Bank is able to beat with an interest rate of 3.5 percent.
While ING Direct may not offer the best rates anymore, it remains a leader in an important way. It offers a whole range of banking products in one place with better rates and lower fees than the big banks. The convenience factor of all accounts in one place is perhaps the reason why ING Direct, despite the competition, continues to remain very popular among cost conscious Canadians.