Monday, May 14, 2007

The end of an era

I'm in the process of transfering to a new high-interest savings account.

Netherlands-based ING Direct deserves credit for literally starting the high-interest savings account movement in Canada. When they set up shop a decade ago, Canadians really weren't very well-served by the Canadian banking oligarchy. Banks, to my teenaged eyes, were basically places where you could go to borrow money, or keep your hard-earned cash safe against things like theft and fire. But looking at my monthly statements every month (where the service charges for accessing the money outnumbered the interest payment I got at the end of the month) banks certainly didn't seem like a particularly useful tool to build wealth with.

For introducing the breakthrough concept that a bank should pay you somewhat-significant monthly sums for the privilege of holding your money, ING deserves accolades. Because in the 10 years since then, a host of other players have crowded into the market -- most notably, even the Big Five. (Although their offerings fall predictably short of the mark, in my opinion.) Won over by their no-nonsense, generic Scandinavian pitchman, I've kept whatever savings I could accumulate over the years in an ING account.

So I'm generally well disposed towards ING for getting the savings ball rolling -- the orange savings ball, as it were. But it really needs to be said: ING seems to be getting a little complacent, and away from what they do best -- offering a simple way to save with a great savings rate. All of the players, ING included, try to distract consumers with a bunch of flashy bells and whistles like same-day transfers, points, and temporarily-inflated rates to lure you in. But all these things distract from the central issue: which interest rate gives you the opportunity to grow your money the quickest. And maybe it's because they seem to spend more than the other players on marketing, but ING has simply fallen behind when it comes to offering the best savings rate.

Even a cursory look at the posted rates shows ING is lagging behind. I can count no fewer than a half-dozen no-fee places to park my money that have a better rate than ING's current 3.5% and are just as easy to access and transfer money online. That's why I'm saying sayonara to ING and moving over to PC Financial. Loblaws is my primary grocery store, so I'm seriously considering moving over my everyday chequing account and accumulating PC points while I'm at it.

Rest assured, if ING wakes up in the near future and offers me a rate better than the 4% PC Financial has offered, I'll welcome them back with open arms. But until then, I'm ignoring the smoke and mirrors. Banks have zero loyalty to me, so I don't really see why I should have any to them. It's one of the joys of living in a capitalist system.

Lenders can try to confuse me with semantics all they want. At the end of the day, it comes down to simple arithmetic: 4 > 3.5.

2 comments:

Mr. Cheap said...

I sense that you feel a little bit bad about leaving ING Direct which is exactly how I felt when I also moved to PC Financial.

Like yourself, I thought that ING had done a great job providing a new option to Canadians and I love them for it. At the end of the day, I've got to be loyal to my wallet and it felt like I was creeping off to visit a mistress the first few transactions I had with PC Financial.

Now I'm being horribly neglectful of poor loyal ING direct. When the GIC I have there comes due at the end of the month, I'm going to pull out the rest of my cash and leave it empty (until they up their rates :-))

GIV said...

I'm vertainly not closing my ING account. I suspect ING will up their rates as soon as they start losing enough capital. I think we're definitely on the same page.

If I'm feeling charitable, I may even write ING a letter, explaining while I'm very happy with the service and thanking them for getting the ball rolling, until they offer competitive rates they won't be seeing my money...

Maybe I'll just link to this post. :)