ING tightens its savings belt another notch

ING Direct customers have been left wondering whether to carry on clinging to the bank's iconic orange and white lifebelt after it announced a second savings rate cut inside five months.

From 1 January, the rate will fall from 4.65 per cent gross to 4.41 per cent, the bank said last week. This change to the no-notice, no-strings account will come into effect only five months after the last reduction. Back in August, ING Direct's gross rate fell from 4.89 per cent to 4.65 per cent.

That cut was announced some weeks ahead of the Bank of England's decision in August to cut the base rate from 4.75 per cent to 4.5 per cent.

ING Direct's latest reduction comes despite the base rate having remained on hold at 4.5 per cent since then.

A company spokesman says "less favourable investment conditions" are to blame.

And he adds: "Some competitors are dealing with this in a different way - by imposing withdrawal penalties and by offering new customers table-topping rates while leaving their existing customers on lower ones."

Rachel Thrussell from the financial analyst Moneyfacts is among those who defend the provider. She stresses that, while customers may be disappointed, ING's second reduction matches those that many of its competitors have already undertaken this year. "Only it's doing it at a much later date."

But Susan Hannums from independent financial adviser Chase de Vere is less convinced. "This rate drop puts ING Direct on the cusp in terms of competitiveness," she says.

"If it drops its rates any further, I would advise savers to look elsewhere."

The most competitive higher-paying accounts - with no strings or catches - tend to be either internet-only or, outside cyberspace, to require a high minimum balance .

Newcastle building society, for example, pays 4.9 per cent on balances of just £1 on its internet-only NetSavings Issue 4.

Anglo-Irish Bank's Easy Access deposit account pays 4.8 per cent but savers need to invest a minimum of £500.

Higher rates are available on rival savings accounts elsewhere, but these invariably last only for a limited period.

"Other providers offer rates that include an introductory bonus, which then drops away," says Ms Hannums.

"If you go for [higher interest] in this type of account, you have to be happy to swap and change accounts when the bonus comes to an end."

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Sales Assistant / Buyer

    £15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

    Recruitment Genius: Customer Service Advisor

    £15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

    Recruitment Genius: Compliance Manager

    £40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

    Day In a Page

    The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

    Gaping hole at the heart of the European Union

    Treatment of Greece has shown up a lack of genuine legitimacy
    Number of young homeless in Britain 'more than three times the official figures'

    'Everything changed when I went to the hostel'

    Number of young homeless people in Britain is 'more than three times the official figures'
    Compton Cricket Club

    Compton Cricket Club

    Portraits of LA cricketers from notorious suburb to be displayed in London
    London now the global money-laundering centre for the drug trade, says crime expert

    Wlecome to London, drug money-laundering centre for the world

    'Mexico is its heart and London is its head'
    The Buddhist temple minutes from Centre Court that helps a winner keep on winning

    The Buddhist temple minutes from Centre Court

    It helps a winner keep on winning
    Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

    Is this the future of flying?

    Battery-powered planes made of plastic, and without flight decks
    Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

    Isis are barbarians

    but the Caliphate is an ancient Muslim ideal
    The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

    Curse of Brink's Mat strikes again

    Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
    Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

    'The ministers talk to us about miracles'

    Why Greeks are cynical ahead of the bailout referendum
    Call of the wild: How science is learning to decode the way animals communicate

    Call of the wild

    How science is learning to decode the way animals communicate
    Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

    'The economic collapse has happened. What is at risk now is democracy...'

    If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
    The science of swearing: What lies behind the use of four-letter words?

    The science of swearing

    What lies behind the use of four-letter words?
    The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

    The Real Stories of Migrant Britain

    Clive fled from Zimbabwe - now it won’t have him back
    Africa on the menu: Three foodie friends want to popularise dishes from the continent

    Africa on the menu

    Three foodie friends want to popularise dishes from the hot new continent
    Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

    Who will fill Donna Karan's boots?

    The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'