ING Direct GIC rates
Posted in Commentary on June 10th, 2009 by Sacha PeterFor some strange reason, ING Direct is offering a 1-year GIC, if held in an RRSP only, with an interest rate of 3%.
3% is a significantly better-than-market interest rate (which would be around 2% or so – anything else is a promotional rate).
I don’t know why they don’t offer it for other accounts (e.g. TFSA) as it would be a good vehicle to store risk-free cash at this time, but if you’ve got some RSP money with ING (that you wouldn’t otherwise earmark for anything more risky), might as well put it in the 3% GIC instead. Their short-term rate on cash is currently 1.35%.
I do not project future 1-year GICs being offered at anything higher than 3% for the next year.
Gone now – down to 1.25%. A mistake perhaps?
They changed it back on June 13th. There’s got to be no other reason. I didn’t read any promotions on it at all. Anybody vigilant enough to seeing it should have pounced on it with all of their risk-free money since there’s no way you can beat that guaranteed return right now.
I have no idea how they set the rate. Who would sign up for short term GIC or 1 year GIC when their rate are less than the rate at ISA which can be withdrawn at anytime?
Re: David’s question
I assume it means ING believes that sometime in the next year rates will drop below the current 1 year rate. How do the offerings from other banks compare?
David,
You would sign up for a 1-year GIC that is less than the ISA rate if you were to believe that the ISA rate would decline.
I wouldn’t bet on it – Bank of Canada short term rates are as low as they can possibly go, and if ING reduces their rate they will cannibalize even more of their customer deposits as they scramble to get it out of cash and into more productive assets (e.g. mortgages).
Hi Dave,
If you’re investing for a Small Business account in Montreal in a financial institution…well I suggest emailing []. They will search it for you for an investment of 100K or more.
Good luck with ING ;)