Rivals put skids under ING

Rivals put skids under ING

More than a million people have piled into ING Direct's heavily advertised savings account since it was launched in 2003. But the arrival of new entrants such as Icelandic bank Landsbanki and the Indian-owned ICICI Bank has left ING's once table-topping offering looking distinctly uncompetitive.

The ING Direct account currently pays 4.65% gross (4.75% AER). By contrast, Landsbanki's Icesave account now pays 5.7% gross while ICICI Bank's HiSAVE account is offering 5.51% gross.

Part of the reason why ING has fallen behind is that it failed to pass on any of November's quarter-point interest rate rise to its savers, and unlike Landsbanki and ICICI, it has yet to respond to the January 11 rate hike. A spokesman said it was considering its position and indicated an announcement is likely in the next few days. ING's 1.1 million savers will be hoping that this time they get the full quarter-point rise. If they don't, they may wish to consider better places to stash their cash.

Our graph shows that when ING Direct's account was launched in May 2003, its rate was almost 0.5% higher than the base rate (ING 4.22% gross, base rate 3.75%). ING's gross rate is now 0.6% lower than the base rate (4.65% against 5.25%).

ING points out that unlike some rivals, it pays all its customers a consistently good rate with no hidden catches. It concedes competitors will sometimes offer higher amounts, but three years down the line, will they still be topping the.....continued below

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tables?

Meanwhile, fixed rate savings accounts are now paying more than 6%. Birmingham Midshires has launched a one-year fixed rate bond paying 6.05%. The minimum balance is just £1. "This is great news for savers who are able to tuck away a fixed amount of savings for one year," says Lisa Taylor at Moneyfacts.co.uk.

· r.jones@guardian.co.uk

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