Now I hope you guys paid attention in Macroeconomics 101. Remember the Federal Reserve has a responsibility to fight recessions. One of the techniques used is to lower the interest rate. This makes it cheaper for consumers to borrow money to buy stuff (thus increasing demand) and for business to make investments. Both of these effects create jobs and add to economic growth.

All is fine and dandy except for bondholders and people who have savings accounts! This growth strategy has taken money out of our pockets. It was only two years ago when rates were 4.5%. Rates have fallen to 1.3%! We won’t know what inflation for this year is until 2010 but I wouldn’t be surprised if it is quite close. This is especially true if there is a spike in gasoline prices.
So if you don’t have an account already, should you sign up? Even though there is a chance that the rate is below inflation (and thus still technically burning up), ING direct orange savings still pays a great deal more than typical money markets and bank accounts. I have a Bank of America. I think I’m getting like .1% or something ridiculous like that. I mean honestly what are they thinking, offering such a nominally low rates? Many of their customers are wasting money by keeping their money in such an account.

O the cost of laziness…

The most popular one is ING Direct, which was is part of the Dutch financial-services conglomerate ING. Those concerned with the financial crisis can be at ease; ING is vital to the Dutch economy and the Dutch government has injected over $13 billion into it. In addition, all ING direct savings account are FDIC insured.

ING Direct is no new comer to this game. They actually pioneered the market and introduced their orange savings account in late 2000. They now have over five million customers. ING has been so successful that they are being copied by competitors like Citi and HSBC.

Many of these newcomers are offering higher rates than ING. But there are several reasons why one should not just go with the bank with the highest rate.

• Many of these competitors are merely offering “teaser” rates. Once they obtain enough deposits they will bring down their rates significantly.
• Many banks have high five-figure minimums for account size. ING has no minimum.
• ING has no fees. Others might.
• Signing up takes 5 minutes with an ING orange savings account. Not all newcomers have perfected their system and their signup processes are sometimes tedious.
• Likewise with user interface. ING has been in the game for awhile and their orange savings account are very easy to use. It’s a mixed bag with the other banks
• Cash is available in a few business days with ING. All you have to do is initiate a transfer. Other banks are not as quick.

If you are looking to boost the return you get on your cash savings (every little bit helps in this kind of an economy), you should serious consider an orange savings account. I actually referred my Mother. The only type of person that should not is if you need constant contact with a bank customer representative.