ING Direct plays catch up in high yield

ING Direct has increased their at call interest rate by 85 basis points to 7 per cent for the period from 17 September to 31 December, with some conditions applying.

New customers will receive the full 7 per cent, but existing customers will receive only the special promotional rate on funds above the account balance on 28 August, with earlier funds attracting the current variable of 6.15 per cent.

Lisa Claes, executive director direct sales and operations at ING Direct, said the recent increase in competition had made a big impact on growth.

"We were in a very small pool when we launched a few years ago, but due to increased competition, we can't enjoy the same level of growth. We are still opening a significant amount of accounts though.

"The online savings market is an incredibly competitive market and we want to remain competitive, it's as simple as that.

"It's a campaign, and sure, we want to remind customers we are still around and in the end it's the customer who benefits. We want to grow our funds on deposit."

ING Direct increased the variable interest rate by 15 points in mid August following the RBA's quarter of a per cent rise in the cash rate. Claes added interest rate return decisions are not based just on the cash rate, but also the competition, the bank's internal and external investment strategy and other financial circumstances.