Annual Percent Yield of ING DIRECT Offer Compared to Emigrant Direct Offer
I just got an offer in the mail today from ING DIRECT. If I open a new account with them they will give me $25. The APR they list is 4.35%, but it says that was current as of 6/30/2006, and my Emigrant Direct rate is 5.15%. On checking they haven't increased their rate since the offer.
Does this pay? How do you compare these? Use the APY! This is the standard for comparing these scenarios. We are missing two pieces of data, the length of time we are looking depositing the money and the amount we are investing.
Here are some comparisons.
If we deposit $100 for 1 year:
|
|
Ending Balance |
APY |
|
IngDirect |
$130.44 |
30.34% |
|
Emigrant Direct |
$105.15 |
5.15% |
If we deposit $1000 for 1 year:
|
|
Ending Balance |
APY |
|
IngDirect |
$1069.59 |
6.96% |
|
Emigrant Direct |
$1051.50 |
5.15% |
If we deposit $10000 for 1 year:
|
|
Ending Balance |
APY |
|
IngDirect |
$10461.09 |
4.61% |
|
Emigrant Direct |
$10515.00 |
5.15% |
If we shorten the time to a month (the IngDirect minimum for withdrawing this money):
If we deposit $100 for 1 month:
|
|
Ending Balance |
APY |
|
IngDirect |
$125.45 |
25.45% |
|
Emigrant Direct |
$100.43 |
5.15% |
If we deposit $1000 for 1 month:
|
|
Ending Balance |
APY |
|
IngDirect |
$1028.72 |
40.46% |
|
Emigrant Direct |
$1004.29 |
5.15% |
So, as you might have guessed for short periods of time or small initial deposits the ING deal beats the Emigrant deal. So, I plan on depositing a few bucks for about a month and then closing the account.
You might also note that an easy shortcut is that a larger interest rate, given enough time always wins. Really, the only reason to do the math is to find out if the larger rate wins in time to be used for your goal!