This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Banks Raise Interest Rates, Savers Give Up Hope

This week, several banks raised interest rates for diligent savers taking advantage of so-called high-yield savings accounts. American Express Bank, a cousin of a credit card company you've probably heard of that reorganized as a bank holding company to better position itself for government protection and balance sheet building, raised its interest rate. Ally Bank, the result of GMAC's well-funded rebranding campaign, following government intervention in the bank's parent company, also raised its interest rates.

Banks have a balancing act today. Many banks, particularly those that are subsidiaries or corporate cousins of credit card companies, want to carry more cash on hand to meet newer federal regulations and to have something positive to show on their quarterly financial reports. The real business of a bank is to lend money, though, and when banks can borrow from the Federal Reserve at an extremely low cost, there's no incentive to seek deposits from customers other than expanding customer base.

Capital One, the fifth largest credit card issuer in the world, purchased ING Direct to strengthen the acquirer's balance sheet. It was a match made in plastic heaven; ING Direct's parent company was forced to divest its American branches in exchange for a European bailout. Since the acquisition, customers haven't seen much difference yet, but ING Direct employees have more to say on the quality of the transition. Layoffs loom throughout the former ING Direct throughout the United States. This isn't just conjecture. 235 employees are affected in Los Angeles alone.

Cosmetic changes are underway. The bank will lose its classic orange logo and color scheme (inspired by ING Direct's former headquarters on South Orange Street in Wilmington, Delaware), and the ING Direct name will cease to exist sometime next year. It still remains to be seen how customers will take to the rebranding. It's safe to say that among savers and credit card users alike, the ING Direct brand has a more positive connotation than Capital One, but keeping the ING Direct branding did not seem to be an option.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs