ING Direct Gross Bonus calculation

jamesg99

I'm looking at getting an ING Direct savings account. It currently pays 5.0% AER which includes a 2.17% gross bonus fixed for 12 months.

I assume this means I get 2.83% (which is paid monthly, I think), and then 2.17% at the end of the 12 months.

Does anyone know how the bonus is calculated? Say I took some of the money out after 6 months. At the end of the 12 months, would I have been getting 5% interest on that money for the time it was in the account?

Milarky

No. The standard rate (ex bonus) is 2.72% gross and 2.17% for the bonus.

Add them together and you get '4.89% gross'

But '4.89% gross' is actually '5.00 AER' because interest (at 1/12th of the gross rate per month is paid onto the account on the last day of each month)

i.e. (1.004075) x (1.004075) x (1.004075) x (1.004075) x (1.004075) x (1.004075) x (1.004075) x (1.004075) x (1.004075) x (1.004075) x (1.004075) x (1.004075) = 1.05

As an aside, whilst '2.72% gross' is '2.75 AER' - '2.17% gross' is only '2.19 AER'

Yet

'1.0275' x '1.0219' = '1.0500' (or '5%' in other words)

YorkshireBoy

You earn, and receive, the bonus as you go.

You'll earn interest monthly at the rate of 4.89% gross p.a. which is made up of 2.72% underlying and 2.17% bonus.

If left in the account for a year, the 4.89% gross p.a. will compound up to 5% AER.

See here: http://www.ingdirect.co.uk/savings/our_savings/about_our_savings/dsa_rates.asp

Milarky

(Sorry for going OT)

But, since '5%' is only possible if 0.4075% interest is paid each month, it is apparent from the calculation that ING must intend to pay both standard and bonus interest together throughout the year

tommyjoeybirchie

I opened this account when the rate was 5% AER with the 2.17% fixed bonus and now when I try to check my rate online its telling me its 3% with a 1.5% fixed part. How can the fixed portion have changed? And I also have a reward interest credit on my account of £8 which is then adjusted and taken off! What's going on?!

oldfella

thats todays standard rate - you should be getting 1.5% + 2.17%. If you are not, then call them.

G_M

The 'reward' was something offered to certain existing customers between 2 particular dates. They erroneously gave it to accounts which did not meet the criteria, so then removed it - or so they told me!
I believe the 3% with 1.5% fixed is what they are offering new customers. If you opened the account with a 2.17% fixed bonus, you should be getting 1.5% (current base variablke rate) + 2.17% bonus. If in doubt, call them!

tommyjoeybirchie

yeah finally got through to them. the reward was a glitch in the system and i am on 1.5% variable with the 2.17% bonus. thanks guys