I happen to live near a busy intersection where all the major Canadian banks have a branch. Last Saturday, ING had students in orange jump suits in front of the Scotiabank branch giving out flyers. I was in too much of a rush to take a flyer and find out what was going on but today I ended up with an ING flyer in my mailbox. ING seems to have upped the stakes in the high interest savings account competition- it is paying anyone who opens a new savings account 4.25% interest (0.75% more than their existing account-holders) and it will deposit $13 into new account with over a $100 initial deposit- but this offer only lasts until August 31 (in order words, come September 1, you’ll be back to 3.5% interest). Its not an iPod (like TD is giving out to new customers who switch banks) but 4.25% interest (even until August 31) is a better performance than some money market mutual funds.

I posted a comment on Million Dollar Journey yesterday that ING does not have the highest rates anymore in high interest savings accounts- guess this is changing rapidly. I also wonder if this is the beginning of another round of interest rate increases for other high interest savings accounts. As I wrote on Monday, RBC managed to secure $1.6 billion of deposits from outside its existing customer base in the first 90 days after it introduced its high interest savings account; so the field is becoming very competitive and financial institutions have to keep making their high interest savings accounts more attractive by increasing interest rates or getting creative with their incentives. With the Prime Rate most likely going up soon, the banks may have room to increase the interest rates on these accounts as well. You have to love competition when it benefits the general public like this!

As a quick market comparison, the best bets are still PC Financial’s Interest Plus Savings Account (4.0% on over $1,000 deposit) and Achieva Financial’s Daily Savings Account (4.1%) for Canadian dollars and Altamira’s High-Interest Cash Performer for USD (4.75%) which is approaching t-bill yields.

For those wondering what happened to my supermarket experiment, first week results will be posted tomorrow.