[brad]

Sampson is right -- basically you have to view interest rates in concert with inflation rates in order to understand the whole picture.

The Consumer Price Index inflation rate in April was 0.4 percent. If you're earning 0.75 percent today you're actually making more than you were in the third quarter of 2008 in a high-interest account that was getting 3.5 percent interest, because inflation back then was running at 3.4 percent.

 

[brad]

if you wait long enough, the animation changes the coffee cups to a 3% rate that says "until October 1st 2009"... leads me to think this is a limited time promotion to get everyone's TFSA there and then it will jump down.

That's correct. You have to careful with ING as they do this kind of tease frequently. I got a 90-day GIC at an introductory rate of 3.5%, and it auto-renewed at something like 0.05%.

 

[brad]

The other thing you can do, and which I should have done, is to call ING before your first 90-day term is up and tell them that you want to renew for a longer term (which will get you a better rate but of course your money won't be as liquid...it depends on what you want to use your TFSA for). You can't do that online, you have to do it by phone.

For example, if your 90-day term is up and you want to switch to a 3-year TFSA, you'll get renewed at 2.5 percent. ING posts its GIC rates on its website. The current normal rate for a short-term GIC at ING is 0.5 percent (not 0.05 percent as I mistyped above).

You aren't locked into a 90-day term forever if you buy a 90-day GIC. When your term comes up you can call them and ask to roll it over to a longer-term GIC so you can get a better rate.