ING has decided to put together a rather tricky promotion to try and win back some of the deposits that have been heading to other online banks offering higher interest rates. In a new “Winter Save Up Sale” they are offering 4.75% on all new deposits made into an account between today (January 19, 2006) and April 15, 2006. The catch? The 4.75 % rate only lasts until April 15 at which point it goes back to their standard rate:

For example, using the Orange Savings Account APY from December 31, 2005 (3.80%), all New Funds that are deposited on January 19, 2006, will yield 4.75% APY for 87 days until April 15, 2006, and would yield 3.80% APY after that date. So, the blended APY for the first year after account opening is 4.03%. The blended APY for New Funds that are on deposit for fewer than 87 days will be lower, as it may vary depending on the number of days the promotional rate is earned. The non-promotional APY is variable and may change during the Sale Period.

So is it worth it? It depends on a couple of factors. First, the amount of money you have available in another online bank account and second, what the float is between your current account to ING and then transferring the money back once ING’s rate decreases after the promotion is over. For example in you have $10,000 in HSBC (currently 4.25%) and switch it to ING, you’ll earn an extra $12.50 making the switch, but this is assuming 3 months of interest (which you will get slightly less because there is only 87 days in the campaign) and doesn’t take into account the float where your money won’t be earning any interest. Therefore unless you have a lot of money sitting in another high interest online bank, the promotion probably isn’t worth the effort.

Those who have large deposits currently in an ING account are also out of luck since under the rules you can’t withdraw and re-deposit the money to get the 4.75%.

To determine what portion of your Orange Savings Account balance will earn the 4.75% APY, during the Sale Period we add up all of your new deposits from an external source and then subtract all withdrawals from the account (whether internal or external) from that total. If that amount is greater than zero, it is eligible for the 4.75% APY. If an account is closed during the Sale Period, the 4.75% may not be earned for the entire period that the new funds were on deposit.

Here are all the details of the program: ING Winter Save Up Sale

The one group that the promotion will benefit are those that still haven’t opened an ING account as they can do so today,earn an extra $25 bonus with an initial $250 or more deposit and begin receiving the 4.75% interest. It is especially appealing for those who may have a large amount sitting in a brick and mortar bank earning less than 1%.

Source: Thanks to Ken who posted it in the forums and at Bank Deals