In February 2012, ING Direct became part of the Capital One family. Both institutions, historically, have been pretty competitive when compared to the industry as a whole, and reviews have been mixed on how this merger would affect the everyday consumer. Some analysts thought the merger would only have positive effects, since the network of ATMs that are available to its customer base would increase. Those optimists even speculated that customers who continued to choose the online-only banking option might even see better savings rates than previously found at either bank.

Others, however, took a more cautious approach, arguing that the number of total banking options would decrease. Many speculated that ING customers could ultimately suffer, since previous ING customers didn't have to deal with the overhead fees that came along with having a bank that also has brick-and-mortar locations, like Capital One. However, for those who currently carry large dollar balances at both ING Direct and Capital One, there's now a new reason to worry: FDIC coverage.

Recently, ING Direct sent emails to customers at Capital One, N.A. and ING letting them know that on November 1, 2012 both institutions will legally become one bank. There will be a six-month grace period on FDIC coverage on existing deposits, where separate deposit amounts at Capital One, N.A. and ING Direct will still be covered up to the FDIC max of $250,000 per depositor (or $500,000 for joint depositors) at each of the institutions. After May 1, 2013 (or, effective immediately, for any new deposits), FDIC coverage will be based on your total combined deposits in all of your accounts at both institutions. That means if you have $200,000 in deposit at Capital One, N.A. and $200,000 at ING Direct, only $250,000 will be insured by FDIC. There is a good piece of news for CD-holders, however. If you open CDs before November 1, 2012, they will stay separately insured until the first maturity date after May 1, 2013.

However, to make things even more confusing, some existing Capital One account holders are not affected by the merger. Capital One accounts that are held by Capital One Bank are separate from accounts that held by Capital One, N.A. Capital One Bank is not part of the legal merger (while Capital One, N.A. is), and accounts held in Capital One Bank will continue to have separate FDIC coverage, even after May 1, 2013.

Many people report receiving an email from their bank in the last few days, letting them know about what changes they can expect in their FDIC coverage. If you currently have an account at Capital One and are unsure about whether or not your account will be affected for FDIC purposes, you should definitely call your bank to clarify. In today's banking market, customers have to be more proactive than ever to make sure that they’re getting the best deal—and the most FDIC coverage—possible.

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Let us first start out with the highly glorified story, regarding the monetary policy of low interest rates. Theoretically, low rates make it easier for people to buy homes and cars. This in turn induces demand for other things like furniture, appliances, and car accessories, which really is a chain reaction that should boost a slow economy.

Additionally, the idea is that people will go out and spend more as low rates help them save on interest costs. On a bigger scale, low rates allow companies and businesses to borrow and invest in buildings and equipment among other things. Returns on these investments will then be worth more in the future if rates are higher than those of todays. Investment in businesses will also, hopefully, increase productivity levels and make the economy grow faster.

Nonetheless, in recent years, low rates have also spurred a refinancing frenzy. Demand for refinancing US mortgages is high due to record low rates. The idea is that when interest rates fall and remain low, homeowners can refinance their fixed rate loans and borrow at a lower cost. However, not everyone is qualified for low rate refinancing due to tight credit standards. In many cases, it can be said that the people who need refinancing most cannot get it, so are low rates really helping those that need to be helped?

The answer is probably yes and no. Yes, as in sure it does allow borrowers to borrow at a lower cost and therefore invest and spur economic activity, which should then theoretically be good for everyone in the country. Another benefactor of low rates, not yet mentioned is our government. By keeping rates low, the government induces people to buy government debt such as treasuries, which makes it a winner.

Moreover, American debt has always been a safe haven for investors. The buying up of American debt by foreign investors have kept rates low to begin with, but the Fed by continuing to buy up government debt has managed to keep rates even lower. The government saves trillions of dollars in interest payments each year by keeping rates low. In fact the recent announcement of a so-called QE3 aims to keep rates low until mid 2015. Yet, rates are kept so low that savers are losing money because bank rates are lower than inflation. Finally, we get to the story of the savers.

Essentially low rates are chipping away savings and forcing those that are planning to live off their savings to retire later. Not only that, many who have retired are re-entering the workforce because they can no longer rely on their savings to sustain the cost of living. A September 10, 2012 New York Times article noted that Dorothy L. Brooks, 65, who retired 10 years ago has decided to go back to work in a local school, and in her words, “I got hit a couple of years ago pretty badly in the stock market, so now my savings are weighted mostly toward bonds... Now both investments are terrible. And I can’t put my money in a money-market account because that’s crazy. That just pays nothing.” It’s literally as if people are paying the bank to put money in the bank.

In today’s low rate environment where inflation trumps savings rates, some people would rather hold on to their cash than put it in the bank. The same New York Times article also noted that Bill Taren, a retiree in Florida, would rather put cash at home, because then he can at least see the cash when he wants to.

Overall, the winners of this low rate story are the borrowers and the government, as the policy makes it easier for these people to borrow. The losers, nonetheless, are the older people, the retirees, and the savers. In the end, the question is, is the cost of low rates worth it? Does the story of low rates providing a boost to the economy still apply today?

Over the past four years, the trends in savings and money market rates have been pretty consistent – down. Week after week we’ve watched banks drop their rates. But in the last several months, a number of banks have reversed that trend and actually increased the rate they pay on their savings and money market accounts.

Among the rate increases we’ve seen are:

• American Express Bank increased the rate on their savings account from a low of .75% APY in the first quarter of 2012 to 0.90% APY today.
• ableBanking recently increased their rate from .85% to .90% APY.
• SallieMae Bank increased the rate they pay on their savings account from .90% to 1.00% APY.
• In March 2012, EverBank re-started their bonus rate of 1.05% on all new savings and checking accounts for six months. Over the summer they increased the bonus rate to 1.25% for six months.

I reached out to these banks for comment and received a response from Debby Hohler at Sallie Mae, who wrote that: “We continuously evaluate our rates to ensure our FDIC insured savings products are highly competitive, providing value to our customers and a mechanism to fund for our financially responsible private student loans.”

To translate, they need the money to fund their student loan business. Deposits have become the most stable, least expensive way to fund a business, and financial institutions that are growing often need more deposits to lend out.

Despite the encouraging rate increases from these banks, don’t expect to see wholesale increases in rates over the next year. Savings rates from local banks and CD rates continue to fall. And while the top online rate in July was 1.25% APY it is now down to 1.05% (a savings account from CIT). We expect the Fed to keep rates at or close to 0% through 2014, if not longer. With job growth anemic, it appears that rate increases are the exception rather than the norm.

As local bank savings rates continue to drop, the online savings rates continue to remain the most competitive option for savers. While local banks often offer more competitive CD rates, especially in longer terms, our data shows that online banks offer the best savings and money market rates. According to the BestCashCow database, only 14 brick-and-mortar banks and credit unions out of over 13,000 beat the best online savings rate.

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