Bank Review: Capital One 360

Stars: 5 out of 5

Pros: High interest rates; no fees

Cons: Loss of convenience

The Bottom Line:

Better interest rates

So far with same great service

Happy all these years

As ING Direct Becomes Capital One 360, so Far Nothing Has Changed

Note: This review was originally written in 2007.  ING Direct was recently bought out and is now Capital One 360.  The change has only been in effect for a couple of months, but so far everything I said then still holds true today.  The only change is the interest rates, which aren't as good as they were back then, but interest rates everywhere are down.  Currently, the savings account (now called 360 Savings) rate is .75% and the checking out rate (now called 360 checking) are .20% if you have a balance under $50,000, .80% if your balance is between $50,000 and $100,000, and .85% if your balance is over $100,000.

Names of accounts are different, but everything else I say below is exactly the same.

A Full Service Internet Bank.  I Won't Go Back

I was a business major in college and currently work as an accountant. Obviously, I had the value of money and interest drilled into me constantly for years. Yet, I never bothered to open a savings account. I just couldn't get excited about having something like that for less than one percent interest. And let's face it, I had so little money, I knew that was what I would get.

All that changed when I actually stopped to open a piece of junk mail one day from ING Direct. They were offering a $25 bonus if I opened a new account with them. And I saw what they were offering for an interest rate. I couldn't turn that down. I did a little research, and then signed up. I have never looked back. In fact, they are now my primary bank, and I have two savings accounts and a checking account with them.

The ING Direct Difference

What makes ING Direct different? They are an internet bank. They have no true traditional branches. True, they do have internet cafes that sell tea and Peet's coffee in Wilmington, Los Angeles, Philadelphia, and New York, with a new one opening in Chicago Summer 2007. But you do the majority of your transactions over the phone or internet. And if you do go into a cafe, they will help you do a transaction on the internet, but there are no services like a normal bank would have.

In this day and age, that's not as weird as it once was, but it is a little less convenient. It means you have to plan ahead more since there is lag time both ways.

However, there is a reward, too. Because ING Direct has no traditional branches, they are able to offer higher interest rates with no fees. And that makes the little inconvenience completely worth while.

And I mentioned no fees, right? Actually, there are a couple fees for services related to their new electric checking account, but those can be avoided by planning ahead.

Orange Savings

This is the first account offered and the one that brought me into the ING family. It's a traditional savings account. There is no minimum balance. (Really. I've gotten pretty low before.)

To open an account, you need a bank account at a traditional bank to link to your ING Direct account. If you sign up on-line, they will make a few small deposits (less than a dollar each) into your linked account to make sure everything is working. Or, if you sign up by mail, just mail a check from your current account to them, and they will take care of the link. You can have up to three linked accounts at any one time.

To deposit money, you can mail them a check or you can use their phone system or their website to transfer money. And they accept direct deposit. I must admit I haven't used the phone system before. But the interface on the website is easy to use. When you transfer money to your savings account, you can't withdraw it for five business days, but it does show up in your balance the next business day.

You also use the phone or internet site to transfer money from ING Direct to your linked account. The time it takes to show up in your linked account will vary, but I have found it is usually there in two business days.

While you can transfer as much money into your account as you want, they do limit you to six transfers out of your savings account a month.

Not that you want to spend your money. The current interest rate is 4.5% APY (annual percentage yield). While the interest is deposited into accounts on the last day of the month, it accrues daily. They take your balance, multiply it by the current interest rate, and then divide by 365. So your daily balance is extremely important. You can log in daily and see how much you've earned. Believe me, this is highly addicting, and I do just about every day. And the money adds up quickly or at least more quickly then it does with a regular savings account.

Electric Orange

The complaint for a long time was that ING Direct had no checking account. In fall of 2006, that changed that when they introduced Electric Orange.

Like their savings account, this is a complete internet account. They have started issuing paper checks you can use for a small fee, but I haven't gotten any yet.

Now most banks offer on-line bill pay these days, and ING Direct's set up is no different. You create accounts for the people you want to pay, then each month you simply log in and tell them how much to pay and when, and they take care of it. So far, payments have been credited to my account within two business days, most the next business day, and my mortgage gets credited the same business day.

Some people aren't set up to receive money electronically, and ING Direct is willing to pay them, too. If a business you routinely pay doesn't take electronic payment, ING Direct will send them a check. For example, my home owner's association gets a check every month. The money comes out of my account the day the check is issued, and so far, the association has credited it to my account two business days later.

And you can also write one time checks to people. There is a separate screen to send check payments. The screen looks like a check with blanks to be filled in, and you type in them like you would a normal check. Then ING Direct mails it for you. Normal checks are free; the do charge a fee (currently $15) for overnight delivery. And you can do a stop payment after a check has been issued, but it does cost you money.

While I have had the savings account for years, I've only had this one a few months. I kept my linked account, and I've found I still use it for one or two checks a month. It's nice to have that option. And I can transfer funds back and forth from ING's website.

The account also automatically comes with an overdraft line of credit. It's small to start with, but can be increased by applying with them. The interest rate on it is currently 12.25%.

So let's talk deposits. Basically, it works the same way it does with the savings account. I have the majority of my check deposited directly into my account. When my roommates pay their rent, I deposit that into my old account and transfer that over. It takes three business days before it is available, but they do show it the next business day. And any transfer you make between your ING Direct accounts are effective immediately.

You do get a MasterCard Debit card with the account. You can use it just like any Debit card. And they are part of the AllPoint ATM network, so if you use them, you won't be charged a fee to get your money. There is a link on their website that shows you where these ATMs are located across the country. Many seem to be in small liquor stores, but they do have them in Targets, Costcos, and CVS and Rite Aid Pharmacies as well. You can withdraw a maximum of $1,000 daily using your card. Even if you use another company's ATM, ING never charges you. You can not make a deposit at an ATM with this account.

Now for the part that sold me, the interest rate. The interest rate is variable based on the account balance. For balances under $50,000, the current APY is 4%. Most savings accounts don't even pay that! Between $50K and $100K, the rate is 5.25%, and above $100K, the rate becomes 5.3% The interest is calculated the same way as the savings account. It's deposited once a month, but the amount is accrued on a daily basis. I've found watching what I am earning makes it really easy to save money.

Other Products

ING Direct does offer other products as well. They have a whole line of CD with terms from 6 to 60 months. Current interest rates range from 4.75% to 5.25%.

They also offer home mortgages and home equity lines of credit. Both are adjustable rate loans, no fixed rates available. The mortgage is currently 5.5%, and the line of credit is 8.25%.

And they offer various investment products including IRA's.

I have personally never used any of these services. Based on my satisfaction with the accounts I have set up, I am confident that these services are great as well.

One Warning

I had a roommate who had set up an account with them before he moved in. He had nothing but negative things to say about them because his savings account didn't get properly linked to his traditional bank checking account. He had to fight with them for months to get his money out. On the other hand, I have lots of friends who have opened accounts with ING and are as happy as I am. I don't know if this is an isolated case or not. And I don't know where the error lies.

Conclusion

Yes, there is a tradeoff. You lose convenience to gain a higher interest rate. I thought long and hard before I decided to give them a try. But I am thrilled I did. The benefits and higher interest far outweigh the little bit of added work I have to do for my banking.