Beating Broke

Personal Finance from the Broke Perspective

Capital One 360 Review

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For many years, I was a user of ING Direct and their online banking products.  When word went out a while back that the US branch of their online bank was being sold I began to worry that a good thing was about to be ruined.  When we learned that the company that was buying them was Capital One, it didn’t exactly help me not worry.  I’ve had a credit card from Capital One for longer than I’ve had an account at ING Direct, and while I’ve never had a terrible experience with them, I’ve never really felt that I was anything more than just another cardholder; easily replaced and nothing worth going out of their way for.  If that level of service came to the online bank side after the purchase of ING Direct, I might have had to find something else.

The prospect of having to move my accounts at what was ING Direct to somewhere else upset me a bit.  I’ve tried several of the online bank options, and so far, haven’t found one that was as easy to use as the accounts were with ING Direct.  Now that ING Direct US is no more, and it’s been sold to Capital One, and re-branded to Capital One 360, what has my experience been?

Click here to start saving with Capital One 360Surprisingly, I have no complaints.  I truly expected that they’d start squeezing in some new fees, or making it harder to get things done, but the experience so far has been very similar to what it was with ING Direct.  There’s the obvious rebranding that came with a change of logo and color scheme, but for all intents and purposes, they’ve done a very good job of keeping the function and service levels where they were when it was ING Direct.

I suppose there may be some things behind the scenes that I don’t see that are different.  And they may just be biding their time before they start implementing some new fees and roadblocks, but if so, they are taking their sweet time doing it.  In the mean time, many of the features that I really loved about ING Direct are still resident in the Capital One 360 system.  It’s still super easy to create a new account, making it simple to have an account for each purpose and being able to segment your money by purpose.  Every other place I’ve tried this at, make it much more difficult to create a new account and that process becomes a roadblock to use.

The interface of Capital One 360 is very easy to use, with all of the major functions and features that most bank customers use right at your fingertips (or mouse pointer I suppose).  The rates that they pay on their savings and CD accounts still aren’t the best around, but they remain competitive with most other online banks, and they are double and triple what my local banks and even Credit Unions are paying.

The connection between Capital One 360 and Capital One Sharebuilder remains, making it easy to transfer money to investment accounts and IRAs at Capital One Sharebuilder.  Does that make a huge difference?  Not really, but it is convenient.

Overall, I think Capital One has done a really good job of bringing the Capital One 360 accounts into the fold and not rocking the boat.  I hope that they remain dedicated to keeping the excellent service and system in place.  Even with a new name, Capital One 360 is still my favorite online bank.

Emigrant Bank Announces 3.75% Dollar Savings Direct

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Emigrant Bank announced their newest high yield savings account today.  Called the Dollar Savings Direct account, it will pay out what they claim to be an industry high 3.75% on all balances over $1000. I believe that there is at least one account that pays higher than 3.75% and the WaMu account is paying out 3.75%.  Still, a pretty good rate that is hard to beat.

If the name Emigrant Bank starts ringing bells for you, it’s because they run the Emigrant Direct savings accounts.  The Emigrant Direct savings accounts are a no minimum account that currently are paying 3.00% on all balances.  Neither account charges any fees and link directly to your current checking account.

It’s beginning to look like the Online Savings market is starting to heat up again.  With the current financial turmoil, people are starting to look for the highest yield they can find.  And quickly overcoming any qualms they have on using a online account to do so.  It’s a good thing for savers.

Choosing an Online Savings Account is Easier Than You Think

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If you really want to over simplify things, you can choose online savings accounts by no other requirements than the interest rate that the account is paying out.  If that’s all you care about, then the current high yield king is WaMu with 3.75% (current as of 8/5/08).  The rest fall behind, but most all of them stick in the 3-4% range with only a few outliers in each direction.

So, unless you really, really want to chase rates, you’ll want to pick a savings account with some other things in mind.  Each person is going to have different things that they like and require, so I’ll share how I selected my accounts first.

When I was looking for a high-yield savings, I was looking for something to hold our emergency savings.  A lump of money that wouldn’t get touched for quite some time (hopefully). Because the money was just going to sit around interest rate was one of the most important factors.  At the time, I had narrowed it down to three accounts.  ING Direct, HSBC, and e-Trade.  e-Trade was paying 4%, HSBC was at 3.75% and ING Direct was at 3.3%.  They were all pretty close.  I decided that the interest difference was fairly minimal.  I chose ING Direct.  The deciding factor was the $25 bonus I got for opening an account with more than $250.  Even at 4%, that was well over a years worth of interest up front.

I’ve since moved our account over to e-Trade for the higher interest rate.  I still hold our account at ING Direct (several actually including a Orange Checking) for other household savings accounts such as a home improvement fund.  It really is just a matter of accounting now, so I could easily move the money from one to another.

When you go to choose your account, be sure to take into effect some of these factors.

  • You’ll want to make sure that the account will let you transfer to another savings account.  ING Direct doesn’t.  I get around that by pulling the money from my e-Trade account.
  • Is there any risk involved to the bank?  With a few banks being shut down, this is more of a factor than it should be.  Remember to make sure that wherever you put your money, it’s FDIC or NCUA insured.  As long as that is in place, you won’t lose your money up to $100,000.  And don’t be afraid to double check insurance claims with third parties.
  • Do you need a Debit Card?  Many of the accounts don’t give you a debit card.  ING direct does, and that was another important factor in my choice.
  • Are there any bonuses involved?  As far as I know, ING Direct is the only one that currently has a bonus program.  All you need is a referral code and you’ll get $25 with a new account of over $250.  (If you need a referral, let me know and I can get you one.)
  • Do they require other accounts?  Will they make you open other accounts to hold the savings account?  WaMu, for instance, requires a online checking account in order to have an online savings account.  Not a huge deal, but can be a bit of a nuisance.

I’m sure that there are other factors to take into effect when you select your account, but those are the big ones.  With interest rates as competitive as they are in this niche of accounts, you’ll be hard pressed to make your selection on interest rate alone.  And keep in mind that just having a high yield account puts you well on your way to debt freedom and financial independence!