ING Direct Orange Savings & Electric Orange Checking Accounts - Online Banking Review

A couple years ago, online savings accounts such as ING Direct became very popular. Their enticing savings rates caused many people to take their short-term savings out of traditional banks and into the internet world of banking. When my wife and I got married, we opened up an ING savings account for our emergency fund and any other short-term savings for large purchases in the future. We still have it, and it’s been a great account for us. Now, banks offering online savings account are trying out the online checking account. ING rolled out their Electric Orange checking account, but it has not received the same attention as its Orange savings account. I’ll break down the advantages and disadvantages of both accounts so you can figure out if either account is right for you.

The ING Orange Savings Account

The ING Orange Savings account would replace the dreadful savings accounts that brick-and-mortar banks offer. I always laugh when I see the 0.2% and 0.5% savings rates at Bank of America and Wachovia.

You won’t get rich from this account. You’ll use it to park cash for short-term savings such as an emergency fund or saving up for a car.


Advantages:

• The interest rate used to be 4.75% a couple years ago, but it’s still 3.00% today. This is infinitely better than the rates that traditional banks offer, unless you’re putting away a million dollars. But, you’d be an idiot to sock away a million bucks in a short-term savings account.
• You can access your money anywhere that you can find an internet connection. Let’s say you’re in France, and you need to make a money transfer, you can do it at an internet cafe.
• The transfer time is two business days. ING is quick to transfer money into your checking account.
• It’s harder to acess your money. This is an advantage and a disadvantage to an online savings account. The advantage is that it will help prevent you from making an impulse buy. If it takes you two days to access your money, it gives you more time to figure out if you should really buy the plasma TV you were looking at the other day.
• No fees and no minimums.
• An automatic savings plan to help you save on a consistent basis.
• It’s FDIC insured up to $100,000.

Disadvantages:

• It takes two days to access the money. This could pose a problem if you keep your emergency fund money in this account, and your breaks down. You won’t have immediate access to the money. The only advantage to the Paypal money market account is that you can get a debit card to access the money. If ING offered a debit card for their Orange Savings account, it’d be the best savings account on the planet!
• You can find a better interest rate.
• Keeping your money in a virtual account scares some people, because identity theft is the fast growing crime in the United States. However, ING has a very sophisticated login process. It takes much more than cracking a user name and a password to hack an ING account.

The Electric Orange Checking Account

It’s still hard for some people to dive into the world of online checking accounts. But, if you’re the ultimate techy and you like paying for everything online, the Electric Orange Checking is the account for you.

I don’t have this account, because of the reasons that I will discuss in the disadvantages section. I can’t speak from personal experience about this account, but a good friend of mine opened the account about six months ago, so I received some good information from him. Here is the table from the website showing the interest rates for the account

• $0 - $49,999: 1.75%
• $49,999 - $99,999: 3.20%
• $100,000 or more: 3.35%

Advantages:

• You earn interest on your money. There are not very many checking accounts that offer a MINIMUM of 1.75% interest.
• No fees associated with the account.
• A debit Master Card that can be used for free at over 32,000 ATMs.
• No overdraft fees. You get a line of credit hooked up to your account, and once your account dips below $0, you’ll pay a variable daily interest rate on the money that you owe. This is a huge advantage, because my wife and i have paid a few overdraft fees simply from bad accounting, rather than the lack of funds.
• Online bill pay. You can send electronic or paper checks to any individual or company.
• It’s FDIC insured up to $100,000.

Disadvantages:

• Depositing money is a pain. If you want to deposit cash into the account, you’ll still need a checking account from a traditional bank. You can set up direct deposit for your paycheck, and send in paper checks to ING, but otherwise, they haven’t figured out the cash thing.
• If you don’t live in a metropolitan area, it could be hard to find an ATM that doesn’t charge you a fee.
• Many young people seldom write paper checks, but it’s convenient when you don’t have cash and you can’t use your debit card. You would have to find an internet connection to send someone a check.

I think ING needs to figure out a way for people to deposit cash or checks into the approved ATMs. If they do this, I will definitely sign up for an account. If I’m going to make the switch, I don’t want to keep my Bank of America checking account. Hopefully, this review helps you make your decision. Money Smart Life is a big proponent of keeping an emergency fund, and the Orange Savings Account is a great option to store the money. The Electric Orange Checking account definitely has its advantages for those that never open up their checkbook and want to make the financial life paperless.

Writer Auditions - Author Erik Folgate - Offer Your Feedback

Open a Separate Bank Account for Your Tax Payment or Refund

Do you hate the hassle of printing out and mailing in your tax return every year?  According to the IRS, 80 million people avoided the hassle last year by choosing to e-File their taxes.  For those not aware, e-File simply means you send in your tax information electronically using tax software on your computer.

e-Filing Taxes
One of the convenient things about e-filing is that you don’t have to mail in a check to pay your taxes due.  Instead, you provide bank account information and the payment is deducted directly from your balance. If you’re getting a refund, the money will be deposited into your bank account.

If you’re going to e-File, I’d suggest opening a separate bank account to use just for tax purposes.  I did this several years ago and it’s worked out nicely.  Of course you’ll want to make sure your bank doesn’t charge you any money for opening an additional account. 

Help Managing Your Taxes Due
 The main benefit of having a different “taxes only” bank account is that it helps you stay organized.  If you’re going to owe taxes you can deposit some money every month so you’re not hit with a big bill and no funds to pay it come tax season.  If you’re putting the money into a separate account you’ll know that money is just for taxes and not to spend it for other things.

Maintaining the Appropriate Balance
Something you want to avoid is opting for electronic payment for your tax bill and then not having enough money in your account to cover the total.  Think of the mess you’d create if you gave your primary checking account to the IRS and your credit card payment cleared the exact same day the IRS tried to withdraw your taxes due.  If you have a different tax account you can deposit the appropriate balance and just leave it alone, knowing you have enough cash available to pay the taxes.

Tax History Snapshot
 Having a separate account can also provide an easy snapshot of your tax bills over the years.  If you want to know how much you paid for a certain year, just look back at the account history and you can see the trend in tax payment amounts.

Working with Tax Preparers
Another benefit is having account information you can share with others.  For example, we hired our tax attorney friend to do our taxes this year.  His firm can e-File the return for us, he just needs the bank account and routing number we want to pay from.  We don’t have to worry about giving out our primary checking account since we have one just for taxes.

Mobile Banking - Managing Money in Your Car, in Church, or on the Beach

Okay, so those aren’t the best place to manage your money.  You really should be giving your attention to the road in your car, to the service in church, and to relaxing when on the beach.

However, if you’re dozing off under a beach umbrella when you suddenly remember you didn’t move any money into your checking account before leaving for vacation, you may be able to take care of it right there from your beach chair.

Mobile banking is starting to become a reality in the US thanks to the widespread adoption of mobile devices. According to a PEW Internet study:

“Sixty-two per cent of all Americans are part of a wireless, mobile population that participates in digital activities away from home or work”

Banks are well aware of the potential for mobile banking and are working on rolling out the capability for their customers. A recent article in FinExtra announced that some Citibank checking account customers will soon be able to access a mobile person to person payment service.

“The Citi Obopay consumer trial will commence in summer 2008 and will allow Citibank customers to receive and send money from their mobile phone directly into or out of their Citibank checking account. New and existing Citibank customers will be able to enroll in the Citi Obopay mobile payment service in a highly secure manner through Citibank.com or in Citibank branches in select markets.”

So if you realized you were short on cash in one of your checking accounts and needed to move money around; you could add money to your Obopay account from your debit or credit card, then turn around and withdraw it into the bank account that was short on funds.

At least, that’s how I undertand it after reading the Obopay overview page.  In addition to moving money around, you can also use Obopay to make payments to other people.  One scenario I could see this coming in handy is when you’re out to lunch with a big group of people.  It seems there’s always some problem splitting up the bill because people only have credit cards or don’t have the right change.

Of course, there are definitely concerns about security but I’m sure as the technology progresses those will be addressed.  Personally, I just sent my first text message a few weeks ago so I’d say I’m in the 48% 38% of people that aren’t really taking advantage of mobile capabilities.  The ability to use mobile banking is definitely something that would push me to make better use of my cell phone.  I’m not a Citi bank customer so I’ll probably signup for Obopay on my own just to try it out.

Online Banking vs. Local Banking, Which is Better?

Online banking with companies such as Bank of America and Wachovia are great for convenience and access but sometimes they can’t offer the service of a local bank.

Banking Trends
Making money from lending and deposits has grown increasingly competitive over the last 10 years and profit margins have narrowed for local and regional banks. In an effort to compete with national banks and purely online banks such as ING Direct local banks are diversifying their revenue streams and working harder to keep their customers.

Banking Service
Other than good interest rates, what would keep you at your current bank? One of the first things that comes to mind is the level of service they provide. I recently experienced that service first hand at our local bank.

Credit Card Assistance
I opened a business account with our bank this year and they worked with me to open a credit card for the company. This was helpful because even though the LLC had no established credit rating my bank granted me credit card with a $1000 limit in order to build up a credit history.

I haven’t used the credit card yet, for reasons I’ll discuss next week, so when the first statement came in the mail I figured I had no balance and it went to the to-file stack. When I finally opened the credit card bill I discovered that they had charged me an annual fee, even worse, the payment for the bill was due 10 days ago.

After a quick phone call to the head of our local branch my bank agreed to pay the fee for me. They contacted the credit division to ensure nothing negative would be reported to the credit reporting agencies for the late payment, and are trying to get my annual fee waived.

The best part was the bank did all of this without me even asking. I called up, explained my problem, and they were on it. The service not only met my expectations, but exceeded them, which is a great way to keep me as a customer.

Go Online and Stay Local
We use both online banking and our local bank for our financial needs. We have our emergency fund with ING Direct to earn better interest rates. Our personal and business checking accounts are with our local bank so we can count on personal service.

We still have the convenience of accessing balances & making transfers online because our bank offers web interface into our accounts. Setting up our ING Direct account so we can transfer money to and from our local checking accounts gives us the flexibility we need.

Using a combination of online and local banking gives us the best of both worlds, good interest rates and great service. What local and online banks have you had good luck or bad experiences with?