Uncategorized: Account Review: ING Direct’s Electric Orange Checking Account

Until a few years ago, free checking accounts were a very standardized and commoditized product. Every bank and credit union offers a free checking account with very similar features and there has been no compelling reason to move to another bank. ING Direct and other online banks, decided they were going to fight this trend and offer highly competitive, interest-bearing and feature-packed online checking accounts in the hopes of gaining new customers.

Online checking accounts vary from traditional checking accounts in that you don’t actually receive paper checks. Instead, you use their free bill pay service to take care of anything that would normally require a check and then use the Visa or MasterCard debit card associated with the account to make your day to day purchases. If you do ever need to have a check written up, ING Direct will print and mail you a check for a small fee.

ING Direct also offers the option for an “electronic check” which allows you to make an electronic transfer to a friend if they provide you a canceled check. Essentially, you enter in their checking account’s routing and account number and you will be able to make an ACH transfer into their account.

A problem that arises with online checking accounts is that since there’s no branch near-by, it can be difficult to make withdrawals and deposits. ING Direct’s solution has been to partner with the AllPoint network, so that you have access a network of ATM machines across the country. If you would like to make a deposit, you will need to either mail ING Direct a check or transfer the money in using an electronic transfer from another institution.

As of 8/15/2009, ING Direct is offering 0.25% on balances between $0 and $50,000, 1.60% APY on balances between $50,000 and $100,000 and 1.65% on balances greater than $100,000. To compare rates, Schwab is currently offering a 0.75% APY on their online checking account offering and FNBO Direct is offering a 1.50% APY on their online bill pay account.

UPDATE 9/15/2009: The maximum interest rate that ING is offering from electric orange customers has dropped to 1.50% APY from 1.60% APY