My first foray into online savings account came about when I opened an ING Direct Orange Savings account in 2004. At that time, I was in a position to put aside some money for emergency use and yields on savings and CDs at banks with brick-and-mortar branches were unattractive, to say the least. Since then, I have opened a Capital One Direct Banking Online Savings Account and a HSBC Direct Savings Account. Here are my experiences with these three products:
ING Direct:
ING Direct is my oldest online only bank account. Having had no previous experience with online only banking relationship, I opened an Orange Savings Account to see how things would work. The opening process was easy. I set up a link with my existing checking account to transfer funds, and ING Direct initiated two trial deposits to verify the link (this is also the practice for opening a HSBC Direct and Capital One Direct Banking accounts).
Since then, I have opened CDs and an Electric Orange Checking Account with ING Direct I use my Electric Orange checking account to pay my credit cards and other bills through ACH transfers (be warned that Electric Orange checking does not offer conventional paper checks). I keep the funds in my Orange Savings and transfer the required funds to my Electric Orange account just before payment is due, to maximize my interest earning potential. Hence, my collection of ING Direct accounts are for meeting my current and medium term expenses.
Compared to Capital One Direct Banking and HSBC Direct, ING Direct remains the easiest to use. The online interface is extremely user friendly and highly intuitive, even for non-techies. Fund transfers with an external checking account takes 5 working days for Orange Savings, 3 working days for Electric Orange and instantaneous between different ING Direct accounts. Hence, I always transfer money between my brick-and-mortar bank's account and the Electric Orange checking, and then transfer between Electric Orange and my Orange Savings or Orange CD. In the early 2000s, ING Direct has the best rates, but today's rates are at the low-end of online only accounts: 1.5% for Orange Savings and 0.25% for Electric Orange (for deposits up to $49,999.99).
HSBC Direct:
I opened a HSBC Direct Savings Account in 2006 to take advantage of the promotional nterest rates that HSBC Direct was offering at that time. Compared to ING Direct, HSBC Direct's online interface is more cumbersome and less intuitive. I have not tried their Online Payment account (HSBC Direct's answer to ING Direct's Electric Orange) or their Online CDs. My HSBC Direct Savings Account is designated as my emergency fund. The fact that the transfer mechanism is more cumbersome keeps me from tapping into this fund too readily. I am happy to report that I have currently saved enough to cover 12 months' worth of expenses. In view of today's prolonged recession and uncertainty in the job market, I think a year's worth of emergency savings is a necessity, since I am not sure how long I would remain unemployed if I were to be laid off. The current interest rate for savings is slightly more competitive than ING Direct: 1.65%.
Capital One:
I opened a Capital One Direct Banking Online Savings Account around the same time I opened my HSBC Direct Savings Account. Compared to ING Direct and HSBC Direct, I find that Capital One has the least intuitive and most cumbersome online interface. It took me a while to figure out how to navigate their original interface. The current interface has been redesigned and is more intuitive than the first-generation version, but it still pales compared to ING Direct's user-friendliness. Indeed, even HSBC Direct's interface is more user-friendly than Capital One's interface. Today, I no longer keep any money with Capital One for three reasons: (1) the hassle of dealing with Capital One's clumsy online interface, (2) among the three banks, Capital One has the longest hold on bank transfers, and (3) they introduced a tiered-interest rate structure, which I didn't care much for.
Astute readers might wonder why I haven't tried other high-yield savings accounts with other online only banks. I am perfectly happy with my ING Direct and HSBC Direct combination, and I see no reason to complicate matters by introducing a third online account. Indeed, I tried that with Capital One and gave up.
ING Direct:
ING Direct is my oldest online only bank account. Having had no previous experience with online only banking relationship, I opened an Orange Savings Account to see how things would work. The opening process was easy. I set up a link with my existing checking account to transfer funds, and ING Direct initiated two trial deposits to verify the link (this is also the practice for opening a HSBC Direct and Capital One Direct Banking accounts).
Since then, I have opened CDs and an Electric Orange Checking Account with ING Direct I use my Electric Orange checking account to pay my credit cards and other bills through ACH transfers (be warned that Electric Orange checking does not offer conventional paper checks). I keep the funds in my Orange Savings and transfer the required funds to my Electric Orange account just before payment is due, to maximize my interest earning potential. Hence, my collection of ING Direct accounts are for meeting my current and medium term expenses.
Compared to Capital One Direct Banking and HSBC Direct, ING Direct remains the easiest to use. The online interface is extremely user friendly and highly intuitive, even for non-techies. Fund transfers with an external checking account takes 5 working days for Orange Savings, 3 working days for Electric Orange and instantaneous between different ING Direct accounts. Hence, I always transfer money between my brick-and-mortar bank's account and the Electric Orange checking, and then transfer between Electric Orange and my Orange Savings or Orange CD. In the early 2000s, ING Direct has the best rates, but today's rates are at the low-end of online only accounts: 1.5% for Orange Savings and 0.25% for Electric Orange (for deposits up to $49,999.99).
HSBC Direct:
I opened a HSBC Direct Savings Account in 2006 to take advantage of the promotional nterest rates that HSBC Direct was offering at that time. Compared to ING Direct, HSBC Direct's online interface is more cumbersome and less intuitive. I have not tried their Online Payment account (HSBC Direct's answer to ING Direct's Electric Orange) or their Online CDs. My HSBC Direct Savings Account is designated as my emergency fund. The fact that the transfer mechanism is more cumbersome keeps me from tapping into this fund too readily. I am happy to report that I have currently saved enough to cover 12 months' worth of expenses. In view of today's prolonged recession and uncertainty in the job market, I think a year's worth of emergency savings is a necessity, since I am not sure how long I would remain unemployed if I were to be laid off. The current interest rate for savings is slightly more competitive than ING Direct: 1.65%.
Capital One:
I opened a Capital One Direct Banking Online Savings Account around the same time I opened my HSBC Direct Savings Account. Compared to ING Direct and HSBC Direct, I find that Capital One has the least intuitive and most cumbersome online interface. It took me a while to figure out how to navigate their original interface. The current interface has been redesigned and is more intuitive than the first-generation version, but it still pales compared to ING Direct's user-friendliness. Indeed, even HSBC Direct's interface is more user-friendly than Capital One's interface. Today, I no longer keep any money with Capital One for three reasons: (1) the hassle of dealing with Capital One's clumsy online interface, (2) among the three banks, Capital One has the longest hold on bank transfers, and (3) they introduced a tiered-interest rate structure, which I didn't care much for.
Astute readers might wonder why I haven't tried other high-yield savings accounts with other online only banks. I am perfectly happy with my ING Direct and HSBC Direct combination, and I see no reason to complicate matters by introducing a third online account. Indeed, I tried that with Capital One and gave up.
Posts
No comments:
Post a Comment