Orange Savings Account: The no-fee, high interest savings account for the rest of us
Written: Oct 25 '03 (Updated Mar 07 '05)
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Product Rating:
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Pros: Interest and benefits that exceed those of most brick-and-mortar banks
Cons: Not a good choice for those who prefer one-stop banking.
The Bottom Line: As banks make savings accounts cumbersome and unproductive, the Orange Savings Account from ING Direct offers everyone interest rates and benefits usually reserved for the wealthiest savers.
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| JoeEkaitis's Full Review: ING Direct |
My bank, the one where I have free checking with direct deposit, offers a savings account but with more restrictions than the IRS imposes on itemized deductions.
If the savings account balance drops below $300 in any statement period, you have to pay a maintenance fee. You can only move money into or out of the account 3 times in a statement period without paying a processing fee. And if you want to avoid all that, just scrape together $2,500 that you can do without and don't touch it. Your reward: 0.25% interest.
ONE-QUARTER OF ONE PERCENT!
How many of you can afford to leave $2,500 comatose in a savings account with an interest rate that wouldn't produce a blip on a vital signs monitor? (Sit down, Donald Trump.)
When we refinanced our home mortgage, the monthly payment was much lower because of the lower interest rate, shorter term and no escrow. So when ING Direct mailed me an offer to open an Orange Savings Account (with a $25 opening bonus), I had the application and my initial deposit check in the mail that very day. The ING Direct Orange Savings Account makes a dandy escrow account, especially when you set up its Automatic Savings Plan so deposits happen every payday.
The Orange Savings Account pays a variable interest rate that provides at least a 2.00% annual yield, compounded daily and paid monthly. All you need is a checking account at your own bank. Transactions with ING Direct are performed over the phone or on the Internet.
Because I mailed an application, it took about 2 weeks before I could start playing with this new financial toy. My customer number and account number arrived in one letter and a few days later my 4-digit PIN (Personal Identification Number) code arrived.
The Orange Savings Account uses your checking account as your money pipeline. When you want to make a deposit to your Orange Savings Account, you first deposit the money in your checking account. Then, by phone or on the internet, you authorize ING Direct to transfer the money from your checking account to your Orange Savings Account. Yes, it's a little more work than simply selecting a savings account from an ATM screen but savings accounts at most brick-and-mortar banks are much more work to maintain and avoid fees.
The customer interface at www.ingdirect.com is neatly laid out and intuitive. You use drop-down lists to select the FROM: and TO: accounts, enter the amount of money to move, and when to move it. From the same money transfer screen, you can set up an Automatic Savings Plan so that transfers can coincide with direct payday deposits to your checking account. This way, more money shoots into your interest-earning Orange Savings Account instead of languishing in your checking account.
So, what does ING Direct charge you for all this?
Nothing.
And how many thousands of dollars must you tie up every month?
None.
"Geez, how do they make money, then?"
As with any bank, deposits to an Orange Savings Account are subject to holds before you can have the money back. You let them play with your money for 5 business days and in exchange, they pay you a whole lot more than your own bank would. With millions of customers already signed up and more every day, ING Direct has a constant cash flow and because they don't maintain a nationwide network of banking centers or ATMs, the cost savings are applied to interest on accounts.
Hmmm. . .
0.25% interest versus at least a 2.00% variable annual yield.
$2,500 minimum balance to avoid all fees versus no minimum balance.
3 free transfers a month versus as many as the law allows per month, free.
Your bank's savings account versus the Orange Savings Account from ING Direct.
The choice should be obvious.
Recommended:
Yes
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JoeEkaitis
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Member: Joe Ekaitis
Location: Southern California, USA
Reviews written: 144
Trusted by: 16 members
About Me:
Joe Ekaitis is a business communications technician and a children's book author.
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