From Justin Pritchard,
Your Guide to Banking / Loans.
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One of the online-only banks is ING Direct. With prominent and sophisticated marketing, ING Direct is collecting a lot of deposits. That orange ball gets consumers’ attention.

Below you’ll find my understanding of the product. I won’t quote rates because they constantly change. You should visit the bank’s website and read all the fine print if you’re thinking of using their services.

The Offer

ING Direct is a simple online savings account with a few extra bells and whistles. The main attraction is the APY (Annual Percentage Yield). You can typically earn more than brick-and-mortar banks. Furthermore, there are no fees for the service or minimum balance requirements. You can literally open an account with $1.

With ING Direct, you keep your existing checking account and link it to your ING Direct account. To move money back and forth, you login to your ING Direct account and request a transfer (transfers are free on the ING Direct side, however you should check with your bank to make sure they won’t assess a charge).

For details on other ING Direct offers, see the following:

• ING Direct Electric Orange Checking account (pays interest)
• ING Direct Orange for Business (business savings)

The Extras

Besides a simple savings account, you have a few other options at ING Direct. You can get CD’s ranging from 1 to 5 years. The rates seem competitive, so if you’ve got some cash that you’re not going to spend, you can zap it into a CD.

They also do mortgages and home equity loans, however I have not looked into the details on those offers.

The Competition

Be sure to compare ING Direct with the other leading offers to get what's best for you:

• HSBC Online Savings Account
• CapitalOne High Yield Money Market Account (offers checks)
• GMAC Bank Money Market Savings (offers checks)

The Process

You can open an ING Direct account in a variety of ways. The first option is to submit your information online and skip any paperwork. You can also print their application and mail it in. Either way, you’ll need all your basic information and a checking account number.

The setup process can take several weeks. ING Direct will create a few small transactions in your linked checking account to make sure that they got all the numbers right (and that the account is really yours). After you verify these transactions and validate your PIN (which comes via mail), you are ready to roll.

Requesting the transfers at ING Direct’s website is really easy and intuitive, and it seems like they go through quite fast. If you want to get a savings plan on auto-pilot, you can also set up an automatic monthly draft.

Customer Service

ING Direct operates efficently by urging users to do-it-yourself. You should sign up for their program for the financial value, not the customer experience. While I've heard some great customer service stories, I'm not yet convinced that the service level is the highest available (and maybe it doesn't need to be).

In 2004, Business 2.0 reported that ING Direct actually fires customers that are too high-maintenance. I don't know the accuracy of that claim, but there's one way to keep costs down.

Security

One of the first things you hear if you call ING Direct is “We take security seriously” – and it seems like they do. Each time you change something on your account, they will freeze the account for several business days and send you a letter. While this can be a hassle and slow things down, it’s probably for the best.

Just remember that this is for short-medium term cash. If you’re going to spend the money next week, you probably shouldn’t zap it into your online-only account. Both ING Direct and the bank with your checking account may place a hold on funds that are zapped back and forth – they need to make sure that the funds truly arrive.

In the interests of full disclosure, I should note that I am an investment advisor representative and registered representative with Financial Network Investment Corporation (FNIC). FNIC is an ING-owned broker/dealer. This means that I am capable of offering the ING Direct product to my clients, although I don't always do so.

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