CheckING: Wait Till’ I Tell You This….

ING Rolls Out “Electric Orange” Checking Accounts; Others Sure to Follow

I guess that tagline would just about sum it up. ING, one of the leaders in the online high-yield savings account market, is preparing to roll out its move into the checking account business, and it’s making a strong first impression. ING plans to nationally market their program starting February 1, but many of their current customers have received access to open Electric Orange (EO) Accounts already. This is perhaps a move to re-assert ING as the market leader in online banking, and its major competitors Emigrant Direct and HSBC Direct will most likely offer a similar service.

What’s Included?

- High Interest. ING is offering the following interest rate for the checking accounts.

Electric Orange Balance	Interest Rate	APY	Effective Date
$0-$49,999.99	2.96%	3.00%	11/29/2006
$50,000.00-$99,999.99	4.94%	5.05%	11/29/2006
$100,000.00 or more	5.18%	5.30%	11/29/2006

Source: INGDirect.com

Of course, we at Wealth Weekly are not big supporters of keeping very large amounts of money in a simple checking account (including this one) especially since you won’t need all that money at once. So even though you see a decent interest rate of 5.3% for $100,000 dollar balances, it would probably be best to have half of that money in (at least) a high-yield savings or some type of mutual fund. Besides, the FDIC only insures up to $100,000 anyway.

- MasterCard Debit Card and All Point ATM Access. After opening an electric orange checking account you will receive a debit card from MasterCard to use at All Point ATMs (there are about 32,000 of them located all over) free of charge. ING charges no fees for using other ATMs, but the ATM owner may do so. However, in most metropolitan areas you can find an ATM on the All Point Network.

- Line of Credit on Overdrafts. Perhaps one of the most innovative (but not really new) features is an automatic line of credit on overdrafts. Most banks make you separately apply for such a system. How does it work? If for some reason your balance on your checking account were to fall below zero, instead of being charged an $25 “Not Enough Money” fee that most banks charge, the EO account simply extends to you up to a $1000 line of credit, and you can pay it back at a about a 12.25% interest rate. (So if you fall $30 under, you pay back about $33.68, not $55+).

- Sending Check Payments. You can also wire money to individuals and companies electronically using E-Check payments (a system similar to PayPal). You will need to get the account number and bank routing number of the person you’re sending money to (at least for the first time).

So Should I Close and Switch?

Slow down. To be fair I should let you know some of the downsides. For example:

• Despite all the technological advances we’ve made in this country, there are still some areas that still only take paper checks. ING acts as a third-party in handling paper checks. Instead of you writing a paper check and mailing it yourself, you would make the request online at ING, and they would then send a paper check to the recipient of your choice (at no charge to you) as First-Class Mail. If you need overnight service, they charge a $15 fee. You would also need the bank account number and bank routing number of the person to whom you are sending the money. (If the person is an ING account holder, however, transfers of money are far easier).

• Teller services are still needed in sometimes. Sometimes you need $20 in quarters. Sometimes you need a cashier’s check. These services would cost money if you don’t have an account with a particular bank.

• In addition, other companies are most likely to follow behind ING with their own set of services and perhaps better rates. Presidential Bank has had online checking for some time (since 1995), and its website looks like that was the last time it was updated. It has a higher rate (4.5%), but the features are not as extensive.

So I suggest that you retain your checking account at your current bank and pare it down to the necessary minimum to take advantage of the branch services. Then open and use an ING (or similar) account for the majority of your purchases. I think once you get comfortable with online checking, you will find it a very rewarding change.

I will be traveling for the next two weeks so I'm not sure about the internet access I will have. Next week, Special Contributor J. Hogans returns with a new post. See you soon.