I've been a happy ING savings account customer since 2004, and I recently signed up for their Electric Orange checking account. It offers 4% APY, a MasterCard debit card, free bill-pay, etc. It's a "paperless" account, which can be a good thing... but the one real nuisance is you can't write an actual physical paper check -- if you want to write a check, you have to do it on the web site and have it sent via snail mail. I hate checks, and I really try to avoid using them whenever possible, but I have come across some situations in the last few months where writing a check would have been very handy.

Basically what I've been doing is having my Electric Orange account linked to a standard checking account (which I only keep a few dollars in, I'm living paycheck to paycheck at the moment). I'll write checks from my standard checking account, and cover them with an overdraft line of credit until I can get funds from ING transferred over (takes 2-3 days). Not a huge deal, but it's slightly annoying.

Anyway, I came across some really bad press regarding ING's electric orange accounts. Check out these posts:

Consumerism Commentary
The Consumerist
Liz Weston

Basically what happened is this... ING sent emails to some 5300 electric orange customers basically telling them "sorry, we checked your credit history and we're closing your account.". This happened because ING originally offered overdraft funds to all electric orange customers with NO credit check. Then they decided "oh crap, we should probably weed out some of the people with bad credit". They caught a lot of flack for this move and sent apology letters to most of the people and allowed them to reinstate their accounts.

THAT is bogus, in my opinion. I understand they have the right to choose who their customers are, but I would at least think they should warn the people that they are doing something wrong before just cancelling their accounts. It was obviously a bad move on ING's part, and it's made me want to switch banks.


That said, I've been looking at different online high yield checking accounts now that ING seems a little fishy to me. I came across one that looks interesting -- Charles Schwab.

4.25% APY
No account minimums
No ATM fees
Free Checks
Free Bill Pay
FDIC Insured

The only catch is you have to open it along with a brokerage account, which is free. I signed up for an account tonight but it's too early to tell how it will work out for me. All I can say thus far is their website is like reading hyrogliphics compared to ING's nice clean interface, but it shouldn't take long to adjust.

Here's an interesting article I found comparing the new Schwab account to ING.

Which high yield checking account do you use, and why?

This is absolutely no help to you but I use one at Halifax Bank.

I'm only mentioning it so that I can boast about the no fees, and the 6.17% interest rate. And its a bricks and mortar bank, no fees also includes no fees for cheque books, internet banking and bill paying, ATM withdrawals.

I'm so lucky to live in one of the most competitive personal banking markets.

I had been using paypal. 5.05% interst but not FDIC insured and they have a lousy reputation. I moved the money in there because it was convenient. Nothing I would recommend for any significant pile of cash.

So I recently moved over to FNBODirect.com. Why? 6% promotional rate & a statment that without the promotinoal rate they would be at 5.25%. No fees. No minimum balances.

Otherwise I would select from a No Fee, low minimum balance, 3 star rated, savings account option from Bankrate.

Currently that would be iGoBanking.com with a 5.30% APY.

There is no reason to be pulling in less that 5.0% right now. There are plenty of high yield reliable savings accounts out there.

iirc, ING didn't close accounts, they just reduced or did away with the overdraft line of credit. Their letters didn't express that very clearly and a lot of people thought they were having their bank accounts closed. I don't think that was the case.

Sure they also do a hard-pull, but big whoop if you're free and clear of credit problems. 5 points on your credit score isn't a big deal. I don't even know what my credit score is! Like I'm going to pay some company to tell me what I already know!

I highly recommend ING for checking and savings over the national banks I've used (WaMu, BOA) and even the local banks (Bank of the West). My current setup is 99.9% of my cash in ING Savings, and a few bucks in a WaMu checking account. I can write the occasional personal check without having to wait for the transfer from ING to brick-and-mortar. Since ING Savings deposits to Electric Orange automatically, I just move the exact amount needed whenever I pay a bill, then use their personal bill pay system. Has worked great for me.

Gus, how long does it take to electronically transfer funds out of this FNBO account? I'm getting sick of HSBC's three days.

(Will, 4.25% seems too low to me, especially when there is a = 6% promo/5.25% "regular" accounts out there. I don't think these 5.15/5.25% yields are going away anytime soon.)

The preceding comment is not quite what I was thinking with regard to checking accounts. Please disregard.

Read the topic carefully. High yield checking accounts.

Whoops, sorry! I saw "checking" and just completely ignored it. Gus's comments distracted me as well. Begging your pardon!

Wow, that looks almost perfect. The only "missing" things for me that you get with a normal bank are a way to do paper deposits, and a way to withdraw more cash than you can get from an ATM (and possibly in hundreds). My need for large cash withdrawals is vanishingly rare, but being able to do a deposit at an ATM is pretty important. Still, a free local checking account covers that.

Sorry. Went blind there for a moment. I have pretty much given up on getting a high interest rate from a checkng account & focus on a good high rate savings account. There are too many other factors I consider important for a checking account like now fees, local access, free local ATMs, automatic check writing etc. I just keep a small amount in the checking account to cover monthly expenses plus some. I figure if there is any emergency I can get by on funds for the 3 day transfer period. (That is unless I need to come up with ransom money).

I actually just opened one of the Schwab checking accounts to try it out.
Specific to your post, Schwab usually has brick and mortar retail outlets in most cities.
Here is a link to their "Visit us" page, which details locations. Even if they do not allow you to deposit directly into your checking (which I can not imagine they wouldn't) you could deposit to your Brokerage and then move the funds electronically.

Another feature I really like is the ability to use the brokerage account as overdraft protection. Something I don't typically use, but nice peace of mind.

After signing up for this account, I found out they hold funds for so many days, even on direct deposits. At least with my local bank, they don't direct deposit funds. Are there any other similar accounts to the Schwab account that doesn't hold direct deposit funds?

Korey

I don't think that's true. I just got a paycheck direct-deposited to my Schwab account for the first time this last Friday. It hit my account shortly after midnight (around 12:30am), and was available immediately. I know it was available because I spent $700 from it that same day with no issues

I did, however, transfer some funds from my checking account to my investor account, and it took 1 business day. No big deal.

My apologies, you are correct. I went back to the direct deposit page and it promotes direct deposit by saying you will have immediate access to direct-deposited funds and that there is no hold on the funds.

Korey

Several Americans were furious last month when Bank of America declared that it would begin charging checking consumers $5 a month to utilize their debit cards. Other major banks said they'll soon be charging similar fees. But after these outrageous news from the major banks, customers found hopes by knowing that a high-yield checking account is fee free and may even pay you. With a little digging, a customer can actually discover a local financial institution, a regional bank or a credit union pleased to sign you up for a high-yield account that is fee-free and could even pay you. There are certain rules that must be adhered to in order to keep a fee-free high-yield checking account. Those rules will vary from institution to institution, but generally are similar. Customers not willing to jump through all the hoops necessary to get interest back on a high-yield account can at least enjoy a free checking account devoid of fees. Free beats fee any day.