Capital One’s decision to acquire ING Direct was a great strategic move, but the deal had a few problems. Because ING Direct’s parent company, as part of a European bail-out agreement, was required to sell ING Direct in the United States and in other global locations, and to cease using the ING Direct name, Capital One was forced to change its branding and marketing.
What was once ING Direct, by far a favorite online savings bank among more internet-savvy and financially aware customers for many years, is now known as Capital One 360.
As I’ve discovered from many conversations, online and offline, Capital One is still struggling to rid itself of its reputation for catering to customers with poor credit — and not catering to them well. Although Capital One’s products have matured, and some of the company’s credit cards are matched well against today’s best credit cards, the impression of a company that deals with sub-prime customers lingers.
Today, Capital One is more than just a credit card issuer. The company began acquiring retail banks, redirecting itself towards depository institutions, following a trend through the recession where depository institutions had some regulatory advantages. For example, American Express, a company focused on its own credit cards as well as its travel business, branched into retail banking around the same time.
The question remains as to whether it’s fair to apply the lingering reputation of Capital One to its bank branches, online and offline, which offering savings and checking accounts to retail customers. Should former ING Direct customers expect the types of problems that Capital One’s credit card customers have experienced in the past?
Website improvements
With the rebranding required to occur by February, Capital One 360 took the opportunity to make some changes to the website, arguably the most important aspect for customers interacting with their financial institution when there are no branches.
Most of the changes to the website are purely cosmetic, but a new account overview page provides a simple way to see how much interest you’ve earned and to change basic information, like registering the account in the name of a Revocable Living Trust and applying for an increase in the overdraft line of credit for the checking account.
Money access improvements
If you had an ING Direct “Electric Orange” checking account or you decide to open a Capital One 360 Checking account, you now have additional ATMs available free of charge. ING Direct partnered with the AllPoint network to offer free ATM access at 38,000 locations, and with Capital One’s acquisition, this availability will continue. It is supplemented by free access at all Capital One ATMs, for a new total of 40,000 fee-free locations.
After Capital One announced the acquisition of ING Direct but before the rebranding, Capital One introduced a mobile application allowing easier check deposits. This has become an essential feature for any online banking experience; if your bank does not offer mobile remote check deposits, find a bank that does. Here’s a review of the “CheckMate” check deposit service, which hasn’t changed since the review other than in name from ING Direct to Capital One 360.
Capital One does not charge a foreign transaction fee when customers use a debit card overseas. The lack of foreign transaction fees is a hallmark of some of Capital One’s credit cards.
Interest rates
A primary concern for the savviest savers is the interest rates. A number of banks, traditional and new, are following the early online pioneers like ING Direct, VirtualBank, and NetBank, none of which continue to exist in their pioneering form. These banks without brick-and-mortar locations were able to curtail expenses related to the operation of storefronts. Just like in Being John Malkovich, “Low overhead, my boy; we pass the savings on to you!” High-yield, internet-based, savings accounts can offer interest rates more competitively, putting the typical 0.25% APY or less you might receive with your big national bank to shame, but those big banks are now competing with their own online-only or online-focused divisions.
When a bank that has consistently offered one of the highest — but usually not the highest — interest rates available in the country is acquired by a larger corporation, one of the first thoughts among customers is that the best benefits are likely to change.
The Capital One 360 acquisition came at a time when banks were already lowing their interest rates. With the Federal Reserve Bank offering depository institutions money almost for free, banks have no incentive to attract depositors other than to meet capital requirements. Why would a business pay depositors 1% APY or more when it can raise the same funds at 0.25% or less from the Federal Reserve?
The acquisition does not seem to have hastened the bank’s drive to decrease customers’ interest rates — at least, not yet. Over the past year, ING Direct has decreased its savings account interest rate only once, from 0.8% APY to 0.75% APY. It’s not the highest available among the best savings accounts, but a good customer experience can occasionally make up for a less-than-stellar interest rate deal.
Customer service
For better or worse, there haven’t been any changes to customer service availability. Capital One retained ING Direct employees in their customer service centers and haven’t scaled back hours of operation. I have not had any problems in dealing with customer service since the acquisition. My one call to customer service was to close my business savings accounts — a decision I made because the business was closing, not because of the change in ownership.
The call was easy, and I was connected with the customer service representative right away without being required to navigate a maze in an automated response system. The customer service agent was friendly, respectful, and knowledgeable, and he completed my request immediately.
For years, Consumerism Commentary readers have shared customer service stories with other readers, so if you have any experiences to share with the new Capital One 360, please be sure to offer your impressions for the benefit of other visitors to this website by leaving your comments below.
Referral program
ING Direct was popular not only for its higher interest rates but for its referral program. This program has continued and expanded under Capital One. Customers can earn up to $500 using the “Refer a Friend” program. I used 25 of my 25 referrals back in 2008, but I was interested to see that I now have 25 more referrals available, for a total of 50. For each new customer you refer who opens an account with a deposit of at least $250, you receive a $10 bounty. The new customer receives a bonus as well: $50 for opening a checking account or $25 for opening a savings account.
Improvements to the Refer a Friend program make it easier for customers to share their referral link using social sites like Facebook and Twitter.
The bounty you receive as an existing customer and the bonus you receive as a new customer are considered interest income. If you open a new checking account using a referral link with a $250 deposit and leave it for a year and earn a $50 bonus above your normal interest, you’ve effectively raised your interest rate beyond 20% APY. Refer your friends and you could, in theory with a $250 deposit, earn $550 plus your regular interest, for an incredible APY of 220%. That’s just playing with the numbers, though, because these are one-time bonuses that cannot be repeated over the long-term.
What do you think
Open your own account today and see for yourself.
Thus far, Consumerism Commentary readers are split. Some indicated they intended to close their ING Direct accounts because they weren’t interested in an account owned by Capital One, while others were planning to “wait and see” if Capital One would make any detrimental changes to the banking operations for former ING Direct customers. Normally, I’ve been able to talk with ING Direct executives candidly about their bank’s services and policies — and I’ve never had any problems getting in touch with the right people at other banks — but after the acquisition was announced, Capital One executives refused to talk to me about their plans for ING Direct customers.
A lack of candid communication certainly worried me, but I kept my funds in the Capital One 360 account, and I don’t feel like I’ve suffered for it — so far.
Updated April 17, 2013 and originally published February 7, 2013. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @flexo on Twitter and visit our Facebook page for more updates.
Rank: Platinum
{ 21 comments… read them below or add one }
So far there’s no change, if you liked ING’s way of doing online savings, there’s no reason to close your new “Capital One 360″ accounts.
I personally feel that people who would close their accounts as a knee-jerk reaction to the perception of Cap1 being a “subprime vulture” or some such are ridiculous. You are using a product for the products sake. I’m guessing these are the same people that give 1 star reviews to mobile apps because they can’t get them to run in the first place (seriously how can you review an app if it wont install or run???).
It’s an emotional reaction. I can’t fault people completely for not wanting to deal with a company they’ve had a bad experience with, even if their past experience has no bearing on what they could probably expect for the future. It’s not logical, but fighting against emotions can be difficult. If Capital One 360 were by far the best banking option available, then you wouldn’t want to give up the best for a non-reason, but when there are better rates, and possibly better consumer experiences, available, and switching doesn’t require a lot of work, all I can do is shrug my shoulders.
My wife and I have used ING Direct since 2001, and we haven’t been all that worried about the switchover. We lived in Germany for most of 2011/2012, and the Capital One Venture credit card was the best thing we could have possibly gotten before we went there: no 2-3% international transaction fees and effectively 2% cash back (we travel a *lot*). In all my customer service dealings, I (fortunately) never had a problem with Capital One.
We use an ING/CapOne360 checking account as the “crossroads” account in our budget system. It’s early, but I haven’t seen anything yet that concerns me about Capital One’s management of the account.
I moved to Ally, but mostly because their interest rate was higher. Simple enough.
How much higher was the interest? was it really worth changing over?
Honestly, less than 1%, but I also wasn’t into the new UI and such. Super easy to switch, and I like Ally’s style. I am now looking into an account that earns me airline miles each month, so I might move that direction soon…
I’m more likely to hold off until there is a fee increase. The variance in interest rates being less than 1% don’t seem worth it to me. It seems the switch promotions various banks run (switch and get a $100 deposit, ipod, free t-shirt, etc) are a better deal than the small amount of interest switching will generate.
The most notable difference for me so far is a big pro — I can now find drive-up ATMs : ).
I am willing to give Capital One a chance to see how it goes. I am most focused on the interest rate and will be watching to see if that goes down soon. That being said, I get special offers in the mail for account opening bonuses all the time and they are pretty tempting.
I have decided to keep my money with Capital One 360 for now, since I haven’t seen any reason to move my money. Luckily there is competition in the online banking market and it won’t be too hard to move my money if an issue does come up.
The one thing that I dislike, and this was an ING thing, that hasn’t changed with Cap1…
anyway – why, when I deposit a check do they hold it for 3 full business days. I just scanned one in on my phone (at about 6pm local time) and it wont be available until 2/12. It’s kind of ridiculous. After the “Check 21″ act passed in 2004 a scanned image of a check is no different from a physical check. If I had gone to my “brick and morter bank” and deposited this check it would be available tomorrow. I often go out of my way to stop by the actual bank drive through where the atm DOES EXACTLY THE SAME THING AS MY PHONE instead of waiting the 3 days for it to clear through ING/Cap1.
It’s a strange omission for an otherwise superb bank when it comes to customer service (speaking of ING here…).
We’re moving to Ally right now mainly for security reasons. Twice in four months my debit card was comprimised and ING/CapOne Fraud Dept cannot explain or help to understand why. Other banks have security procedures to detect unusual activity (i.e. typically you have charges in Chicago, but now you’re charging in Florida or India). The first time this happened the ING rep was very apologetic and helped me work everything out in terms of contacting the merchant and getting a new card. This second time the Rep (this comprimised happened on Feb 1) acted like I had committed a crime. Very unhelpful and just told me “Your card has been deactivated, and if you claim these charges are fraud you need to request an investigation online.”
Thus, we are now Ally customers and I’m enjoying the experience. I’ve called them three times over the last week and had two online chats. Each time the rep was professional and resolved my issue with no problems.
Called three times and two online chats….my goodness.
What was the reason you had to call them 3x and have 2 online chats within a week?
“Are you saying that if I open up another bank account using a link to refer myself, I get the bonus???
If you open a new checking account using a referral link with a $250 deposit and leave it for a year and earn a $50 bonus above your normal interest, you’ve effectively raised your interest rate beyond 20% APY.”
No, you can’t refer yourself, and as a new customer, if someone refers you, you can only get a bonus for your first account. But once your account is open, you can then refer your friends, your family, your social media followers, and the public.
I’ve been with ING almost from the beginning. While I came for the interest rates, I stayed for website. It’s easy to use and they keep trying to make it easier. The latest, as you noted, is remote check deposit, where you scan in your check, instead of sending it in.
I was skeptical about Capital One buying INGDirect, given their reputation for horrible credit card customer service. I voiced my opinions to INGDirect, reminding them that they aren’t the only good online bank around. Unlike the sheeple that stick with BofA, no matter how badly they are treated or high the fees become, I have no problems moving my money around.
The latest kudos I give to CapitalOne360 is about the check I sent to a wrong address. When it was returned by the post office, they looked up the correct address, resent the check, notified me of the change, and suggested that I update my address book to reflect the corrected address. That is customer service.
Capital One 360 is a complete joke. If you make a deposit don’t expect to use it for 10-12 days. My last deposit was placed on hold for 18 days!! So even though my ‘balance’ showed $12,700, they returned a check for $2.86!! Fucking criminals!
What kind of deposit was it? I’ve never had them hold a deposit for more than 2-3 days.
I was a bit skeptical at first when Capital One took over.So far I’ve seen no change in service, and have been pleased with the account.
So far, I do not have any complaints about Capital One 360. I signed up a couple years ago, back when it was still under ING. I have had to call their customer service a few times, but every time I have they went over the top to make sure things went well. You actually get to speak to someone here in the U.S. – not someone halfway across the world. In any company these days, that’s hard to come by. Their interest rates used to be better, but they’re still great. Overdrafts (if you need them) are just a percentage, so you won’t get nailed with a huge fee if you pay it back right away.
[Edited to remove referral link]
I currently have CapitalOne Online savings account but the rate stink, .5%, Allys have better rate for savings and checking, .84%. Yes I know not that much of a difference.
Im seriously looking into opening up an online checking account instead of a local bank. I was considering opening up a CapitalOne 360 checking and a 360 savings account because the rate is better than what I currently have. My concern is does CapitalOne 360 reimburse you if you dont use an ATM that is part of the AllPoint system? Do they have any drive-up ATM machines? Now-a-days people dont like to have to park their car, go into a store, get money, go back to car and go on their merry way. Ally will reimburse you if there is a fee to use any ATM… just like Schwab.