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.

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