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ING Direct Electric Orange Raising Credit and Margin Rates

This article was written by in Banking. 16 comments.


On May 16, ING Direct will change the rate is uses to determine the cost of overdrawing the Electric Orange checking account.

ING Direct’s overdraft system is a little like Passover, where we ask how this bank is different than all other banks. Rather than charging an overdraft fee if you send an electronic check or other electronic payment that exceeds your balance like most other banks, ING Direct extends a small line of credit and charges you interest for its use. The amount of interest is based on what ING Direct calculates as a prime rate plus a margin.

That margin has been, and will continue to be until May 16, a rate of 4%. Added to the ING Direct Prime rate, the total interest charged for using the line of credit feature of Electric Orange has been 7.25%. That margin rate will increase to 8% on May 16, and when added to the updated ING Direct Prime rate, will result in a total interest rate of 11.25%. ING Direct’s terms allow for this rate to be variable. In fact, ING Direct can increase the margin up to 12% without changing the terms for all customers. I expect, since that condition is currently allowed, for ING Direct to follow through and increase that margin some time in the future. Meanwhile, current customers of the Electric Orange checking account who use the line of credit should be aware that they will be charged more beginning May 16. As of 10.21.11 the ING Direct savings rate is 0.90% APY and the checking rates are 0.20% – 1.10% APY.

Even with this increase, this line of credit is a better deal than most overdraft protection terms offered by other banks. Rather than a fee of $25 to $35 per overdraft, you could be paying less than a dollar if your use of ING Direct’s line of credit is temporary.

For those who would rather have their transactions rejected than dip into a line of credit, the bank allows customers to cancel their overdraft coverage by calling 1-888-464-0727.

Do you use ING Direct’s line of credit? I used it once, when a deposit I scheduled was unavailable before a scheduled payment hit my Electric Orange account. I owed the bank just pennies for the protection, but I try to be more careful when scheduling my deposits and withdrawals.

Updated October 21, 2011 and originally published March 23, 2011. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 16 comments… read them below or add one }

avatar Harm

Hey, I wonder if that means they can raise rates PAID to SAVERS, if only by
a similarly small amount…….?

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avatar Luke Landes ♦127,372 (Platinum)

I wouldn’t bet on it…

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avatar Ceecee ♦796 (Dime)

I haven’t used it yet, but I would. It is MUCH better than those big overdraft fees. On another ING note, have you noticed that you get a celebratory email if the orange savings account rate goes up, but if it goes down, you get nada…just a line on your month-end statement, which you could easily miss. Seems like they should have to inform you directly of a rate change.

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avatar tbork84 ♦1,867 (Half-Dollar)

One nice thing about FNBO Direct is that they do email you a notice if their rates go down or up. Not that a rate going down is a great thing to read about in an email, but you are right that it is nice to know.

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avatar Hunter

I think this rate is very reasonable for a small and temporary line of credit. HSBC are also very good at rate change notifications, good or bad. NFCU is not so good.

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avatar Jon | Free Money Wisdom

Those are still not bad rates, I’ve seen a lot worse. ING is great, while I can’t comment on HSBC or NFCU.

This is off-topic, but man I miss the high interest ING orange accounts during the early 2000′s!

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avatar Evan

Jon,

I don’t think your longing for those rates are ever off topic! Ugh if I had what I had now with ING I’d be raking in the interest!

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avatar Tom Dziubek

Any idea whether or not this is offered to everyone or if only approved people would be extended a line of credit? We had something similar at the bank I worked at, but the people needed to be approved first. Otherwise, people with bad intent or no self-control could easily rack up charges they’d never pay for.

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avatar Luke Landes ♦127,372 (Platinum)

ING Direct performs a credit check to determine if you qualify for the line of credit that comes along with the Electric Orange account.

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avatar rewards ♦31 (Newbie)

I personally prefer automatic transfers from a savings account to cover overdrafts.

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avatar shellye ♦107 (Cent)

I also prefer automatic transfers from a savings account to cover overdrafts, but if I didn’t have those funds available, I’d say ING’s deal sounds much more reasonable than most banks’ overdraft fees.

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avatar The Latter-day Saver ♦706 (Dime)

I really like ING’s line of credit on their Electric Orange Checking accounts, because it means I can leave all of my money in my Orange Savings account earning interest and when I need to purchase something using the checking account (via my Debit card) I can transfer the funds from savings when I get home that evening and usually pay nothing in interest.

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avatar Will @ HackingTheBank.com ♦258 (Nickel)

Wow, this is completely awesome. I’ve had overdraft fees hit me for $39 because I accidentally selected the wrong account when paying a CC. Then had a fee for the bounced payment. Overall, would have cost me about $70 but luckily I got both banks to reverse the fee. Still a ridiculous practice for the amount borrowed and the short-term nature of the overdraft. This is a much better solution. Absolutely love seeing banks work for their customers. This seems to be the opposite approach of Chase, which is attempting to squeeze every dime it can out of consumers.

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avatar Jett

I have an ING Direct Account because it feels more resonable than my Chase Bank account. This is a good example. I have maybe used this feature once maybe twice. I still try and avoid it but things can happen. You do not have to live in fear of this bank. For that reason I really only use my Chase account to cash checks and then move funds to ING. The day ING takes electronic deposits via apps, I am done with Chase.

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avatar skylog ♦368 (Nickel)

the rates are still good, but i have not used the service, nor do i plan to. i will just try to make certain i do nothing that would require the need for it. that said, again, the rates are good and it seems to beat many other competing services.

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avatar lynn ♦155 (Cent)

I agree with SKYLOG on this one. I like to be able to access what is mine when I want to. An unseen amount of anything is not comfortable for me.

I agree the rates are better than most other banks offer.

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