Several readers contacted me yesterday with this piece of good news. After months of promising its customers to launch the new feature soon, ING Direct now offers remote check deposit. The delay was likely caused by the efforts that resulted in Capital One purchasing ING Direct USA. Previously, in order to deposit a check into an ING Direct savings or “Electric Orange” checking account, you would have needed to mail the check to a deposit address, deposit the check in a local bank branch and transfer the money to ING Direct later, or find an ATM that allowed deposits to the online bank.

Although paper checks are heading towards obsolescence and electronic person-to-person transactions are becoming more mainstream, some people still find paper checks convenient. For self-employed individuals and business owners, checks from clients are still a very common way of doing business.

Remote check deposit, where you do not need to visit a bank to deposit a check or send it through the mail and wait, is made possible by the “Check 21″ law. With the advancement of technology, an image of a check is just as legitimate as the check itself. In the last decade, banks have been providing scanners to business customers to securely scan and email check images for deposit.

This was an expensive proposition. In recent years, the process has improved, thanks again to technology. The cameras on cell phones now have enough resolution for these purposes. Rather than sending its customers large pieces of hardware, banks offer mobile phone applications — often for both iOS and Android — that use the phone’s camera and a secure internet connection to make remote deposit as easy as snapping a photograph or two.

How ING Direct’s remote deposit “CheckMate” works

I wanted to try ING Direct’s remote deposit service, but without a check written to my personal account handy, I wrote myself a check for $10, withdrawing from my local Wells Fargo account. I downloaded the ING Direct app for my Android phone and configured my account. As expected, I needed my customer number, PIN, answers to several security questions, and recognition of my secret image, similar configuring online access on a new computer.

Once logged in, “Deposit” was an option at the top of the screen, alongside my account overview and transfers. To initiate remote deposit, the software required me to read and accept the CheckMate terms and conditions. The terms included a warning that deposits will be held by the bank for up to 5 business days. This is typical for check deposits to ING Direct, so it’s not completely unexpected. It is unfortunate, as even check deposits are often considered electronic transactions. The hold doesn’t apply to payroll checks or checks from the U.S. Treasury like federal tax refunds.

Check deposits using the ING Direct software are limited to $3,000 per check. Compared with Chase Bank’s $500 limit, this is an improvement, but could still make the service useless for some customers.

Once I agreed to the terms, the software prompted me to take a photograph of first the front of the check then the back of the check. It was difficult to focus on the back of the check, so I tried twice, changing the lighting environment to try to get a photograph that was more precise and included a legible copy of my signature.

After confirming both photographs, I entered the amount of the check and selected the account in which I wanted the $10 deposited. At the end of the process, I tapped the button to deposit the check and received this response:

All done. Your deposit will be available April 30. Hang on to your check until you get an email saying it posted. Then, void it.

ING Direct did send an email notification to say that my submission was successful, but this notification did not indicate that the funds were posted. For this, I’ll need to wait for a later email. I’ll update this article once I receive the email to indicate how long it takes to post $10. I checked my account online immediately after completing the deposit, and this appeared in my transaction history:

Notice how the total “Amount” is zero; the $10 is not available for me to use yet.

How to deposit checks without a cameraphone

The above process depends on having a mobile device with a camera and an internet connection. Not everyone has a smartphone or web-enabled, camera-equipped tablet. I didn’t see it at first, but ING Direct provides an option to remotely deposit checks without a camera. After you endorse your check for deposit, take a photograph using a digital camera of the front and back of your check. You could also use a scanner. Save the front and back as two separate JPG images. Access your account online, and click on “Image Upload” under the “Transfers & Deposits” heading. The website will take you through a process similar to the above.

Overall, whether using a mobile phone or your computer, depositing a check with ING Direct is now a simple and convenient process. If receiving checks is still a part of your life, and you’re looking for a way to exclude high-cost local banks from your personal finance system in favor of online banks like ING Direct, remote deposit is a necessity. ING Direct has made good on their promise to offer this service to their users.

Hat tip to Daniel from Sweating the Big Stuff and many others, including the bank itself, who brought the news to my attention.

{ 17 comments }

Last year, I opened a money market account with Aurora Bank, a division of Lehman Brothers. If it seemed like an odd thing to do, it probably was. Lehman Brothers had filed for bankruptcy in 2008, yet in 2011, they were promoting their online retail bank and looking for new customers. Not wanting to associate the marketing push with their brand, the bank had the name Aurora Bank rather than Lehman Brothers Bank, as it had been known from 1999 until after the bankruptcy.

I knew at the time that Lehman Brothers had been directed to sell Aurora Bank by May 2012, and that target is approaching. If regulators approve the acquisition, New York Community Bank will be assuming all deposits (savings, money market, and checking accounts) from Aurora Bank. New York Community Bank is no stranger to acquiring “online” banks. AmTrust was a recent acquisition. AmTrust “failed” in 2009, alongside many banks that crumbled under the credit crunch and recession, and New York Community Bank became the receivor. In this case, the situation does not reflect any problem with Aurora, but a condition of Lehman Brothers’ bankrupcty.

As I pointed out in my review of Aurora Bank, with the pending sale, Aurora Bank offered higher than average rates and initiated a marketing push to build a larger customer base in advance of the banking division being sold to the highest or best bidder. The risk of acquisition is mostly meaningless to customers, particularly those who are generally blind to brands and are not concerned with being loyal to a bank with whom they’ve had a relationship for many years. The FDIC ensures that changes like these don’t affect customers, even when banks fail without being acquired by another bank.

New York Community Bank consists of several divisions, each serving a different community. Most of these communities are in the New York area, but with acquisitions, the service area has spread. With the divisions operating somewhat separately, maintaining their own branding, and keeping the word “community” in many of the division names, the bank is certainly looking to emphasize the small-town vibe of a community-focused organization despite the growing size of the company.

• Queens County Community Bank is a division of NYCB that operates in Queens County, New York.
• Roosevelt Savings Bank operates in Brooklyn, New York.
• Roslyn Savings Bank operates on Long Island.
• CFS Bank operates in Westchester County, Manhattan, and the Bronx.
• Richmond County Savings Bank operates on Staten Island.
• NYCB also operates several banks in New Jersey including the Garden State Community Bank.

New York Community Bank’s online features are not as strong as one might expect from a bank that competes for business among the best online savings accounts, but Aurora Bank customers should receive services similar to those they’ve had over the past few years, including high-yield money market accounts accessible online.

Even the bigger online banks are not immune to changes; Capital One has acquired the United States deposits of online juggernaut ING Direct. The retail banking industry has been in a state of upheaval since the recession, and while the rate of failing banks has slowed down, banks with power are seizing opportunities for acquisitions. With consolidation, there is always fear that the customer will lose, and there is some validity to that fear. Competition is good in the banking industry, motivating companies to offer products that meet customers’ needs while keeping fees low.

Here is the text of the letter I received as a customer of Aurora Bank:

Dear Bank Customer:

Please be advised that at 12 noon on July 6, 2012, the following Aurora Bank FSB (aurora) branches will close permanently…

Separately, we wish to inform you that New York Community Bank, in a transaction that is subject to regulatory approval, will be acquiring any deposit accounts you currently maintain at Aurora. In the event the required regulatory approvals have not been received prior to the branch closing date, your accounts will be transferred to, and will be serviced by, Aurora’s home office, currently located at 1000 West Street, Suite 200, Wilmington, Delaware 19801, until such time as the necessary approvals are received. New York Community Bank will contact you with additional information regarding the transfer of your account(s). No action by you will be necessary.

We thank you for being an Aurora customer. If you have any questions, please contact our customer service department at 888-522-9295.

The letter comes to me as a reminder that I have too many open bank accounts floating around, mostly as a result of writing reviews for Consumerism Commentary readers.

{ 0 comments }

Just when you thought the era of new online banks splashing into the market was over, TIAA-CREF is on the hunt for customers’ deposits. TIAA-CREF Trust Company, FSB was established in 1998, and the bank just began offering deposit accounts in the last month. The products, under the name TIAA Direct, are intended to compete with the best online savings accounts and checking accounts, and as of now, the interest rates are attractive.

I have some of my retirement funds invested with TIAA-CREF’s mutual fund division, and after a frustrating effort with the company to fund my SEP IRA several years ago, I decided to leave the company in favor of Vanguard for my investments.

I initially chose to invest with TIAA-CREF due to their low minimum investment amount and their association, at least in my mind, with the education industry and non-profit organizations. Several companies within the TIAA-CREF family are non-profit organizations, but the government revoked its 501(c)(3) status in 1998. As a result, the company does not enjoy the same tax benefits as other non-profit organizations.

My experience with the investment arm of TIAA-CREF and the lack of a need to open yet another savings account may prevent me from opening a new account with TIAA Direct. Customers who are looking for the best interest rates would do well to investigate the bank further, though. When a new account arrives on the scene, it will attempt to attract new depositors, and that often includes offering a great interest rate for savings accounts.

I’ve found that for the most part over the last decade, banks who offer overly attractive terms and initiate a significant marketing endeavor after their arrival soon lower interest rates. Once the company has received its target amount of deposits, there is less motivation to attract new customers. Some banks have even closed their doors to new customers once their target was reached.

The following details are as of March 20, 2012, and are subject to change at any time.

TIAA Direct is attracting new customers to its basic High Yield Savings account with a 1.25% APY, one of the best interest rates currently available in the United States. This rate is about twice as much as the interest offered by some of TIAA Direct’s most relevant competitors.

There is a $25 minimum initial deposit and there are no fees. The savings account and the companion Money Market account are limited to six non-ATM transactions each month, as mandated by banking regulations. The Money Market account offers the same interest rate and minimum deposit as the High Yield Savings account but also offers check-writing privileges. Both accounts include an ATM card.

The bank is also offering an interest checking account with interest rates ranging from 0.05% to 0.15% APY. Customers will receive free checks, a debit card, and the ability to deposit checks using an iPhone application. Again, there is a initial deposit requirement of at least $25.

Once these accounts are open and funded with at least $25, there is no ongoing minimum balance requirement.

If you’re willing to lock up your savings for a period of time, TIAA Direct is also offering certificates of deposit with maturities of six months, one year, and two years. The interest rates for these accounts are lower than the High Yield Savings account and the Money Market account. You’re better off keeping your money in a savings account earning more interest and keeping your savings liquid until the CD rates exceed the rates earned in the savings account.

There are some finer points to consider; if you expect the savings account interest rate to dip below the best CD interest rate within the next two years, and you expect the CD rate to dip as well, you might be better off locking in the two-year CD rate today. It’s impossible to predict the future though, and you can make these decisions based only on what you know. There’s a good chance that the high interest rate on the savings and money market accounts won’t last, as has been the case for banks looking to make some noise and attract depositors right away.

There’s an indication of a lack of transparency, a troubling sign. There is a fee to withdraw funds from your CD before it reaches maturity, but you can only discover the details of this fee in the disclosure document customers receive only after funding the CD. You have to lock up your money before you’re told how much it’ll cost you to withdraw your cash in an emergency. Other banks typical penalize customers for withdrawing money from a CD by charging a fee based on the interest accrued in the account.

The real tests of a savings account, particularly in an environment where interest rates are low, are whether your money will be accessible when you need it and how well you’re able to work with customer service. TIAA Direct is new on the block, but if it inherits its customer service from its parent company, based on the feedback from hundreds of customers visiting Consumerism Commentary, potential customers may want to steer clear of this bank’s new deposit products.

Note: Richard Barrington from Money-Rates.com has asked for an interview with a spokesperson for TIAA Direct, but the company is saying they are not yet ready to launch these new products. You can, however, open a new account using the TIAA Direct website, and it is open to the public.

Photo: frankh

{ 0 comments }