With its High APY, You Should Be Highly Interested in the Orange Savings Account
Sep 1, 2009
Pros: competitive interest rate, user-friendly web site and automated phone system, no fees
Cons: transactions aren't instant; money isn't available for a few days
The Bottom Line: I love free money!
Update: As of Sept. 1, 2009, the interest rate for ING Direct's Orange Savings Account is only 1.4%, but it's still a better rate than you would get from most brick-and-mortar banks.
I opened an Orange Savings Account with ING Direct in November of 2003 after receiving an advertisement in the mail. They offered a $25 bonus for opening an account with them. Free money? It seemed too good to be true. But it wasn't!
The Orange Savings Account has a higher interest rate than any brick-and-mortar bank you'll find in America. I recently closed the savings account I had with the bank that I use for checking because its interest rate was less than one percent, and they were about to start charging fees for using the ATM.
Unlike regular banks, ING Direct charges no fees for its Orange Savings Account, and there is no minimum balance. And with a competitive interest rate, you can actually see your account grow each month.
ING Direct keeps its interest rates so high by keeping its costs low. Since they don't have physical bank branches, they don't have to pay the wages of as many employees. It aggravates me no end every time I see the "greeters" standing around at my local bank. They don't do anything except smile and offer you a lollipop while taking your money. In New York, Philadelphia, LA, and Wilmington, ING Direct has cafes that feature Peet's Coffee, but most people do all of their ING Direct banking online or over the phone.
To open an Orange Savings Account, you have to have an existing account (checking or savings) with another bank that you link to your ING account. You can have up to three linked accounts.
This process, and all Orange Savings Account transactions, takes a few days. That's the only downside to the Orange Savings Account -- your money isn't available for a few days after you deposit it, and it takes two to three business days for money to be transferred out of the Orange Savings account into one of your linked accounts. For instance, if you make a deposit on April 13, the money will not be available for withdrawal until April 20th. So, if you are thinking of making a deposit to your Orange Savings Account, make sure that you won't need to access that money for at least two weeks.
To transfer money into your Orange Savings Account, you can use the phone or ING's web site. The automated phone system is extremely simple. You just need to type in your account number, PIN, and the amount of money you want to deposit or withdraw. In the time it would take to check your voicemail, you can transfer money into or out of your Orange Savings Account.
Each quarter, ING Direct will send you a statement with all of your transactions and the money earned that month. It will also tell you how much money you have earned since you first opened the account. To keep their costs even lower, ING Direct encourages customers to receive their statements online. If you choose that option, you get an e-mail each month telling you to log onto ingdirect.com to view a PDF file of your monthly statement.
For security purposes, ING requires three pieces of information to log in: your account number, a PIN, and a number that rotates. The third number is usually part of your Social Security number.
Another way to make money from ING Direct is that they offer a referral bonus. If you can convince your friends to start Orange Savings Accounts of their own, each friend gets a $25 bonus, and you get $10 deposited in your own account. Free money is definitely a good thing. The only catch is that your friends must follow the link in the e-mail you send them and start their accounts with at least $250.
ING Direct also offers CDs. I used these in the past when the economy was better, but the 12-month CD currently earns 1.5% (9/1/2009), so I don't think it's worth it. If you aren't comfortable locking up your money for a full year, you can create a CD ladder, which invests money into higher-interest CDs as the shorter-term ones mature. They have 6-, 9-, 12-, 18-, 24-, 36-, 48-, and 60-month CDs. However, any CD that's 12 months or above gets the same rate, so I don't know why anyone would want to keep their money imprisoned for any longer than that.
You can also use ING Direct for a home mortgage, but they don't have 30-year fixed rates, which is what I went for when I got my mortgage recently.
If you have an ING account, keep an eye out for special-offer e-mails. At the beginning of this year, they had a "Winter Save Up Sale" to encourage people to deposit more money into their Orange Savings Accounts. During this two-month time period, new deposits earned 4.75% interest.
Update: As of May 1, 2005, the APY on the Orange Savings Account is 4.15%, and the 12-month CD yields 5.25%. The CD rate went up a couple of days after I opened one, but they wouldn't let me change the rate. Oh, well. Even though she said "no," it was nice to speak to a real person on the phone.
At the end of June, 2006, the interest rate on the Orange Savings Account increased to 4.266% (4.35% APY).
If you want a free $25 to start out your account, email me at beckytcy @ yahoo [dot] com and I'll send you a referral link. Make sure to mention Epinions so I don't think it's SPAM.