If you’re looking for a strong all-round option in online banking, Capital One 360 is a particularly good choice. In fact, it’s The Simple Dollar’s pick for the best free checking account. This online arm of Capital One should appeal to anyone who wants to dip their toes into online banking with a convenient, trusted service that boasts several physical locations and a nationwide ATM network.
- No hidden fees or minimums as you earn interest on your everyday money
- 38,000 fee-free Allpoint® ATMs and 2,000 Capital One® ATMs
- Free MasterCard® Debit Card for all purchases
- Mobile check deposits with CheckMateSM & one checkbook’s free
Capital One 360 launched in 2013 after Capital One acquired ING Direct and rebranded the service. As a former ING Direct customer, I “inherited” a Capital One 360 savings account that I still use today, and I can personally attest to the convenience and ease of use it offers.
Capital One 360 at a Glance
When it comes to your banking needs, you’ll have access to just about everything you expect from a bank through Capital One 360, as well as some products that aren’t as common for online-only banks. Here are the key offerings:
- Savings: Capital One 360 offers personal, business, and kid-focused savings accounts.
- Checking: There’s a no-fee personal checking account and a teen-friendly checking account that links to a debit card and helps teach your child how to manage money.
- CDs: Choose from nine terms ranging from six to 60 months when you want to amp up your personal or business savings.
- Mortgages: Whether you need a fixed- or adjustable-rate mortgage, Capital One 360 has you covered at competitive interest rates.
- Investment accounts: With the Capital One Investing platform, you can build a portfolio of stocks, ETFs, and mutual funds. You can also open an IRA.
In addition, parent company Capital One fills in the gaps with auto loans, credit cards, and more extensive business and commercial banking. However, there are no money market accounts or personal loans.
If you’re nervous about online banking, note that your deposits with Capital One 360 will be protected by the Federal Deposit Insurance Corporation, just like at any brick-and-mortar bank. In addition, your data is fully encrypted and protected by several layers of security such as firewalls, intrusion detection, and multi-factor authentication.
Capital One 360 Savings
Capital One 360 Savings has a lot of appeal, and now is a great time to jump in: Great news – Capital One 360 has extended their current offer – sign up by 11/30 to earn up to $500 when you maintain a certain balance for 90 days. (Note offer expires on 3/31/2016.)
The interest rate, currently 0.75% APY, isn’t the highest you can find online, but it’s still pretty competitive — especially when you consider that the national average is .09%, according to Bankrate. Add that to this account’s other perks, including no fees and no account minimums, and you’ve got a compelling savings option. Here are the account features at a glance:
- No maintenance fees: At other banks, you may have to pay a fee just to have an account.
- No account minimums: You don’t have to have a certain amount of money to open an account or maintain any sort of minimum balance to avoid a fee.
- A great rate: You’ll earn 0.75% APY, more than eight times the national average.
- Open multiple accounts: You can have up to 25 different savings accounts for free.
- 24/7 account access: Need to make a withdrawal at 2 a.m.? No problem.
- Customer support any day of the week: You’re just a phone call away from a real person.
- Easy account management: Schedule stress-free automatic deposits, and track your progress with the My Savings Goals feature.
- Mobile check deposit: Depositing funds is as simple as snapping a picture with your phone using the CheckMate feature.
One of the nicest features on this list is the ability to open up to 25 savings accounts without ponying up account maintenance fees. This is a great way to stay organized if you have multiple savings goals.
Right now, I have a few separate savings accounts with Capital One 360, and have had several more in the past, including one dedicated to saving for a down payment on our house. You could also have one emergency-only account, one for a dream vacation, and so on.
I can also vouch for the convenience of the automatic savings plan, which let me funnel a certain amount of money into my savings account every other week without lifting a finger. You can also set up an automatic transfer to take place as often as every week or as little as once every few months depending on your savings goals. It’s a great way to force yourself to save and requires very little effort to set up.
The biggest downside here is the interest rate. I’ve watched my interest rate sink (and sink … and sink) over the past several years from a high of close to 5%, when I opened it with ING. Now, that’s not a situation that’s unique to Capital One 360 — rates have plummeted everywhere, and the current rate of 0.75% is definitely higher than brick-and-mortar banks offer.
However, some competing online-only banks are closer to 1.0% APY — you’ll find a few in our guide to the best savings accounts. That isn’t a lot in the grand scheme of things, but every bit helps.
Capital One 360 Checking
Capital One 360 Checking shares many of the benefits of the savings account, including no maintenance fees and mobile check deposits. Though I don’t personally use Capital One 360 for checking, The Simple Dollar has picked it as one of the best checking accounts for 2016. Why? Here are some of the main features:
- No maintenance fees or minimums: You won’t need to keep a minimum balance or hook up direct deposit to avoid maintenance fees, like many other banks require.
- No overdraft fees: At many banks, you’ll pay $30 or more every time your account is overdrawn.
- Nationwide ATMs: You’ll get fee-free access to 38,000 Allpoint ATMs and 2,000 Capital One ATMs.
- Free debit card: You’ll get a MasterCard debit card to make purchases. And as a bonus, there are no foreign transaction fees if you use it overseas.
- Pay other individuals for free: You can easily send money directly to others’ bank accounts, even if they don’t also bank with Capital One 360.
- Mobile check deposit: Depositing funds is as simple as snapping a picture with your phone using the CheckMate feature.
- Free online bill pay: Use the bill pay center to keep up with bills online — no need to waste checks or stamps. If a bill ever arrives late because of Capital One 360, they will pay your penalty fees.
- Earn interest on your balance: You’ll get 0.20% APY for balances of up to $49,999.99, 0.75% from $50,000 to $99,999.99, and 0.90% on $100,000 or more.
One of the biggest perks of Capital One 360 Checking is the lack of an overdraft fee. These fees top $30 at other banks and can add up fast. Instead, Capital One hooks up your checking account to an Overdraft Line of Credit of up to $1,000. You’ll simply pay interest (right now, 11.25% APY) on the amount you’re overdrawn only for as long as you’re overdrawn.
To get an idea of how much that can save you, here’s an example: If you slipped up and overdrew your account by $100 for just five days, you’d only pay about 15 cents in interest with Capital One 360 instead of a fee over $30 with another bank. That’s a big savings for anyone who has let their balance slip into the red from time to time.
On the downside, you’ll have to have a pretty substantial balance to earn anything more than 0.20% APY on this account, and there are competitors that offer better yields on checking. For instance, Ally will bump you up to 0.60% for balances over $15,000, and Bank5Connect offers 0.76% on any balance over $100. If you’re like most people, you aren’t going to park a huge amount of money in a checking account. Still, the interest is a nice bonus.
I also want to mention the fees that I did see: $25 to stop payment, $20 to overnight a check, and up to $40 for domestic wire transfers. The first two fees are in line with national averages, but $40 for wire transfers is high — so take note if you think you may use wire transfers often.
You will also have to pay for checks with Capital One 360. The first checkbook is free, but after that, it’s $5 per book of 50 checks. It’s a trade-off I’ll gladly make for no account maintenance fees and the lack of overdraft gouging, but it’s still worth noting.
Capital One 360 Accounts for Children and Teens
Online banks will probably be even more common once your kids are grown, so Capital One 360 could be the perfect way to teach them about money.
- Kids Savings Account: A lot of banks offer savings accounts aimed at teaching kids the value of a dollar, but most earn the paltry interest rates typical at brick-and-mortar institutions. Kids will earn the same 0.75% APY that their parents do and have access to tools including the automatic savings plan and My Savings Goals tracker. They get their own log-in to check their balance, but adults will have to transfer money to and from the account.
- MONEY (teen checking): This checking account aimed at teens help them learn how to use a checking account and fully featured debit card, but adults can easily keep tabs on account activity. Teens have access to all of Capital One’s ATMs as well, but only adults can initiate online money transfers.
Getting Started with Capital One 360
Capital One has a clean, easy-to-use website, and opening an account is a fairly effortless affair. To open a savings or checking account, you’ll need to enter standard personal information: name, address, date of birth, and Social Security number.
You’ll also need to link your new account to an existing checking account for funding purposes. You simply enter your account number and bank’s routing number, all found on the bottom of your current checks. You’ll be asked to verify ownership of your external account by confirming one or two small deposits from Capital One 360. You can link up to three personal checking accounts to a Capital One 360 checking or savings account.
After you open a savings account, your funds will be held for 10 business days for security purposes. After that, all new deposits are held for five business days before they’re available for withdrawal. Checking account deposits have a standard two-day hold; however, some types of deposits (such as direct deposit) are available sooner. You may have to wait up to five days to access all of a check deposit over $500, however.
Who Is Capital One 360 Best For?
You tend to rack up overdraft fees: If you’re in the habit of withdrawing more than you owe, you know that bank fees make that an expensive habit. Though you should still aim to better track your balance and avoid the situation entirely, Capital One 360’s Overdraft Line of Credit means you’re likely to pay just pennies in interest instead of over $30 in fees.
You’re looking for a lot of services in one spot: A lot of online-only banks focus only on checking and savings to the exclusion of other products, but you have a lot more to choose from with Capital One 360, like mortgages and investments. And 360’s parent bank, Capital One, provides easy access to other products such as auto loans and credit cards.
You’re not that tech-savvy but still wants to start banking online: Opening an account with Capital One 360 is very simple, and the online interface is very streamlined. Several cities now even have inviting brick-and-mortar Capital One 360 Cafes, where you can open an account or speak with an associate in person over a cup of Peet’s coffee.
You have a variety of savings goals and want an easy way to manage them: Capital One is great for savers with a lot of different goals. Because you can have up to 25 different accounts for free, it’s easy to keep your money in different buckets but still manage each account in one spot.
You like the idea of online banking, but lesser-known online banks make you nervous: Capital One 360 is an established brand with all the resources of a major bank, including its huge ATM network — that may mean peace of mind for some people.
Who Might Want to Skip Capital One 360?
While Capital One 360 should have a lot of appeal for the casual saver who wants a convenient venue for their online banking, there are still a few downsides. You may want to look elsewhere if:
You’re chasing the highest interest rate: While Capital One 360 offers solid interest rates that eclipse those offered by traditional brick-and-mortar banks, they aren’t the highest you’ll find online. For instance, some competitors such as Synchrony Bank and Ally offer savings account rates closer to over 1.0% APY.
You need your money fast: This can be an issue with all online banks, but some online reviewers complain that Capital One 360’s hold times on check deposits are too long. Assuming you’re using mobile check deposit to put funds in your checking account, you’ll only get access to the first $200 of a check over $500 the next business day. You’ll have to wait five business days to access the remainder of the deposit. (Note that direct deposits, if available, are a good way around this, as you can get same-day access to those funds.) For savings accounts, you’ll wait five business days to access any deposit. Since I don’t expect to turn around and immediately access my savings, I’ve been OK with this delay, but I can understand why the checking holds would be frustrating.
You want 24/7 customer service: Disappointingly, Capital One 360 does not staff its call center around the clock. Many may not take issue with this, but it’s worth noting that several competitors do let you talk to a live person, even at 3 a.m.
Ready to Bank with Capital One 360?
When it’s all said and done, Capital One 360 is a great option for anyone who wants the convenience of online banking, better-than-average interest rates, and no account maintenance fees. Capital One 360 has extended their current offer – sign up by 11/30 to earn up to $500 when you maintain a certain balance in your new account for 90 days.
If you’re not quite sold, you can check out more of The Simple Dollar’s banking recommendations in our guides to the best free checking accounts, best savings accounts, and best money market accounts to find the right home for your money.