Updated on 11.02.09

The Simple Dollar Weekly Roundup: Next Project Edition

Trent Hamm

Now that my book is finished, I’ve decided to embark on another big time-consuming project, but this one is a little different.

I’m a big fan of online banks. I think they’re an incredibly powerful tool for helping you with your personal savings. For a long time, I’ve wanted to talk about a slew of online banks, just to review all of the different options out there.

There’s been a problem with this, though. I don’t like to talk about products that I don’t actually use myself. I won’t review a book unless I’ve read it and thought about it. I won’t review a financial tool unless I’ve used it extensively myself. And I won’t talk about a bank unless I’ve used it myself.

I use ING Direct as my primary bank. I talk about it often. But I don’t mention other banks for the reason above, and I want that to change. There is a huge diversity in online banks, offering different features, different interest rates, different offerings, and different tools for managing your money.

Here’s my solution. Over the next several months, I’m going to open accounts at a bevy of online banks. I’m going to try them out, see in detail what services they offer, transfer some money in out, test their customer service, and close the accounts (if I don’t intend to replace an account I’m already using).

Then, once a week, I’m going to post a detailed review of that bank in an effort to outline clearly what distinguishes it from other banks. What do they do differently? Who is this bank most appropriate for?

So I’m going to open this up to you a little bit. What would you like to see in a review of an online bank? What features really matter to you and would cause you to make the move to switch to a new bank?

While you chew on that, here are some interesting personal finance articles that might interest you.

“Natural Inclinations…Are Hardly Ever Altered or Overcome.” Over the last few days, I’ve been enormously inspired by this little quote. (@ the happiness project)

Do you do your most important work first? I used to have a very organized morning routine, where I would do most of my “routine” tasks before starting the day. What I found is that I got my “routine” tasks done, but most of the real meat of my work – the creative tasks – didn’t go nearly as well. (@ unclutterer)

How to Change Your Motor Oil Changing one’s own motor oil is a tremendous way to save money – when you pay someone else to do it, you’re essentially paying someone $20 so you can sit in a waiting room while some guy unscrews a nut, collects some oil in a bucket, screws the nut back in place, then dumps some clean oil in the top. Why not do that at home where you can do something worthwhile while the oil drains and save yourself $20? (@ art of manliness)

What To Do With A Financial Windfall This is a great step-by-step guide to handling a windfall. If you don’t have a plan, windfalls can actually be a large negative disruption in your life, as we talked about a bit last week. (@ moolanomy)

Results of a Week Without Spending Can you go an entire week without spending any money? As an experiment, this family attempted to have a week without any spending and managed to get by only spending $3. Fairly insightful stuff. (@ pt money)

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  1. Little House says:

    I use Capital One for my online bank. I have a high interest savings account that I can easily transfer money in and out of, though it does take 3 business days for the transfer to be processed. I like that Capital One has no fees, no minimum, and I can make transfers up to $200,000 a month (I think this is correct – I don’t transfer this much so I’m not 100% sure). I also have an ATM card for quick access to my cash, which I try to avoid using, and a checkbook for the account. The interest rate is OK at 1.4%, when I opened the account it was at a much better 3.5% rate.

    I’d like to see how it compares to ING or others. I initially chose Capital One because they are a well known bank, I didn’t want to go with a bank I never heard of. I look forward to the reviews of ones you try.

  2. Ryan says:

    One of the things I’m sure a lot of people would like to see is time that inter-bank transfers take. I am very happy with my primary bank and tend to rate chase for savings/efund between a few different banks, but not very often.

    A few other things that may be handy to say:
    1) Time for transfers
    2) Refunds of atm fees?
    3) deposit from home feature? (scanning checks, or using your phone to take a picture of them)
    4) free billpay?
    5) APR (and tiers if applicable)
    6) Minimum account balance to prevent fees?
    7) Rewards programs if any.

    I’m sure others will have some great ideas as well.

  3. Tax time will be extra fun this year with all the resulting 1099s of this project.

  4. Johanna says:

    I’d be interested in anything you can say about international transactions. What fees are added, and what exchange rates are used, when you make purchases in foreign currencies or from retailers outside the US (note, these are not the same thing), or when you use an ATM outside the US? I don’t suppose you’ll travel abroad just to test these things, but any information you can gather would be great.

    Another thing I’d be interested in is the ease of accessing and keeping track of all the information about fees and interest rates and so forth. I’m generally very happy with my (bricks and mortar) bank, but one thing that annoys me is that you can’t access the fee schedule online – you can only request a paper copy.

  5. Monica says:

    As I’ve experienced, the logistics with online banks are varied and I’m interested in that especially. I’ve tried several online banks for their high rates on cds or money market accounts, but the following things have bugged me with some banks:

    1) How long it takes to set up transfers for outside accounts – and if this can be done online vs. paper form (sometimes I still have to print out a transfer set up form, sign it, and send it in)

    2)How much paper they still send you even when you have an online account and everything is available online (Charles Schwab LOVES to send me lots of paper, very irritating!)

    3)How often the account is inaccessible? One of my banks was notorious for not being available when I wanted it to be (server down, etc) and I got so frustrated, I closed my account.

    4)How easy is the site to navigate? (I still get lost around Charles Schwab’s site even after three years of holding accounts there!)

    5)Transfer Limits? Some accounts have very limiting amount of transfers that can be done in one month, etc.

    6)Ease of closing the account and time to get account balance in your hands.

    7)Customer service by phone, internet…wait time, helpfulness, etc.

  6. Marc says:

    Great project Trent! There are a few things I like about the banks I use and would like to see how other banks stack up:

    1) Security. I really like the virtual keyboard on ING’s login that would thwart keystroke loggers.

    2) Deposits. I haven’t found a great way to deposit to ING, but the options available through USAA are fantastic. Mail-in deposits, scan checks online, and deposit using a picture with your iPhone?!?!? Awesome!

    3) Customer service. USAA has the best customer service I have ever experienced with any company. They have called me within seconds of a transaction to make sure it wasn’t fraudulent. They have gone the extra mile every single time I have talked to them.

    4) Also with @Ryan #2. Refund of ATM fees. Huge plus for online banking.

    5) I also agree with @Monica #6. I have had trouble closing accounts with several banks.

    Looking forward to the new book! Congrats on getting the manuscript done…maybe you should give yourself a break before jumping into the next project!

  7. Hillarie says:

    Others have already covered several points, but I’d also suggest looking at their mobile sites/apps. Are the apps/sites easy to navigate? Are the important functions available (Account balance, transfers, BillPay)? Do they have “gee-wiz” features? I.E. USAA Online Banking lets you deposite a check electronically. The website lets you upload a scanned image of a check, and their iPhone app lets you snap a pic of the check.

  8. Some people are afraid of online banks, worried about FDIC not covering them, or worried that there really isn’t a bank there at all.

  9. nickel says:

    Early Retirement Extreme: Odds are, they won’t issue a 1099 for the amount of interest that will be generated from this project. Yes, Trent will technically have to report the interest, but it’s not much work to do so.

  10. Eden Jaeger says:

    If you use Mint, I’d be curious to see how well the bank syncs with Mint. ING is ‘supported’ but doesn’t update very easily (and constantly says there are errors) in Mint.

  11. Cara says:

    Second the Mint recommendation. Also, ING was really hard to set up on Mint- there were a good dozen or so security questions that had to be completed, in a certain order.

  12. heather t says:

    I have Bank of America for my personal checking and savings. The savings interest rate is awful, they charge for online bill paying, and they charge me $12/month for the checking, DESPITE being both a homeowner and having automatic deposit, so you can bet I am actively bank shopping!

    At work we use 5/3 which has free bill pay and is a pretty easy site to use. That’s a business account, so your mileage may vary.

    I checked out ING based on your recommendations here, and it sounds great except there is no provision for on-the-spot paper checks, like the kind I use to pay my son’s day care. Need that. Absolutely.

    Definitely looking forward to this series!

  13. PT says:

    Looking forward to your take on the financial products/banks. Thanks for sharing my “no spending” experiment.

  14. Brent says:

    My list:
    1) Consistency of Interest Rates(is this a promo gimmick or the real deal?
    2)ATM coverage/refunds
    3)Online/Management Compatibility ie Mint/Quicken etc
    4)Clarity of Statements
    5)bill pay (mail payment too)
    6)Check Deposit features
    8)Anything that Can’t be done online(phone/fax etc)
    9)Security (how good and how annoying/complicated)

    I would LOVE to see a summary when its all done in some sort of a ranking on multiple points of each Bank.

  15. John says:

    I use HSBC. I’ve mostly been happy with it. Rates are as good as most online banks. I want to know how easy it is to open additional sub-accounts once you get an initial account established. For example, maybe I want to open a sub-account to keep track of savings for a specific item (car, etc.). I’ve done this with HSBC but it seemed cumbersome. Also, is there a limit to the number of sub-accounts one can open? Thanks. I’ll be interested in reading your research results.

  16. Megan says:

    I just recently made the transition from our brick-and-mortar bank to Charles Schwab (for checking and fun money) and ING (for savings). I would be curious to hear what else is out there, just for my information.

    Things I’m specifically interested in:
    1) site ease of use,
    2) how long it takes for money to move between internal accounts, and to and from external accounts,
    3) if the bill pay is easy to use and how automatic payments are handled,
    4) hours of customer service availability, and where the customer service personnel are located (in the US, in India, or whatever).

    And if you want to ask questions of people who have accounts with the online banks in question, as I said, I’ve been using Charles Schwab for about four months, and I would be happy to answer any questions you had about my experiences with them. If that helps your research at all.

  17. Emily says:

    No service in particular that I’d like you to look at, except for the time it takes to transfer funds.

    I am intersted in looking at some less well-known banks, such as Redneck Bank http://www.redneckbank.com their rates are great, I’ve thought about making the switch but like someone else posted, I’m a little nervous about going to someone that’s not a big name.

  18. J says:

    Online bank reviews are pretty easy to find. I’d suggest trying to get beyond it and do a “bank review”

    I would like to see the online banks compared with “local” establishments. Pick a couple of local credit unions, banks, or even branches of an large bank — since one of your common themes is using “local” resources. They likely all have an online presence of some kind, in addition to employing people you live with and lending money to local companies.

    We went from having an online bank back to using a brick-and-mortar bank that offers a discount plan through my employer. No fees of any kind (as a matter of fact, for using electronic statements and online bill pay we get a credit!), ATM’s are ubiquitous and branches are in the supermarket, open 7 days a week. One of the driving forces for us was that we moved back to using cash more often, and the amount of cash we would need to get out of the ATM once a month was more than the ATM would allow — and it could only be gotten in $20 increments, so making change was difficult. With a local bank we can do this all during our grocery shopping.

    Our online bank was decent — but they got bought out a couple of times, changed their name incessantly and went from truly awesome customer service to average and then finally below average service. Add in the waiting for banking by mail and the wavering of the “waiving ATM fee” policy, in addition to fee structures changing all the time, and you pretty much have all the complaints of a local bank.

    We also do keep savings at ING — they are great — but for our day to day banking, we are VERY satisfied with the local bank.

    I’d also be interested in knowing if you can open an account with USAA. My friend was able to do so because his father was in the Navy — and he absolutely loves them.

  19. Nick says:

    1. Mint compatibility. I’m closing my account with my company’s credit union because it isn’t and probably will never be on Mint. (My mortgage bank is also too small to have a web presence, but I’m not about to refi so that shows up on Mint!)

    2. How security balances with ease of use (Why does it take three pages to log in at some banks?)

    3. How easy is it to get a real person on the phone when you need to?

    4. Their track record for savings interest rates, and their fee structure.

    5. Fringe benefits, such as rewards programs or paid ATM fees.

    6. Billpay availability and robustness

  20. J says:

    And, of course, it would be interesting to know who you are *really* banking with — since banks have been consolidating like crazy, the “small online bank” may in reality be a bank that was acquired by some large megabank that was acquired by another and then sold to a holding company, who will re-brand the bank in about six months and up your fees.

    Also, a look into how much TARP money the bank took on may be interesting if you can find that information, in addition to links to other information about the financial health of the bank. I know that the money is backed, but I’d rather not use a bank that’s going to go under in the first place!

  21. Trent Hamm Trent says:

    “Early Retirement Extreme: Odds are, they won’t issue a 1099 for the amount of interest that will be generated from this project. Yes, Trent will technically have to report the interest, but it’s not much work to do so.”

    I expect that I’ll be generating $0.02 in interest or so per bank. The minimum amount for a 1099 is $600, though most banks issue them down to a negligible amount ($1 or $5), so there probably won’t be any 1099s to deal with.

    Thanks for all of your great input, guys! I am going to open several accounts shortly and I wanted to get lots of ideas on what to look for before I did so.

  22. Trent Hamm Trent says:

    “Online bank reviews are pretty easy to find. I’d suggest trying to get beyond it and do a “bank review””

    That’s kind of why I was looking for suggestions from readers. I’m trying to seek out the things that are hard to find in other online bank reviews that are genuinely useful.

  23. bethh says:

    I second or third any suggestions that you fabricate a reason to call them and see how helpful they are able to be. I use USAA exclusively and wonder how good the service is for other banks.

  24. Kevin M says:

    I use ING too and it seems like it takes forever for the money to transfer and be available. I would definitely like to see a comparison of this against other online banks.

    RE 1099s – FWIW, the bank isn’t required to issue one unless the total is over $10, but you’re still required to report all interest earned.

  25. Kevin M says:

    EDIT – $600 is the minimum for 1099-MISC, not 1099-INT/DIV.

  26. Marsh says:

    Great project! I agree with Johanna–international transactions.

  27. John Smith says:

    I think before you start reviewing perhaps it would be great to take the course of action of the following:
    1) History of online banks and pros/cons in general
    2) Reviews (Measure all the banks with the same yard stick please!)
    3) Conclusion / Lessons learned with a single post/table of features with links to each review.

    Good luck on your journey and grats on the book.

  28. Trent Hamm Trent says:

    “I second or third any suggestions that you fabricate a reason to call them and see how helpful they are able to be. I use USAA exclusively and wonder how good the service is for other banks.”

    Oh, I have some good ideas along this path. Banks, watch out…

  29. sumokitty says:

    I would like an online bank that considers client relationship before returning a check.

    I am w/ING. This just happened to me: I originated a electronic debit from my credit card provider to pay credit card bill. I did this weeks before the actual debit date. Although I had sufficient funds in other ING subaccounts, when my electronic debit posted to the designated account, it was returned for NSF. (it was NSF by less than $100). Considering I had direct deposit in a few days, and especially since I had money in other ING subaccounts (thanks to you Trent for the prior “subaccount” lesson), the check was returned and I incurred a whopping $40 returned check fee from credit card issuer. Ouch ! This really hurts because I HAD THE MONEY. But made a one-time mistake and didn’t have enough money in the right account.

  30. Hannah says:

    In addition to taking into account the nrates and the features of the bank, the actual user interface of the website is really important to me. For example, I love T Rowe Price’s website. It’s neat, organized, easy to navigate etc. Many well known bank websites look like a high schooler’s first web design project, or they haven’t been updated since the 90’s. I would pay a slightly higher fee or take a slightly lower interest rate to use a website that is up to today’s standards. I think including screen shots and rating the ease of navigating the site would be a great idea.

  31. Ruth says:

    I’d like to know:

    How long it takes to set up an account
    How long bank transfers take (to other customers and to customers of other banks)
    Atm fees
    Interest rates and requirements to get them
    Website ease of use
    How much it costs to get checks
    Customer service experience
    Any extra charges/fees
    Any other “gotchas” that make it difficult to add or remove your money from the account.

  32. Ruth says:

    Oh, and how long the statement history is stored on the website. I just found with one of my accounts that only the previous month is easily accessed, the other statements have to be downloaded to view.

  33. Scott says:

    Thank you for doing this! I look forward to reading these posts. I’d most like to know how easy it is to make deposits into these accounts. If I have a check made out to me, what are my options for depositing that into my account? How long does it take for the deposit to be acknowledged? How long does it take for the money to be useable?

  34. Mary W says:

    I’d enjoy having you include a local credit union or two in your investigation. Often credit unions are suggested sources of good, relatively cheap loans, but they don’t have the money to lend unless members make deposits.

    My primary *bank* is still the same credit union I joined when got my first job. I’m now retired. Customer service has been great, but I’m not sure how interest stacks up.

  35. Gwen says:

    Will you please review South Shore Bank in Chicago? I am currently using them because their online savings rate is the highest around and they are a community development bank.

  36. mes says:

    I’m interested in the general intuitiveness of the web sites. Is it easy to navigate, and do what you want to do, without using the help menus? Another thing I’d wonder about is the ease of downloading transactions into Quicken. Some companies make it really easy and others seem to make it as difficult as possible.

  37. Russ says:

    Um.. let’s review:

    “I’m going to open accounts at a bevy of online banks”.

    Have you condsidered the consequences to your credit? Will the banks be leary of so many recent inquiries from other banks? These won’t be soft hits.

    Maybe you can start a message board for this site and get all kinds of feedback on several financial insite from your viewers.

    Just a thought!

  38. Shelly says:

    Minor typo — on the last link about the week without spending, they actually *made* $3, not the other way around. :)

  39. Jo says:

    Russ, it isn’t so much a credit issue as it is banks looking at how many accounts that have been opened in the past 12 months. I am pretty sure it is to verify that there’s no “kiting” going on, and rate chasing, etc.

    Trent, that is still a GREAT idea. Gotta ask, however, if you’re familiar with the Bank Deals – Bank Rates and Deals website (another blog) which I follow daily. Like yours, those who follow Banking Guy, are given a dearth of information regarding banks’ promos, where they stand with Bauer Financial and Bankrate.com. He has also listed all the banks that have failed in the past year.

    I am not saying you would be posting the same things as Banking Guy has. You’ll be addressing many different issues that is missed by BG. No matter, cuz I will be following yours equally.

    Knowledge is power. Thank you for all you do!

  40. Jessica says:

    My bank has budget management tools built right in to my online access to my account. So I can track my spending in various categories without having to transfer my information to a third party, like Wasabe. This is not something I have found with ING. I would be interested to know how many banks have these budgeting tools available.

  41. Griffin says:

    I need one that will accept PayPal payments. So far, bupkis.

  42. Georgia says:

    I have 3 savings accounts with Emigrant-Direct and they have been excellent. I don’t have a checking. I can transfer money easily from them to my bank. If after a certain time of the day, you get it in 2 days, if before you get it the next day. If you order on Friday, you get it on Mon or Tues according to the time of day you posted. When I opened the account it was 5.05% APY and is now down to 1.30%. But it still seems to be comparable to other rates I’ve seen and it has been easy to manage. I have direct deposits made from my checking at my regular bank each month.

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