Like many financial institutions, Capital One has been expanding the services they offer. Everyone associates the Capital One brand with credit cards but a growing number also recognize them as an online banking brand. Capital One bought its way into online banking through the purchase of ING Direct in 2012. Anyone familiar with ING Direct will notice some similarities but Capital One has added its one line of features to ING Direct’s core products to create Capital One 360. If you have not considered Capital One 360, then you may be wondering how it works and a want a quick review of each Capital One 360 offering.
The Basics of Online Banks
Online banks have become popular as less people handle cash or receive physical paychecks. The obvious drawback of online banks for some people is the lack of physical locations. If you prefer to go into a bank and interact with a teller face-to-face then transitioning to an online bank may be difficult. Capital One 360 does offers some physical locations however they are few and far between; however, Capital One does provide 38,000 fee-free Allpoint ATMs and 2,000 Capital ATMs across the country. If you are interested in a quality online bank, Capital One 360 is worth considering.
Capital One 360 Checking
Capital One 360 checking allows you to earn interest with no fee, no minimum online checking. As with most checking accounts, you will receive a free debit card. Capital One offers the ability to deposit checks using your mobile phone as well. This eliminates the need to visit a physical location or ATM.
There are several key benefits Capital One 360 Checking can offer.
1. No Maintenance Fees.
The most important balance for people with smaller accounts is there will never be a minimum balance requirement and direct deposit is not necessary to avoid maintenance fees. This makes Capital One 360 checking convenient and easy to use.
2. No Overdraft Fees.
Another benefit of Capital One 360 checking is no overdraft fees. This is accomplished by offer a feature often referred to as an overdraft line of credit. Essentially, the line of credit is loan against your bank account. While it is not something you should use often, it is much less expensive than the overdraft fees traditional banks charge.
3. Earn Interest on Your Checking Account
It can be difficult to find a checking account that offers to pay you interest in your balance. The variable annual percentage yield will vary based upon your average account balance during the interest accrual period. The APY will range from 0.20% to 0.90%. While this may not sound like much, combining the interest gains with the lack of fees and the final amount earned/saved can be comparatively significant.
Many of the drawbacks people cite when discussing Capital One 360 checking accounts mirror those of any online checking account. Below are a few potential drawbacks which are specific to Capital One 360.
1. Checks Must be Ordered from Capital One
Most banks allow you to choose where you can order your checks from which is particularly appealing to those who prefer vanity checks. Currently, Capital One 360 checking requires you to purchase your checks directly from them. While this isn’t inherently a problem it does limit your selection, and can be more expensive than some options.
2. Interest Yields May Not Be Competitive
While Capital One 360 checking does offer some interest on your checking account balance, there are some banks with higher yields. If the yield is your make-or-break reason to select Capital One 360 checking, then you could end up disappointed.
Capital One 360 Savings
Of all types of online bank accounts, savings accounts are the most popular. Many people make few if any withdrawals from their savings accounts on a regular basis so having an online account is no less convenient than a bank down the street. Capital One 360 Savings accounts offer a few unique advantages over many other online banks.
1. Minimal Fees
Capital One 360 savings has no maintenance fees and no account minimums. This is great news for anyone just starting a savings account. The only fees to worry about is if you make too many withdrawals per month.
2. Up to 25 Accounts
Having up to 25 savings account may not sound like a benefit you will use but it is ideal for the saver who wants a separate account for each item. For example, if you are saving for several high price items such as a vacation, new car, or down payment on a house then keeping those funds separate from your normal savings account makes it easier to be accountable for how much you are saving. Some people use this option to set up separate savings account for recurring expenses such as real estate taxes, insurance deductibles, or tuition.
1. Free Withdrawal Limits
Depending on the account, the normal limit is 6. This shouldn’t be an issue for anyone using their savings account to save but for those who want to park their funds in a higher interest savings account for only a few weeks then this probably is not the right account.
2. Solid but Not Elite Interest Rate
The Capital One 360 savings account has competitive interest rates for their savings account but they are not elite. A rate of 0.75% is higher than the industry average but is not the best around.
Capital One 360 Money Market Account
A Capital One 360 money market is account is similar to a Capital One 360 savings account in every way but one. The money market account has a higher annual percentage yield of 1.00%. To qualify for a money market account, you must keep your balance above $10,000. If it falls below this level, the account automatically transitions to a standard Capital One 360 savings account.
Capital One 360 Certificates of Deposit
Traditional banks have long been the place to go for Certificates of Deposit (CDs). Unfortunately, the return on CDs has plummeted over the past decade. Capital One 360 now offers CDs to all customers. While the terms for CDs of nine months or less are not much better than the Capital One 360 savings account interest rate, the two-year CD yield is about three times the national average. When shopping around for CDs, Capital One 360 is worth considering but the term of the CD will be a key factor is deciding if Capital One 360 is the best choice.
Capital One 360 Accounts for Children & Teens
Capital One 360 has two account options for kids and teens. The first is the Kids Savings Account. This goal of this account at most banks is simply to teach kids about the importance of saving money. As a result, the interest rates are barely worth mentioning. With the Capital One 360 Kids Savings account the interest rate is the same as the normal savings account which makes the power of compounding interest more valuable. The Kids Savings account also has unique tools, such as the Automatic Savings Plan, to encourage kids to save more. It allows kids to set specific savings goal, determine how much money they want to save, and how often money should be transferred in.
On the checking side, Capital One 360 offers the MONEY account. This is a debit card and bank account parents and their teens can manage together. It offers all the same features as the Capital One 360 checking account with the added feature of parents being able to sign up to receive text alerts every time a transaction takes place.
Who Will Benefit the Most from Capital One 360?
Are you one of the several types of people who will benefit the most from using Capital One 360 products.
1. You Regularly Get Hit with Overdraft Fees
The first type of person to benefit from Capital One 360 products are those who regularly get assessed expensive overdraft fees. While you should make it a priority to eliminate this bad habit, Capital One 360’s Overdraft Line of Credit means you will pay much less when you do overdraw your account.
2. You Want to Use Online Banking but Are Intimidated by the Idea
A lot of people are initially intimidated by the idea of online banking for two reasons. The first is a lack of tech-skills. The signup process and user interface make using Capital One 360 products simple and easy to use. The second is hesitation to use lesser-known brands. There are a growing number of online banks which are relatively unknown by the general public. While they are safe (if they are FDIC insured) the idea of using a bank, you have never heard of can be scary. Capital One is a well-known brand which can provide comfort to those who want to venture into online banking for the first time.
3. You Have Multiple Savings Goals
The ability to manage 25 different savings accounts within a single bank makes saving towards multiple goals easy because all the funds are separated out rather than lumped into a single savings account.
Who Might Want to Avoid Capital One 360?
Are you one of the several types of people who may want to avoid Capital One 360 products?
1. Interest Rate Chasers
If you are constantly on the lookout for higher interest rates and change banks to get them, then Capital One 260 products are not for you. While they offer better-than-average rates they are never industry leaders.
2. You Need Your Funds Immediately After Depositing Them
Capital One generally does a good job of making newly deposited funds available quickly, but for larger checks you will only get access to $200 immediately (assuming you used the mobile check deposit feature). You must wait up to five business days to get access to the remaining amount. For some people this is a deal-breaker but others will rarely be affected by it.
Capital One 360 Review – Overall
Overall, Capital One 360 works like most online banking platforms. The line of products is comprehensive and competitive on all fronts. As with all banks, your goals and preferences will be the key to determining if Capital One 360 products are right for your situation but is worth considering in most situations.