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Follow-Up on NetBank's Closure

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ING DIRECT
Since ING Direct is based in Delaware, newspapers there have had many articles on ING Direct. This one published in today's Delaware Online has some interesting information regarding NetBank's failure and ING Direct's acquisition of NetBank accounts. The article quoted ING Direct's CEO as saying about those who had over FDIC limits at NetBank, "When all the dust gets settled, a very high percentage -- 95, 98 percent will be paid back." Initially, the FDIC reported that depositors would immediately receive 50% of funds over the FDIC limit, and then they would become creditors of the receivership for the rest of the uninsured funds. The 95% payback of uninsured funds may not be too unusual however. The article states that "Over the past 15 years, the uninsured depositor has received an average of 72 cents on the dollar."

Another surprising quote from ING Direct's CEO is that he estimates 40 percent of ING Direct's accounts exceed $100,000. That seems very high to me. ING Direct does offer a high rate (currently 5% APY) on its Electric Orange checking account for balances over $100K. So I wouldn't be surprised that many would have over $100K in this account. If it's a joint account it can be FDIC insured above $100K. But 40% still seems very high.

There were some interesting quotes in the article from someone who has been through a bank failure in 1991. According to this person (who's currently the CFO of a bank), it took him two to three months to get his money back even though it was in a CD with less than $100K. This is the first time I've seen an example of FDIC insured money not being quickly accessible. This contradicts what the FDIC has claimed (see post).

Several readers who had NetBank accounts with under the FDIC limits have reported various issues with their accounts being transfered to ING Direct. As a reader reported in my previous post, any unpaid NetBank bonuses will not be honored by ING Direct. Even more frustrating is that ING Direct seemed to be selective in the features of the accounts that were transfered over. A reader reported that ING was quick to lower the rates to match the ING savings account but kept NetBank's monthly service charges. It took the reader a lot of work to resolve this issue.

If you're a former NetBank customer, please leave a comment describing your experiences with NetBank's closure and account transitions to ING Direct. For all the official information on this NetBank closure, please refer to this FDIC page.

  Tags: ING DIRECT

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Comments
36 comments.
Comment #1 by Anonymous posted on
Anonymous
I had a $15k CD with NetBank. After realizing I wasn't going to get the bonus I decided to redeem the certificate. I sent a Bank Mail 10/3 asking them the close the CD and send a check (they wouldn't do ACH); they responded 10/11 and said they'd close the account.

On 10/18, I received a new Bank Mail saying they couldn't mail a check until I faxed or mailed a written request to close the CD, a copy of my driver's license, and a signed Social Security card. But on 10/19 I received a check from ING for $15k plus the appropriate interest.

I still see my $15k+ balance online and interest continues to accrue. This seems strange, but at least I got my money. The check appears to have cleared as I deposited it 10/22 and haven't yet heard otherwise.

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Comment #2 by Harv (anonymous) posted on
Harv
I had 2 CD's mature on 10/24/07 at netbank I secure emailed them 2 weeks before they were to mature and requested them to be deposited in my Netbank cking account.They did that and I had the money pulled out by countrywide ACH and fund my cd at much better rates.only lost one day of interest.
Also I have pulled most of my
Trad IRA'S out of Netbank too
with no penalty's or fees

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Comment #3 by Cyclone (anonymous) posted on
Cyclone
BankingGuy, I can think of a situation or two where someone would not get immediate rollover of their FDIC-insured funds. If someone has multiple accts at a bank including a CD with less than $100k, then the FDIC may need to look at more details overall to figure out it is covered. I would likely this they work first on checking accts, then savings/MM, then CDs as those typically go down in liquidity and immediate needs.

Another possibility is if someone has a similar name, such as John Smith. The bank may have multiple John Smiths on record and the FDIC may want to be sure each is an independent person under their insurance limit. I know that the SSN would likely be a big clue, but it is reasonable to feel that the records between people of the same name may get mixed up and the FDIC would want to make absolutely sure before paying funds to the wrong person.

I still feel that most people would get access to their funds rather quickly (especially in today's computerized age), but it's something to keep in mind.

Just my $0.02.

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Comment #4 by Anonymous posted on
Anonymous
After learning that the promised bonuses would not be paid, I called the NetBank number, waited 42 minutes, and had the CSR close my CD and move it (and the interest accrued as of that date, 10/18, no penalties) into my money market account. I ACH pull from etrade the following day and sent BankMail to close the accounts to the avoid low balance fee. They confirmed closure next day. Without the bonuses added in, the interest rates aren't worthwhile.

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Comment #5 by Anonymous posted on
Anonymous
Was a member of a struggling credit union that was taken over by a strong CU. Not all the account data was fully transferred over to the new CU.

The new CU tried to charge me penalty on the accrued interest when closing out the CD early. They didn't have a record of the initial amount of the CD in their system, only the amount in it when it was trasnferred.

Not surprising because the defunct CU had a terrible computer system, probably why they got merged out.

I had the original CD paperwork and got the correct amount.

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Comment #6 by Anonymous posted on
Anonymous
I have had NetBank accounts for over two years and used them for primary checking and also had a mmk there. Balances weren't large, below 6k total since I keep most cash elsewhere, but I've had no problems. With the exception of the transition day, I've had full access to my money and my billpay options.

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Comment #7 by Anonymous posted on
Anonymous
I had three CDs worth around $60k and a checking account at NetBank. I sent them a bank mail to close the CDs and transfer the proceeds to my checking account.

All three of the CDs were promptly closed, but only the proceeds from two showed up in my checking account. Several days went by without a response to repeated bank mail inquiries. I finally called and talked to someone from the FDIC and after some research, they discovered it had been placed in someone else's account. They promptly corrected it that day.

From there, I was able to use a previously established ACH connection to transfer my money out of my NetBank checking. I then sent a final bank mail to close my checking account, which was done within two days after that.

For bonuses, all of my CD bonuses had already been paid, so no issue there.

All accrued interest on my CDs was paid and there was no early withdrawel penalty when I closed them.

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Comment #8 by Anonymous posted on
Anonymous
Question: What is "Bank Mail" as referred in a couple posts?

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Comment #9 by Anonymous posted on
Anonymous
bank mail is their secure message system that you can use to send/receive customer service messages once you log into your account.

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Comment #10 by Anonymous posted on
Anonymous
I have a 10k 1 yr CD(Mature on02/14/08), I got the $75 bonus shown as Interest Earned YTD. And there is a $386.32 shown as Interest Accrued. I think I will leave the CD there til it's done.

I have a MMA with Netbank (now ING) too.
The interest rate was 3.5% but now it's with ING, the rate went up. It was 4.3%. I know 4.3% rate isn't great but it's better, right?

It looked like Netbank's failure doesn't do anything different to me at all.
I used to wait for 45min - 1 hr to find a Netbank CSR to talk and it is still the same.

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Comment #11 by Anonymous posted on
Anonymous
I had 2 accounts (checking and CD) at Netbank. I chose to keep the CD open, but took out all the money via ACH from the checking account with no problem or interruption. My direct deposit is still going into the Netbank account with no problems.

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Comment #12 by Anonymous posted on
Anonymous
Have been a long time customer of Netbank. Rarely ever needed sustomer service. Account transition has been seamless. Have both Checking & MMA. I will probably transition out of the checking, as I need to write paper checks and ING apparenlty will discontinue that soon.

For the most part, I can say that it is as if Netbank never closed, just the owenrship changed.

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Comment #13 by Anonymous posted on
Anonymous
With the exception of some slow responses from my bank mail, the transition from NetBank to ING was very good. I did foresee a change coming to NetBank months in advance and moved most of my money out of the bank. (The change I foresaw was NetBank trying to sell, not the actual closing of NetBank.) I still have a checking account with them (which includes bill pay) which seems to work fine. However, because of the ridiculously low interest rate on my checking account of an APY 0.74%, I am planning on closing that account as well. I have been with NetBank since the early 1990’s and have been very pleased with them until the last couple of years when their interest rates dropped.

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Comment #14 by Anonymous posted on
Anonymous
I would have to agree with poster 12:14 PM, October 29, 2007. I have been with NetBank shortly after they opened for business and I really don’t have any complaints about them. The transition was seamless with the exception of the actual weekend when it occurred. Besides a new name there doesn’t seem to be much of a difference.

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Comment #15 by Trapahel (anonymous) posted on
Trapahel
I had a total of $1500 at NetBank for the checking and MMA bonuses. Once I heard on the Monday after I wrote 2 checks against the accounts and deposited them to another bank where I have an account.

After the checks posted online, I called up ING and closed the accounts.

The whole proces went smoothly, I got my money out quick without any penalties and they even credited me a small amount of interest, about $3.

Worked out for me.

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Comment #16 by Anonymous posted on
Anonymous
I had a 5 year CD with Netbank which matured the beginning of September. It took me almost 2 months to get the money. I talked with an FDIC claims agent who told me that they couldn't help me because my account was rolled over to an new 5 year CD - without my permission. So in FDIC view, I was not someone who had "claim" Netbank simply wasn't answering any of my faxes/emails/letters and phone calls.

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Comment #17 by Anonymous posted on
Anonymous
Had a CD with NetBank that wasn't scheduled to mature for another 1.5 years. Had no problem getting the money wired to my account with another institution with no penalty.

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Comment #18 by Anonymous posted on
Anonymous
Does anyone know if Netbank's pre-paid mail still works? It is the best feature and not many banks offer something like it. I am a type of guy who dont want to wait in a line at some local bank to deposit a check.

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Comment #19 by DrTebi (anonymous) posted on
DrTebi
To answer the question about Pre-Paid Mail Deposits, they do still work but are as far as I know, INGDirect does not provide the pre-paid envolopes.

So you will still be able to send in your paper checks, but will have to pay for the stamp yourself.

Here is a nice demo that shows some of the "features" of the Electric Orange account (INGDIrect's checking account):
http://home.ingdirect.com/images/demo_eo.html

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Comment #20 by Anonymous posted on
Anonymous
I felt more comfortable throwing my paper checks into an ATM slot than throwing them into a mailbox. With an ATM, you got same day credit (but a five day hold) and no worry about how long it takes the mail to be delivered. Nearly every ATM located at a bank, except for the big nationwide banks like Chase and Wamu, in my area accepted Netbank deposits. Unfortunately, ING ended ATM deposits.

If you have a lot of paper checks to deposit, you may be better off opening a local bank account with good ATM access and then transfering the funds to ING. Having an ATM would solve your problem of waiting in line at banks.

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Comment #21 by Anonymous posted on
Anonymous
The following notice was in fine print tacked onto the bottom of an email I got from Ing encouraging me to open an Orange Savings Account:

IMPORTANT CHANGES TO NETBANK MONEY MARKET, NET VALUE INTEREST CHECKING, and SUPER VALUE INTEREST CHECKING ACCOUNTS

Effective 11/23/2007 ("Effective Date") we will no longer process ATM transfers (including withdrawals) and point of sale transactions (including online and cash-back transactions) that you initiate using an ATM or debit card that accesses a NetBank Money Market, Net Value Interest Checking, or Super Value Interest Checking Account that was acquired by ING DIRECT on September 28, 2007. This means that on or after the Effective Date your NetBank ATM and/or NetBank VISA® Check card(s) won't work.

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Comment #22 by Anonymous posted on
Anonymous
After the announcement, I drained the Netbank savings by pre-established ACH link and then closed it.
Emptied the checking except for one cent to leave it open for the ING transition.
One CD remains that is due Feb. 2008, and the rate is good enough to keep until maturity, though it can be "broken" without penalty.
(Bonus already paid and added to CD bal.)
Then opened an Orange Savings at ING for the $50 bonus, and to pre-establish an account there so the old Netbank accounts transfer over without interruption of online access.
Aside from initial customer service cluelessness, no major probs. so far.

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Comment #23 by Curtis (anonymous) posted on
Curtis
I had already pulled out most of the money I had in NetBank, and was only leaving $500 in my MMA to avoid monthly fees until I could close the account without having to pay their silly early account closure fee. Now, I see that some people have had luck closing their accounts without fees, so I might try that.

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Comment #24 by Anonymous posted on
Anonymous
I had removed all but a few pennies from my NetBank checking to prepare for the merger. I recently got a message saying they will charge me the fee for not using the Bill Pay regularly. ING has also sent a message saying that they will give me $25 to open an ING Orange account.

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Comment #25 by Anonymous posted on
Anonymous
i was a long time netbank customer (sept 2002). i had a money market account and a CD that was coming due; total for both under the FDIC 100k insured amount - fyi, this amount is so well known that if you exceed it and get ****ed, you asked for it.

had i not heard the news of netbanks failure, i would have had no clue anything was going on.

checks cleared, atm worked fine, website was only down a day but i only learned that afterwards.

i have been extremely impressed with the whole process, seamless to me.

i called to cash in my CD, waiting less than a minute for an operator, and they asked that i send a bankmail online as they needed a written request. i did so and the money was in my money market account the next day.

no problems and still amazed the FDIC gets this all working so seamlessly. banks alone often have enough problem of their own, to have an entire one taken over by another bank without any real interruption is fairly impressive.

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Comment #26 by Anonymous posted on
Anonymous
My experience has been similar; everything functioning like before.

However, now I find that ING is going to transfer my accounts on Dec 8th. My savings account will become an ING savings account. AND, my checking account will become an ING savings account ( yes, that's not a typo).
Goodby billpay, goodby checking account; I can open an Orange checking, but I will have to re-enter everything, right at the start of the month when most of my bills are due. Makes it easy to look around for someone else (and, I'm a current ING (savings only) customer.

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Comment #27 by Steve (anonymous) posted on
Steve
The only complaints I have so far is that ING does not have a bank mail feature like NetBank, and they do not allow international addresses. Due to the fact that I am living in Japan, the bank mail feature is much more convenient than calling if I have an issue, and of course the fact that I am not allowed to have an international address is disappointing.

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Comment #28 by Banking Guy (anonymous) posted on
Banking Guy
I don't know why ING Direct has never developed a bank mail feature. You would think a bank that is suppose to be the leader of online banking would have such an important feature.

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Comment #29 by jason.mangiafico (anonymous) posted on
jason.mangiafico
I was a Compubank customer when Netbank bought them out. I really miss Compubank. When I heard of the ING takeover and no checkbook or debit card will be received, I started by withrawing my CD's, which deposited to my netvalue checking. I opened an account with an online savings bank (not ing), and wrote a check for the CD money to new bank. I then opend a new checking account with a local bank, then wrote a check for the remaining balance of my netvalue, and deposited the check at the nearest branch. All my netbank accounts are now closed. And yes, I still have some netbank deposit envelopes and I used one earlier this month to deposit my paycheck.

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Comment #30 by Anonymous posted on
Anonymous
My biggest complaint about this process is the LACK of communication. I called three weeks ago to see if ING would transfer my 10 years' worth of nbill pay data from Netbank. The customr service didn't know.

If I have to enter all that data myself, I'm not going to sign up with ING. While I'm setting up a new account with a different bank (Salem 5 Direct, based in Massachusetts), I figured I'd just pay all my December bills before the Dec. 7 cutoff.

I arranged all that earlier this week, and logged on today to find a message about ACH transfers as of Dec. 3 not being guaranteed.

I spoke with a customer service person who was very aggravating and could do nothing for me.

In the space of a day, I've lost a week on paying my bills.

Most importantly, I discovered TODAY that the Netbank site will no longer be accessible as of Dec. 7.

If ING's goal was to acquire Netbank's customers, they seem to be doing everything they can to bank elsewhere.

I'm also closing my other ING accounts, so ING, really, is losing 3x over.

whew, thanks for the rant ... I feel *slightly* better

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Comment #31 by Gareth (anonymous) posted on
Gareth
I was a previous ING customer and had my savings there.
I was informed, i didn't get any other information before this, that the day after thanks giving, iI would have no ATM card. I was going to be in NC, I am from MA, so I took what woney was left out of netbank except a small amount and deposited it into my Business account so I could get to it. When I got back from NC, I opened an electric orange account and a debit card was supposed to have been sent to me. 2 weeks l;ater, still no debit card, so I reordered, expediate service, $25 service, fee, Christmas is comeing, so I over paid my credit cards and used them, but I still cant get cash.
Is this legal,Is there going to be a class action suit. I find it funny when I cal ING, they say their name and ask if they can save me money, So I say not, so far you are costing me a bunch. This SUX!!!

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Comment #32 by Nicole (anonymous) posted on
Nicole
Going the lazy/procrastination route seemed to have worked for me this time...I had one small CD with Netbank that today I found was already moved under my existing ING Direct account. It appears to have the same terms and maturity date as it did under Netbank.

I'm very happy -- I didn't have to do anything and all of my accounts are consolidated.

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