Now that Countrywide Bank has just lowered the rate on its Savingslink account, Capital One's Online Savings Account has become even more competitive. Its top yield is currently 3.75% APY which is near the top for online savings accounts. There are a few savings accounts, like at Alliant Credit Union (see post) and at AARP Financial Savings Center (see post), which have higher rates, but Capital One's savings account has a few features that may make it a better choice for some.
Capital One's Online Savings Account is somewhat new. They used to only offer a money market account. The MMA has maintained solid rates, but rarely near the top. Capital One seems to have created this Online Savings Account to be more of a rate leader. It has features that should help it maintain higher rates like a rate tier structure, no checks, no ATM cards and an online-only application process.
Capital One's Online Savings Account has many similiarities to Countrywide's Savingslink in that the top yield is earned on balances of $10K or more. Also, there are no monthly fees if your balance drops below a certain amount. You'll just earn a lower yield. And like Countrywide, Capital One has a flexible ACH transfer service.
The main downside seems to be Capital One's slow ACH transfer speeds. Readers have reported that it takes at least 3 business days to complete. The money is pulled from the source account the day after you initiate the transfer, and it won't post until 3 business days later. Interest is lost during this time. If you have experience with Capital One's ACH transfer speeds, please leave a comment. Update 10/08/09: The incoming ACH transfer speed has been improved. It now takes only one business day for incoming ACH transfers to complete.
Another downside may be the customer service. Several readers have reported various problems (see comments from this post).
I've listed some of the important features of this account below. Many of the features like the ACH transfers also apply to their High Yield Money Market Account and Rewards Money Account. A comparison of these three is shown on its website. The features mentioned below are from the FAQ page, the account disclosure, and my online chat with customer service reps.
- 3.75% APY on balances over $10K, 2.75% APY for balances under $10K (as of 5/16/08)
- Minimum initial deposit is $1
- No monthly service fees regardless of balance.
- Withdrawals by online transfer are limited to six per calendar month (as required by Fed regulations)
- In/out ACH transfers are free
- Readers have reported slow ACH transfers. Reports are that it takes at least 3 business days to complete. Update 10/08/09: Incoming ACH transfers now complete in 1 business day
- During account's first 30 days, deposited funds are unavailable for 10 business days. Five business days after that.
- Allows linking to checking accounts, savings accounts and brokerage accounts.
- Trial deposit method for account verification used to link accounts
- Maximum deposit limit of $250K/day on in/out ACH transfers
- No hard credit pull in the application. According to the CSR, it's just a soft pull. So it shouldn't ding your credit score.
- Accounts are now only opened in Capital One, N.A. Accounts can no longer be opened in Capital One Bank which is separately FDIC insured from Capital One, N.A.
- You can add up to 6 beneficiaries per account. This is done when you receive the acceptance form. According to the CSR, the POD specification will be listed in the account title.
- Custodial accounts for minors are allowed.
- IRA products are no longer offered.
These liquid accounts can also be useful if you plan to open their Certificates of Deposit (which currently have yields up to 5.50% APY.) I was told that when the CD matures, you can call and have the funds transfered to the Capital One liquid account. Please refer to this post for more details on their CDs.
In the FAQ under the fifth general question, it describes the two FDIC entities:
Capital One Bank and Capital One, N.A. are both wholly owned subsidiaries of Capital One Financial Corporation. Both entities are FDIC-insured at least $100,000 per depositor per institution.
However, according to the CSR, you can now only open accounts under Capital One, N.A. I thought there may be a chance that you could open accounts under both banks which would provide an easy way to double your FDIC coverage.
Here's Capital One, N.A.'s FDIC page (Certificate # 4297) where you can review their financials. It's a large bank with $97.5 billion in assets and $67.1 billion in deposits based on 12/31/07 data. Bankrate gives Capital One 4 out of 5 star rating (sound) based on 12/31/07 data. BauerFinancial gives the bank 3.5 out of 5 stars (good) based on 12/31/07 data.
The Wall Street Journal reports on a Capital One SEC filing this week. There are concerns that Capital One will be hit hard as more consumers get behind on credit-card payments, as well as home and auto loans.
11/14/09: Savings: 1.50% APY over $10K; 0.50% under $10K; MMA: 1.20% APY
08/06/09: Savings: 1.60% APY over $10K
06/03/09: Savings: 1.75% APY over $10K; MMA: 1.30% APY
??/??/09: Savings: 1.85% APY over $10K; MMA: 1.40% APY
03/22/09: Savings: 2.01% APY over $10K; 1.01% under $10K; MMA: 1.60% APY
12/26/08: 2.10% APY over $10K
??/??/08: 3.00% APY over $10K
05/29/08: 3.50% APY over $10K
05/16/08: 3.75% APY over $10K