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Capital One's Online Savings Accounts and Perks for Costco Members

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Capital One Direct Banking

Capital One Direct Banking has long offered a few small perks for Costco members who open its internet bank accounts. These accounts have several nice features with no monthly fees, and they continue to have competitive rates. I thought it would be useful to highlight these perks for Costco members:

  • Cash bonus when you open your first deposit account and fund with at least $5,000 within 30 days ($60 for Executive members and $20 for Gold Star and Business members)
  • Higher interest rates (5 bps for InterestPlus Savings and 20 bps for Money Market)

The InterestPlus Online Savings Account continues to be a good deal. The Costco version pays 1.30% APY on all balances as of 1/31/2011. This account also has a 10% quarterly bonus on the interest earned with a monthly average balance of at least $10,000. So with the current interest rate, that can push the effective yield up to 1.43%.

Two downsides with the Costco version is that it requires a minimum initial deposit of $5,000, and the only way to qualify for the quarterly bonus is to maintain a $10K balance. The regular version requires only a $1 minimum initial deposit, and it allows monthly Capital One credit card usage to qualify for the quarterly bonus.

If you want limited check writing and ATM access, the money market account is an option. Checks are free. It's interesting to see that the Costco version has a rate 20 basis points higher than the regular version (The costco version yield is currently l.21% APY).

5-Day Hold Time on Deposits

Capital One Bank does provide some nice online banking features such as its ACH bank-to-bank transfer service. I reviewed these transfer features last year. However, it does have one downside that several readers have commented on. It has a standard 5 business day hold on deposits made into accounts, including ACH deposits. Here's what is stated in the account disclosure:

For accounts opened and funded older than 30 days, funds deposited into your account will be held for five business days (available to you on the sixth business day) after the day we receive and process the deposit.

Bank Overview

The internet account disclosures state that the accounts are "held at Capital One Bank (USA), N.A." This is one of the two FDIC chartered banks under Capital One. Capital One Bank (USA), N.A. has an overall health score of 3 out of 5 with a Texas Ratio of 14.41% (excellent) based on September 2010 data. Please refer to our financial overview of Capital One Bank for more details. It has been a FDIC member since 1994 (FDIC Certificate # 33954).

  Tags: Capital One Direct Banking, savings account, money market accounts

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Comments
15 comments.
Comment #1 by Anonymous posted on
Anonymous
Another good feature for the Costco online savings account is that there is no minimum balance requirement to receive the 1.30% interest rate, while the regular Capitalone online savings account requires a balance of $1,000 to receive the 1.25% rate.  Anything under $1,000 gets the dismal 0.1% rate.

5
Comment #2 by Anonymous posted on
Anonymous
Something to beware of with the Costco-CapOne account: the hold time for initial deposits is 30 days. Afterwards the hold time on new deposits decreases to five business days according to the CapOne rep I spoke with last Friday. Bottom line is don't use cash you may need within the next 30 days to open an account.

 

7
Comment #3 by Anonymous posted on
Anonymous
The Money Market account and the Online Savings account (no longer offered) are tied to Capital One, N.A. based in McLean, VA.  The InterestPlus Online Savings and Online Checking are tied to Capital One Bank (USA), N.A. based in Glen Allen, VA.  You can open accounts between the two institutions and be covered up to $250K for each one.

3
Comment #5 by Anonymous posted on
Anonymous
I realize fully Costco is a huge operation.  I know Costco stores are within driving distance of millions of Americans.

But Costco is not everywhere.  There is not, for example, a Costco store anywhere near to where I live.

Still, this Capital One deal is extremely attractive.  So I ask:

Is there a way for folks in my situation to join Costco and have the advantage of this deal?  Please bear in mind I cannot show up at a Costco store in person.  It simply is not practical.  If it is possible for me to join Costco anyway, what does it cost to join, and how do you do it?

2
Comment #6 by moneysaver posted on
moneysaver
Re Costco, I was a member for many years in the past, but not lately... During my time, you had to visit a store to take out a membership, in part to have your photo taken for the membership card. But once you're a member, you could renew annually by paying the annual fee online. So for someone who doesn't live near a Costco store, think about locating one when you travel or go on vacation. After that, you don't need to visit the store again.

Re Cap One, I'm one of the ones who have criticized them here for their horrible 5 business day hold policy in incoming ACH deposits... There is at least one kind of exception to that, though, in that at least if you have Cap One CDs and have the interest credited to your Cap One bank account monthly, there's no hold on Cap One's own interest deposits. Those are available immediately.

 

2
Comment #7 by CraigPD posted on
CraigPD
Membership costs & services

The .005% additional rate paid for a $50 Costco annual membership vs. regular InteresPlus Savings is negated unless you maintain > 100k balance per year.  The same deposit hold rules apply.

2
Comment #8 by bbug posted on
bbug
Anonymous #5,

Just sign up at costco.com and you can shop online at that site.

2
Comment #9 by Anonymous posted on
Anonymous
Is it better to open the savings and money market together or just one (savings or money market)?

What are the pros and cons of both the options?

1
Comment #10 by Anonymous posted on
Anonymous
I'm thinking of Costco Cap1 or Amex? Suggest the better one.

1
Comment #11 by mrvirgo posted on
mrvirgo
Anonymous 10 

I have had an Amex Savings account for two years now.. If you use another financial institution to bring money to Amex there's no hold whatsoever on your funds. However, if you use Amex's website to bring money from another institution there's a six day hold. I make it a point never to use Amex to put money into the account. The reps are very good and there are no minimums or fees. You can determine your cycle by the date on which you open the account; so for example, if you want your cycle to start on the first, open your account ON THE PHONE  with a rep's help. The opening process was practically instantaneous.  Another good thing about Amex is if you need some of your savings and use their website to withdraw funds, they are ligtnting fast. Your money will be out of Amex and into the other bank the next day.

It's a no frills savings account, period and the 1.30% has held up for over a year.

2
Comment #12 by Anonymous posted on
Anonymous
The difference is 0.05%, not 0.005%, so only need 60K deposited for a month to pay for the membership after the bonus. You can let the membership expire and still receive the better rate.

1
Comment #13 by Anonymous posted on
Anonymous
If you are ever dissatisfied with your Costco membership, you can always cancel and they will refund the membership fee paid.

1
Comment #14 by CraigPD posted on
CraigPD
I stand corrected in shifting percentage decimals.  .013 - .0125 = .0005 = .05% which (unfortunately) still equates to 100k for 12 months to recover a $50 membership fee.

1
Comment #15 by Anonymous posted on
Anonymous
I'm thinking of opening the interest checking account along with the costco cap1 savings account? I think it will be good as the transfers will be instantaneous and also has unlimited check facilities.

Will the interest checking result in HARD credit pull?

 

1