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Capital One Interest Online Checking Account Promotion

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Capital One Direct Banking

Yesterday I reviewed Capital One's InterestPlus Online Savings Account promotion. I just learned about a promotion for Capital One's Interest Online Checking Account. For new accounts, they are guaranteeing a 1.01% APY on balances up to $100K for 12 months. The offer is listed in Capital One's Interest Online Checking page as of 8/18/2011. Note, this account isn't available in areas where Capital One has branches (see below).

This rate isn't that great. For example, you can still get liquid accounts with 1.25% APY at some internet banks. However, the 12-month guarantee is nice. As we have seen since the Fed's mid-2013 pledge, rates continue to fall. I don't want to sound like a pessimist, but by next year, it may be tough to find liquid accounts paying 1.00%.

Here's the small print of the offer:

$500 minimum opening deposit required. As of 8/10/2011, a promotional annual percentage yield (APY) of 1.01% applies to account balances of $100,000 or less, and a promotional APY of 1.01% - 0.75% applies to balances of more than $100,000, depending on the account balance. An interest rate of 0.75% will be paid for the portion of your daily balance that is greater than $100,000. Both promotional APYs will expire 365 days after account opening. Upon expiration of the promotional APYs, the standard APY in effect as of that date will apply to the entire account balance.

The checking account has no minimum balance requirement and no monthly fees. However, the account requires a $500 deposit to open.

There have been a lot of concerns from ING Direct customers when they learned that Capital One will be acquiring ING Direct. Will Capital One increase fees? This Interest Online Checking Account is one example in which Capital One has fewer fees than ING Direct. For example, the first order of 50 checks is free. ING Direct just started to offer checks in which it charges $5 for 50 checks. Also, Capital One reimburses other bank ATM fees (up to $25 per month). ING Direct doesn't offer any reimbursements.

Those who travel overseas should like Capital One's debit card which has no foreign currency exchange fees. Most debit cards have a 2-3% fee that banks charge, plus Visa and MasterCard charge a 1% foreign currency exchange fee, which Capital One Bank absorbs and doesn't pass on to customers.

Local Capital One Bank Deals

If you live near a Capital One branch, you may want to check if they have any local deals. The best local deal is in Austin, Texas. Capital One branches in that metro area are offering the High Interest Free Checking account with a 1.30% APY for up to $100K guaranteed for 12 months (see my review).

Capital One Bank Overview

Capital One Bank branches are located in Texas, Louisiana, Maryland, Washington DC, Virginia, Delaware, New Jersey, Connecticut and New York.

Capital One Bank has two FDIC charters. Capital One Bank branches are under Capital One, N.A. (FDIC Certificate # 4297). Direct Banking is under Capital One Bank (USA), N.A. (FDIC Certificate # 33954).

Capital One, N.A. is a large bank with $128.7 billion in assets. It has an overall health score at DepositAccounts.com of 4 stars (out of 5) with a Texas Ratio of 10.19% (above average) based on March 2011 data. Please refer to our financial overview of Capital One, N.A. for more details.


  Tags: Capital One Direct Banking, checking account

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Comments
10 Comments.
Comment #1 by Anonymous posted on
Anonymous
Those who travel overseas should like Capital One's debit card which has no foreign currency exchange fees. Most debit cards have a 2-3% fee that banks charge, plus Visa and MasterCard charge a 1% foreign currency exchange fee, which Capital One Bank absorbs and doesn't pass on to customers.

Contrary to poplular belief, this is incorrect.

 

Thanks for contacting us about your Capital One account.

Capital One does not offer reimbursement for the surcharge charged by Mastercard on international ATM withdrawals.

If we can provide additional assistance, please contact us by using our online secure messaging system and we will be happy to assist you. Thank you for banking online with Capital One.

Sincerely,
Capital One Services, LLC

4
Comment #2 by LisaPA posted on
LisaPA
Anonymous, your comment is specific to ATM withdrawals, which is a whole different animal. Purchases made with the Capital One credit card overseas do not incur foreign transaction fees. This is not a matter of "popular belief", it is in the credit card terms and conditions, which makes it a matter of contract. If you didn't read the terms and made an ATM withdrawal on the credit card, that's on you.

4
Comment #3 by LisaPA posted on
LisaPA
Since I'm unable to edit my previous post, I meant it to read "credit or debit card".

2
Comment #4 by Anonymous posted on
Anonymous
In fact, I did read the terms and even asked around on FW. The "popular belief" comes from there. Also, if you read their terms they do not say anything about reimbursing any fees for ATM cards but they say they do not charge any fees either. They leave things like MC surcharge open to interpretation.

FWIW even the above post does not say if it is a debit card purchase or ATM withdrawal.

1
Comment #5 by KenBDG posted on
KenBDG
@Anonymous #1, That paragraph was from a Capital One Corporate Communications rep. I forwarded her your comment, and in her response, she said "In terms of the foreign currency exchange fee, we do not charge a fee nor pass on the MasterCard fee -- we do absorb that fee." She referenced this Capital One page under the "free" section which states "$0 foreign currency exchange fees by Capital One Bank for purchases and withdrawals made overseas."

3
Comment #6 by Anonymous posted on
Anonymous
Thanks Ken, but they are ambiguous about the fact if they reimburse MC fees. I could only construe that they do not charge any fees of their own from the link. I guess some representatives do not know the correct policies of the bank. I have an international trip coming up in a few weeks and will have an opportunity to test their claim and will post my experience here.

2
Comment #7 by Anonymous posted on
Anonymous
It's not clear yet if one is eligible for this new offer if one already has a Costco IP Online Savings Account.  E.g. when logged onto the Costco account you can select "Open an Account",  but no such checking account, indeed no checking account at all is offered under the Deposit Accounts listed.

1
Comment #8 by Anonymous posted on
Anonymous
If you apply on-line, the initial funding options are 'mail a check' or 'transfer from a non-capital one account'.  No option to transfer from an existing capital one account, so it looks like the initial funding is 'new' money.  Also, per the customer rep, no promo code needed.

1
Comment #9 by Anonymous posted on
Anonymous
Capital One now has High Yield Free Checking Account!!!! No foreign currency exchange fees on debit card transactions. Free checks for as long as you have account. Open with just $500; but, you must maintain $5,000 in combined Capital One Bank deposit accounts (checkking, savings, money market) or else account converts to Rewards checking. As of 10/20/11 promo yield 1.01% if CapitalOne branches are in your state. Fees assessed at ATMs in US are reimbursed upto $15 per statement period within 5 business days.

2
Comment #10 by Anonymous posted on
Anonymous
As an update to Ken's response to CapitalOne reimbursing forex fee on international transactions, I see that they indeed charge fees. The Mastercard site at https://www.mastercard.com/global/currencyconversion/index.html says that on 12/14/2011 USD->INR was 53.60 However, when I withdrew money from the ATM, INR 10000 was converted to a debit of USD188.42 which is an exchange rate of 53.07 This is about 1% surcharge on the rate charged by Mastercard.

There was no ATM owner surcharge involved (most ATMs in India do not charge a surcharge).

1