If you currently have a free checking account at Capital One, it may not last much longer. Capital One has been sending letters to customers informing them that their free checking accounts will be converted on 6/5/2012.
This Consumerist article describes the three types of checking accounts being offered. The Consumerist reader was angered by the fact that Capital One was changing his account to a Premier Rewards account unless he selected another one. The Premier Reward Checking has the largest monthly fee and requires the largest balance to avoid the fee. This doesn't appear to be the case for all customers. A DepositAccounts.com reader forwarded me the email she received, and it informed her that she was being moved to the Rewards Checking unless she chose something different.
This change doesn't appear to be affecting all checking account customers. I still have a Capital One checking account that I opened in Texas (It was when they were guaranteeing 5% for 1 year). I haven't seen any indication that this free checking account is being changed.
You can see the three types of branch checking accounts in the Capital One checking account page. You can only see the branch checking accounts if your zip code is where they have branches. The Premier Rewards Checking and the Rewards Checking have monthly service fees unless you qualify to have them waived. The High Yield Free Checking account has no monthly fees. However, to maintain this account you must have either a combined monthly balance of $5,000 or have a Capital One Bank home loan. This is the case for most Capital One market areas. However, for Austin Texas zip codes, this $5,000 minimum doesn't apply.
Update: A Capital One official provided me the following information on this change:
Capital One Bank is NOT putting all customers in the Premier Rewards checking account. Please know that we're recommending accounts that we believe are a good fit for each customer based on their banking history. Certainly, not all customers default to Premier Rewards. Regardless, it's the customer's choice and we want to make sure customers know their account options and have plenty of time to decide.
Customers are receiving notice two months before the account change goes into effect, and once it does, they also will have a two-month grace period to meet the minimum balance or monthly direct deposit requirement. We want customers to make sure they're in the account they want and are providing them with numerous communications -- multiple direct mailings, email reminders, and a website that outlines the options and provides online chat support to answer any questions.
New Account Promotions
Even with the minimum balance requirement, you might still want to consider a Capital One High Yield Checking account. Capital One still has a promotion for new customers in which they are guaranteeing a 1.00% APY for up to $100K for the first 12 months (as of 4/23/2012). This appears to be offered in most of Capital One market areas (Washington DC, Delaware, Maryland, New Jersey, New York, Texas and Virginia). Some areas are offering lower rates (only 0.75% in Louisiana).
If you don't live in Capital One's market area, the only checking account available is the Interest Online Checking account. This promotional rate is only 0.60% for balances up to $100K for the first 12 months.
Future of ING Direct?
I hope these new fees and minimum balance requirements aren't an indication of what we may see at ING Direct after its merger into Capital One completes. In February ING Direct reported to its customers about what to expect with the merger into Capital One. So far it looks like the future ING Direct will be very similar to what we see today.