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Capital One Direct Banking Review


Capital One Direct Banking and its savings accounts have several features that give Capital One an advantage over other popular internet banks including ING Direct, HSBC and Dollar Savings Direct. Capital One continues to offer competitive rates on its InterestPlus Online Savings Accounts (1.35% APY as of 5/30/10). Costco members qualify for a rate that's 5 basis points higher. It requires a balance of $2,500 to earn the top rate ($5,000 for the Costco version). There's also a 10% quarterly bonus on interest earned if a $15,000 average monthly balance is maintained. For a 1.40% APY, this increases the effective yield to about 1.54% (1.40% + 0.10*1.40%). There are no monthly fees regardless of the balance.

Another type of account that's available is Capital One's High Yield Money Market. Unlike the InterestPlus account, the money market doesn't require a minimum balance to earn interest ($100 for the Costco version). It also offers limited check writing (free checks) and an ATM card. The only downside compared to the InterestPlus account is lower rates. The rate is currently 1.10% APY (1.30% APY for the Costco version) as of 5/30/10.

Sign-up Bonus for Costco Members

Another perk for Costco members is a new account bonus: $60 for Executive Members and $20 for Gold Star, Business Members. Here's the requirement as described by Capital One:

Received on your first Direct Banking account of any kind opened through the Costco program with at least $5,000 deposited in the first 30 days.

Improving ACH Bank-to-Bank Transfers

In the past, Capital One suffered from slow ACH bank-to-bank transfers with at least a two days in which interest would be lost. Late last year, Capital One improved the speed when you pull funds from an external account. It now takes only 1 business day to complete.

A reader reported that Capital One will be making an improvement to the outbound transfers in June. According to the reader, interest will be credited while the ACH is in progress. It appears outbound transfers will still take 3 business days, but at least you shouldn't be losing out on the interest during this time.

Except for the long outbound transfer time, Capital One's other ACH transfer features are notable. Some of the important features that I was described last year include:

  • Allows up to 99 linked external accounts
  • High ACH transfer limit per day: $250,000 in or out
  • External links are set up online with verification via trial deposits

With these features, it makes for a nice hub account which allows you to manage multiple accounts at other banks. This is where internet banks like ING Direct, HSBC and Dollar Savings Direct fall short.

FDIC/Financial Overview

Capital One has two FDIC charters, and these two have different Bankrate ratings (based on 12/31/09 data):

  • Capital One Bank (USA), Glen Allen, VA, Total deposits of $27 billion (as of 3/31/10) FDIC Cert # 33954, Bankrate star rating of 5
  • Capital One, N.A., Mclean, VA, Total deposits of $94 billion (as of 3/31/10) FDIC Cert # 4297, Bankrate star rating of 3

Update 8/25/10: Capital One's disclosure now states that the online savings accounts are held at Capital One Bank (USA), N.A.

Other Savings and Money Market Accounts

Related Pages: savings account

Related Posts


  |     |   Comment #2
The InterestPlus accounts can only be held in one of the two Capital One banks so I've been looking at what's the best rate option for accounts available in the other bank to get more FDIC coverage.  The "Rewards Money Market" account (not mentioned above) might be best depending on how the miles can be redeemed (details of which aren't disclosed on the website).  If it's 1 cent per mile (at 1 mile per $20 per month) then that's a 0.6% boost on top of the baseline 1.01%, otherwise at a half cent per mile it works out to about the same at the Costco Money Market account.

If you deposit a large physical check with them then they may not post it to your account for about a week (unlike most banks that post but make the balance unavailable).  They then backdate the deposit when they do post it.  I got hit by this when depositing two checks together by mail, and they only posted the first immediately.

Quotes of a few sentences from Capital One's letter are below.

"These changes will take effect 6/19/2010"

"Visibility of Online Transfers: While transfers are in process, they will be visible in your Current Balance in Online Banking"

"You will see your funds in your Capital One Direct Banking account Current Balance when you make a transfer to another financial instutuion using Capital One Online Banking, but the funds will not be available during the two business days it takes for the transaction to process."

"More Interst Earned: While your transfers to another institution are in process and reflected in your Current Balance, they will be earning interest.  After all, your money should be working for you as much as possible."
  |     |   Comment #4
CapitalOne is not very good with ACH transfers.  I opened an account with them thinking of closing my account with another bank, however, I changed my mind as I found out CapitalOne ACH is very slow.  I really do not know if it is the ACH that is slow or if this is a way for CapitalOne to gain a "float".  Four business days have passed since CapitalOne has taken the funds from my Checking account at one bank and from my other online bank, however, the funds are still not available.  I sent them an email and even at this CapitalOne really sucks as they have not responded to it -- it has been 4 days (3 business days, 2 weekend) since.  I called customer service and I was told that it takes at least 7 business days for the ACH funds to reflect in the account.

My advice is, it does not pay to have a 0.05% advantage that CapitalOne offers over online banks such as AmericanExpress Bank -- it has never taken AmericanExpress Bank more than 1 business day to effect the ACH transfer and get reflected in my account.  Even Ally bank does not take that long.  So folks, If I were you, stick with banks like AmericanExpress or Ally.  I will certainly do so and will be closing my CapitalOne account! 
  |     |   Comment #17
I am having the same problem and it's ridiculous.  I too am closing  my account and going  elsewhere.  There is no doubt that Capital One gets the money the same day it is transferred and they are drawing interest off of money that you should be getting interest from.   This in  my  opinion is a scam.  I'm done with them. 
  |     |   Comment #5
After reading Capital One's disclosure for online banking, it reveals that ACH (bank-to-bank) transfers are done in one business day if the transaction occurs before 7pm (not sure of the timezone).  Also consider Holidays and Weekends when performing these transactions.  With that being said, how does Capital One recite you different information than what's in their own disclosure?
  |     |   Comment #6
I was with Chevy Chase and now taken over by Capital One bank.  The operation is a mickey-mouse rip off in many ways.  The ACH data (check number) which was provided by Ch ch is no longer.  They closed multiple ATMs over the weekend with no warning and now they are closing my local branchl.  They don't care about your problems in the least; their website sucks and they are ripping me off.  If you want to know the fees please go to the local branch dduring their now-shortened hours.  How convenient!  I am moving everything out.
Former Chevy Chase Customer
  |     |   Comment #7
I was a former Chevy Chase customer and about to be a new Sun Trust Customer!  I absolutly hate the new on-line banking!  The should have left well enough alone.
  |     |   Comment #8
I am a Capital One customer, both for their bank accounts and credit cards. And I have my own reasons for using their bank account, mainly because I opened some good rate CDs with them some time back and used the bank account to fund the CDs...

But, for most people, I'd seriously disagree with the assesssment of Banking Guy, whom I respect highly most of the time, that Capital One bank accounts make for good hub accounts.

The main reason is this: for almost all of Capital One's bank accounts, except for their Internet Checking that only can be opened in their branches, they have a standard FIVE BUSINESS DAY hold on deposits made into their accounts, including ACH deposits. FIVE BUSINESS DAYS, that's a BAD JOKE...

I have a lot of checking accounts with other banks where the deposited funds, including ACHs, are made available the next business day. And I have quite a few others with what used to be the standard three business day hold, including E*Trade. But five business days simply is not warranted. And I'm not talking about unusually large or out of state deposits or such. I'm talking about five days standard hold. It's clearly stated in Capital One's account disclosures...

With most accounts paying 1% or less interest, I don't really care if Capital One starts crediting interest to my account on the day of the deposit or the next day or the next day. But I do care that they deny me access to my own funds for five business days, which usually turns out to be longer because invariably the five-business day period ends up extending over a weekend and into the next week.

I've never understood how one bank can have such a long hold period on ordinary deposits, while another bank can make them available the next business day. As long as Capital One keeps that kind of a policy, I'll never use their bank account for anything much more than a placeholder.

  |     |   Comment #9
I hate the new online banking. Chevy Chase had a superior system and it is missed.  Each time I now pay a bill, I have to designate the account from which the funds come from EACH time.  Pain in the a$$. Also, I can no longer easily see the date and amount of last payment.  Everything now requires multiple screen views.
  |     |   Comment #10
Horrible.  Since the switch from Chevy Chase Bank to Capital One, I have been unable to view my account balance online.  It simple reads "Unavailable" since September.  I have to call their 1-800 number in order to get my account balance.  God, I can't wait to change banks.
  |     |   Comment #11
Chevy Chase Bank had a much better system!  Captial One's online banking is clumsy and requires multiple views for what Chevy Chase did on one page.  Switching soon.
  |     |   Comment #12
I'm the November 17 anonymous.  It's January 7 and my balance is STILL reading UNAVAILABLE in online banking. 5-6 months after the switch from Chevy Chase, they have been unable to show my bank balance.  I called them about this and they said they're working on it.  Absolutely ridiculous.  I've already changed my direct deposit to Wachovia and will be shutting down my Capital One account ASAP.  Oh and I've been getting spammed with a ton of Capital One credit card crap in my email inbox as well as by regular mail since the switch.
  |     |   Comment #13
I was just attempting to open an account.  I declined after I read so many fees. Including 20.00 to receive your money back. Any withdrawal costs 20.00, they mention something about atm or debit card(not sure) but carries a 25.00 fee. plus a big set of fees. They can also force you to accept that if they want they can at will withdraw money from your accut to fund any money you may own.. Close your credit card and get 40,000.00 removed right out. and if you cause an overdraft you must promise to fund it inmediately. Well, they overpower themselves so much on that agreement that I flew away..   I rather open a new small business and get a better interest if I make a profit. At least only I be ripping myself off. Oh , and they keep pressuring you to chat.  LOL... desperate times..
  |     |   Comment #14
I will shortly update my blog about Capital One Direct Banking, but thought I'd update here first. The online site looks better than it is and you will discover that once you attempt the activities that are absurdly implemented. I became aware about 2 weeks ago when my neighbor recieved my statements, they were literally addressed to my neighbor! When I investigated I discovered via a representative named Tisha that my suspicions were correct, someone had mistyped my online address change!

Here's the thing, the online banking has a "self service" section where you can do things like change your address. Where most banks and even Capital One's credit card system have no problem doing this, Capital One Direct Banking Online does something ABSURD! When you change your address on that form it doesn't actually change it, instead it sends a secure email to customer service. You can see this message in your sent messages on the site. Then some person somewhere (Tisha assures me that they are not in India) reads the email and then types in the change! One operator claimed that this was a security measure, but after my neighbor received my balance statements it seems like the end result was the opposite! Now, believe it or not it took me 2 weeks to get the address changed to the correct one. Mostly because in my disbelief I waited until today to call them and kept changing it online. Another operator, not Tisha, told me that they won't accept address changes so close together. The site said no such thing!

In short, Capital One Online Banking SUCKS! Having done ecommerce for nearly 2 decades their system reminds me of practices that were frowned upon even when I was just starting out! A human transposing my address change as a security measure!???!! I've moved most of my money out of their system and will stick with Wells Fargo for now. I will be investigating several other more minor inconsistencies as I prepare my write up on this, including a fax/computer answering the Online Banking phone number, but the summary is, Capital One is LOADED, they even have banking branches now, their technology needs to be held to a higher standard or atleast some standard!
  |     |   Comment #15
If you want another example of poorly implemented, try scheduling a transfer, wait a few minutes, and then look in "pending transfers". See your transfer or see a message stating that "there are no pending transfers"? Shux, it must not have gone through right? Wrong... it went through, the pending transfers screen just somehow doesn't know about it, even though that is what it's there for. I imagine a lawsuit could get these people to implement a real online system. I'm sure there are many more stories like this, please post them.
Capital One Client
  |     |   Comment #16
I have several accounts with capital one.  As of March 21, 2012.  The small and large (400 dollars or more) ACH transaction took about 2 to 4 business days for withdrawal of billing pay using credit card.  Depositing of small amount to took within 2 to 4 business days to clear using electronic transfer from bank to bank.   The deposit fund available for credit card for all transaction less than 100 dollars took 2 to 4 days to clear.  However the depostit fund available for credit card for all transction over >400 took a very long time to post anywhere from 7 business days to 14 business days.  What is written here is not always what always happen.  I had to call the customer service on several occasion.  Since 14 business days (half a month) for a simple deposit transfer before the money become available will make anyone think the money is missing or deposited in the wrong account.   Especially when it is in large amount.  They claim they had no idea of what happen to the amount until the information are later posted.  Which I can understand.  They are doing the 'hold' to cover their own assets which I can understand.  Most people do not read the agreement which were sent to them when they open an account.  And on many occasion the transfer may took longer than then normal ACH that were from other bank.  New customer, which doesn't read the agreement, or assume the deposit was posted, or used their own common sense in place of what is actually happening may get fustrated.  It has become necessary to view the account through internet.  Since all deposit and withdrawal timing are not within a normal specification of most of the faster ACH bank.    This information about Capital One may change in the future.  Before reading any review, make sure its non bias and check the source of the fact with the original source within the current date.  Funny thing.... people are still commenting on messages that are written years ago.  Bank policy & method change. The facts had changed since the year 2010.

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