Money Saving Links: 3/26/07

03.26.07 | Online Banking | 0 Comments | by junger

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Although online savings accounts are generally all the rage when it comes to online banking, a number of online checking accounts have popped up offering high APYs and generous offers.

ING has launched their Electric Orange checking account, obviously hoping to revolutionize online checking accounts the way they did online savings accounts.

A couple of publications have taken a look at the new online checking accounts that have opened up, and here's what they have to say.

In bid to branch out, online banks offer checking accounts - Boston.com

Both ING Direct and E-Trade Financial Corp. launched new checking accounts this month, hoping to boost revenues by managing more of their customers' cash.

The companies are following a broader trend in which banks are increasingly encouraging customers to do all of their saving, borrowing, and investing in one place.

But online banks mostly built their business by offering high-interest savings accounts or low-cost stock trades while allowing consumers to keep their existing relationships with local banks. Now that many brick-and-mortar banks offer online savings accounts, the Internet banks need to diversify, and they're doing so with checking accounts.

Online Checking Accounts Offer Higher Yields to Lure Customers - CNBC.com (thanks, jim)

There are, of course, some disadvantages. The biggest is that ING Direct requires you to keep a checking account at your regular bank to facilitate cash and check deposits. Transferring money between those accounts can also take a couple of days to complete. Then there's the hassle factor of having to set up the new online account.

E*Trade's online checking doesn't require an account at a regular back, but it comes with other restrictions. Customers must keep a balance of $5,000 to receive the 3.25% yield; balances under $5,000 will earn only 0.5%.

Online checking accounts are nothing new. Banks like Citibank Direct, Washington Mutual and Capital One already offer checking accounts with their online savings accounts, although not with such high yields.

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