Posts Tagged ‘financial services’

ING Direct’s Overdraft Line Of Credit Saves Money

ingdirect_logo

 

Normally, I am pretty hard on banks and the financial services industry in general. However, when I read a story about the Internet bank, ING Direct and its overdraft policies, I had to give kudos where kudos are certainly due. It turns out that ING Direct won’t have to change one thing about how it does business in the wake of the new law effective July 1 of this year requiring banks to specifically get permission via an opt-in request for overdraft protection.

ING Direct has always offered overdraft protection on the basis of opt-in only, and only in the form of a low interest line of credit. To make people aware of the high cost of conventional overdraft protection, ING now offers up its overdraft  calculator.

Using the calculator, overdrawing your account by $100 for a ten day period will cost you $30, which is 20 cents of interest per day.  With ING Direct’s method via an overdraft line of credit, you would be charged 20 cents in total for that same $100 overdraft.

As ING Direct’s CEO, Jim Kelly puts it:

That’s $30 for 10 days equates to an interest rate somewhere north of 1000%. That doesn’t seem right. The way those transactions get stacked up — in terms of clearing checks, debit card transactions — you get three or four of those for a few dollars and end up paying $100 or $200 in fees in a day or a month.

That doesn’t seem like the value is in the hands of the consumer. It seems like all the value is going to go to the bank.

Read the complete story here.

Credit Card Reform In Action

After I made the post about credit card companies charging for paper bills, I happened on this cartoon by Mark Fiore and it is so apt, I had to post it here:  Enjoy:

 

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