ING Direct, with their orange direct savings account, pioneered the online bank account. Their product was revolutionary and the industry is now thriving. The most important factor is the interest rate it earns. Internet banks do not have the cost of maintaining a network of branches and the employees to run them. They are then able to pass on these cost reductions to their customers in the form of higher interest rates. Regular banks also know that most people will just choose to open a savings account with them out of convenience and not even try to offer a competitive rate. The opportunity is there for the person who is willing to become knowledgeable about the various details of the competition.

Online banks are the same as their brick-and-mortar competitors in that they differ greatly. Not only in interest rates, but also their levels of service, technology and interfaces. Some banks offer “teaser” rates that are very high initially but are significantly reduced after a couple of months. It might not be worth it for you to open an account with this type of bank if you only make more money for a couple of months. Likewise, some banks are known to have cumbersome interfaces that are frustrating to use. They should be avoided for those who are not very tech savvy. Others have extremely poor levels of customer service. It is important to do proper research first before opening an account with a bank and depositing your cash.

The orange savings account is distinct in that it is essentially the oldest online bank. New ones pop up everyday and their level of service and track record are not fully established. So although ING does not offer the highest rates, its reputation is definitely something that should go into the consideration of which bank you choose. ING also is widely regarded as having an hassle-free easy-to-use interface. All it takes is a few days to verify direct deposit and you are good to go. Rates are decent, but it is important to note that some of the newer banks are offering higher interest rates. As mentioned previously, these rates are sometimes temporary and designed to attract new customers. But ING is able to play off the fact that its millions of customers are not going to go through the hassle of creating a new account for a quarter point of interest. Thus ironically the orange savings account is not very competitive like the regular banks it initially took customers from. So it might or might not be worth it to rate chase. It differs for everyone and each individual needs to do proper research.

Online direct savings accounts offer a significantly higher interest rate than regular banks. ING’s orange savings account was the first and is the choice with the best track record. However, their rates are not that high so a full investigation on current rates with the various banks would be a wise choice. Be sure to check out reviews on customer service and technology.