Capital One is a well-known financial institution that made its name in the credit card business. In fact, its most popular credit cards – Capital One Quicksilver Cash Rewards Credit Card and Capital One Venture Rewards Credit Card – routinely make our respective lists of the best cash back credit cards and best travel rewards credit cards.
Capital One 360, one of its major divisions, offers a related, if less sexy, suite of products: online banking and personal lending services. If you’re not satisfied with the brick-and-mortar banking options in your area – or you want to cast as wide a net as possible during your search for an attractive mortgage – then this institution should be on your radar.
At first glance, Capital One 360 looks similar to online banking applications from Ally Bank, EverBank, and other well-known providers, but it offers updated features and perks that aren’t available to consumers everywhere. For instance, its My Savings Goals program allows you to open multiple savings accounts to track specific goals, such as a down payment on a new home or a lease on a new vehicle. If you own a small or medium-sized business, Capital One 360 has a slew of savings accounts and CDs geared directly to your needs.
Although Capital One 360 has only existed in its current form since early 2013, it has actually been around much longer than that. Previously, the bank was known as ING Direct. Capital One purchased the company in 2012 and completed the transition to full ownership – with the resultant name change – in February 2013. Many of ING’s services and perks survived the switch: In addition to a high-interest savings account, Capital One 360 also includes a checking account, CDs, and various other financial products.
High-Yield Savings Accounts
Capital One 360 has really been pushing its 360 Savings Account. It offers a variable APR, which at 0.75% is competitive with other online savings products. This no-fee account requires no minimum balance and it allows customers to open multiple online savings accounts at once, making it easier for folks who have discrete goals to manage separate financial stockpiles. 360 Savings Accounts can be linked with Capital One 360’s interest-bearing checking accounts as well. Federal law limits you to six withdrawals per month. You can deposit as much as you want, however
High-Yield Money Market Accounts
Capital One 360’s high-yield money market account, known as 360 Money Market, yields 0.60% on balances under $10,000 and 1.00% on balances above $10,000. There’s no minimum deposit or balance requirement and no monthly maintenance fees. By federal law, you’re limited to six withdrawals per month here as well. Inbound deposit volume isn’t restricted at all.
The company’s CDs feature variable term lengths of between six months and five years. They also come with market-based interest rates that increase with term length – at the moment, a 60-month (five-year) CD yields 2.30%, while the six-month CD yields 0.40%. For CDs with terms of less than 12 months, users face an early withdrawal penalty equivalent to three months of interest. CDs with terms longer than 12 months impose an early withdrawal penalty equal to six months of interest. In both cases, then, you need to keep these accounts open for longer than the “penalty period,” or you lose a small portion of your principal amount. There are no minimum balance requirements on Capital One 360 CDs.
Customers can open or roll over IRAs and 401(k)s without leaving the 360 ecosystem. If you’re okay with limiting your retirement investments to FDIC-insured vehicles such as savings accounts or CDs, you can simply open a “Savings IRA” that allows you to earn interest without accumulating a tax burden. If you want to invest in stocks, bonds, mutual funds, or ETFs, you can open an IRA with Capital One Investing and transfer funds directly from your existing, non-IRA 360 Savings account. Capital One Investing also offers 401k solutions for business owners.
Interest-Bearing Checking Accounts
The Capital One 360 Checking Account comes with a fee-free debit card and access to about 40,000 ATMs nationwide. It also pays a small but not insignificant interest rate that ranges from 0.20% for deposits of less than $50,000 to 0.90% on deposits of more than $100,000.
Business Services (Spark)
Capital One 360 has a full lineup of business deposit accounts, investing services, and credit products under its Spark banner. Deposit and investing options include Spark Business Checking, Spark Business Savings, and the Spark 401(k). Yields on Spark Business Savings are quite competitive: 1.00% APY as of April 2017. If you own a small business, visit the Capital One Spark portal for more information about this vertical.
Pro Tip: Even if you’re not interested in Capital One’s other Spark products, the company’s Spark credit cards are worth checking out. Cards like Capital One Spark Miles for Business and Capital One Spark Cash for Business, which offer rare opportunities to reduce small business expenses, routinely make our list of the best small business credit cards.
Capital One 360 offers fixed-rate and adjustable-rate mortgages. Borrowers can choose from 15- or 30-year terms for the former and 5- or 7-year fixed-rate periods for the latter. Both adjustable mortgage products amortize over 30 years.
Kid-Friendly Tools and Services
Many banks pay lip service to financial education, but Capital One 360 actually seems to mean it. The bank offers multiple accounts for kids and teens, including the Kids Savings Account – an FDIC-insured account with an identical APR to the regular 360 Savings Account – and MONEY, a teen-oriented checking account that comes with a free debit card, full parental oversight, and a 0.25% yield.
- Reasonable Balance Requirements and No Maintenance Fees for Cash Accounts. All of Capital One 360’s basic savings and checking accounts, including kid-focused products, lack minimum balance requirements or maintenance fees. In a world where brick-and-mortar banks routinely charge monthly fees on regular checking accounts, this is a big deal. That said, many online banks remain fee-free.
- Variable Interest Rates. Interest rates on Capital One 360’s cash accounts vary based on market fluctuations. Capital One doesn’t reveal the exact formula it uses to set these rates, but, as with many banks, it’s likely based on the Fed Funds Rate, as well as current market rates on Treasury bonds. If these benchmark rates rise, you won’t be locked into a long-term commitment to a low interest rate.
- Interest-Based Overdraft Charges. Unlike many banks’ checking accounts, 360 Checking doesn’t charge overdraft fees on negative balances. Instead, it charges a flat, daily interest rate (currently 12% APR) on all overdrafts, with a total negative limit of $5,000. The daily overdraft fee on a negative balance of $4,999, for example, is just $1.64. Of course, these charges can add up over time, but they’re a far cry from the one-off $30 or $50 charges that some other banks levy.
- Solid Yields on CDs. Capital One 360’s CD yields have improved significantly in recent years. The 60-month 360 CD yields 2.30% per year, which is competitive with some of the best online banks on the market. The yields on shorter-term CDs are, naturally, not as generous, but they’re also mostly competitive with prevailing rates. However, for shorter-term balances, the savings and money market accounts offer better deals.
- Mobile Access for Savings, Checking, and Investments. Given the sheer mobile-unfriendliness of many of Capital One 360’s smaller competitors, the fact that you can access your 360 savings, checking, and investment accounts from any wireless-enabled mobile device is worth noting. Minor interfacing differences aside, 360’s mobile experience is virtually identical to its desktop version.
- Automatic Savings Plan and My Savings Goals. 360 Savings comes with some novel programs that aim to encourage and reward regular saving patterns. The Automatic Savings Plan is self-explanatory: Once per week, it automatically transfers a preset sum from your checking account to your savings account. You can change or discontinue this feature at any time. My Savings Goals allows you to set individual savings goals, track your progress toward them, and receive regular updates on how much longer it will take to reach them at your current pace. Since you can open multiple savings accounts at once, you can keep track of these goals separately and avoid confusion or redundant deposits.
- Flexible Interest Payments on CDs. Some banks don’t allow you to choose when your CDs throw off interest – Capital One 360 does. You can receive interest payments on a monthly, yearly, or once-per-term basis. If you accept payments on a yearly or once-per-term basis, that interest sits in your account longer and thus has more time to compound. Also, remember that prematurely terminated CDs do come with early-withdrawal fees.
- FDIC Insurance on Some Products. Capital One 360 customers enjoy FDIC insurance of up to $250,000 – as is legally required – on their accounts. It’s important to note that this coverage applies to all 360 accounts cumulatively, not separately. If you have $100,000 in a savings account, $100,000 in a CD, and $100,000 in a checking account, $50,000 of your stash remains uncovered.
- Fee-Free ATMs. Capital One has about 2,000 branded ATMs and 38,000 “Allpoint” ATMs in its nationwide network, all of which offer fee-free withdrawals, deposits, and balance checks. International ATMs may charge fees, however.
- Novel Solutions for Small Businesses. Capital One 360 makes a concerted effort to appeal to small businesses. Like their consumer-facing counterparts, its business savings accounts and CDs offer variable-rate interest payments and have no maintenance fees. All business products offer separate, fully secure access for three stakeholders. According to its website, 360’s business instruments are useful for “sole proprietorships, partnerships, limited liability companies (LLCs), corporations, not-for-profits, and small organizations.” It’s implied that larger organizations may wish to look elsewhere.
- Inflexible CD Products. With stiff early withdrawal penalties and no recourse against inflation, Capital One 360’s CDs lack the increasingly commonplace flexibility of other banks’ CDs. Should market rates rise during its term, Ally’s heavily advertised “Raise Your Rate” CD allows customers to upwardly adjust their vehicle’s interest rate once during a two-year term and twice during a four-year term. Ally also offers a “No Penalty” CD that gives early withdrawal privileges at any point during its 11-month term without requiring users to give up any earned interest or pay any additional fees.
- Middling Mortgage Rates. Though they’re subject to change and can vary significantly based on borrowers’ individual financial profiles, Capital One 360’s best home loan rates are significantly above the national average. Unless you can get a special deal through the bank’s lending office, you may want to look elsewhere for a market-rate mortgage loan.
- Limited Phone Support Hours. Capital One 360 has a pretty robust customer care infrastructure that includes an impressive “knowledge database” of help topics and FAQs. However, many banking customers still like to talk to a live person about potential problems, and the bank is less steady on this front. Unlike Ally’s 24-hour phone bank, 360’s call center is only open for 12 hours per day (8am to 8pm, Central Standard Time), although it does keep to those hours on weekends. The company claims to respond to emailed requests within 24 hours, so that might be a better route for customers with in-depth questions to take.
Capital One 360 is a full-service online bank that offers checking, savings, investment, and business products. It’s worth noting that Capital One 360 has dramatically improved the yields on many of its accounts since 2014, far outpacing the painfully slow uptick in prevailing rates during the same period.
Capital One 360 isn’t perfect. While it does place a clear emphasis on financial education and ease of use, it lacks many of the user-friendly features that older online banks, such as Ally Bank, have honed over the years.
On the other hand, it does boast a low-cost DIY investment portal, Capital One Investing (formerly branded as ShareBuilder, a name that’s still visible on some internal content), along with a full suite of business products under the Spark brand. If you’re relatively comfortable with managing and investing your own business and personal finances, Capital One 360 is a great place to get started.