ING Direct "Conto Arancio"

With this post we start a “bank and saving account review”, which we believe may be interesting and useful for our readers. But first of all, a disclaimer: let’s make clear that what you read can be considered personal opinions: first, you should’t make investing choice only for what you read in this blog; second, you should read carefully the original information (since we may be incomplete, or wrong, in what we write). In other words: think with your own brain!

Just one more thing: in these “account reviews”, we talk mostly (if not only) of italian banks. That’s because we’re italians, and since it’s enough difficult to follow what are bank offers in just one country, talk of all bank, saving or low-cost account around the world it’s impossible. At least for now. Anyhow, I think a read at these review may be useful to anybody, to take a look at the state-of-the art and to have a few tips and hints on “what you should look at” in a bank account or a saving account.

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ING Direct’s “Conto Arancio” has probably been the first online saving account in Italy, and surely is the most famous, thanks to continuous advertising on tv, paper, and internet (moreover, ING Direct is also the main sponsor of Renault Forumula 1 team – or better, of ING-Renault team, as it’s officialy named).

Conto arancio is a saving account: you can think of it as an electronic moneybox where you can put money you won’t need for some time. In other words, it’s not a substitute of a traditional bank account, but a way to invest (mostly in the short-term) the savings you will not spend immediately, and gather a little more interest than you would leaving your money on the bank account.

Very schematically, here’s my opinion of ING Direct’s Conto Arancio.

Advantages

• Conto Arancio offers interest rates definitely higher than average bank accounts (by now – march 2007 – Conto Arancio offers a 3.00% gross interest rate, that is 2,19% after tax, against a 0.5 or less of bank accounts).
• There are interesting promotions for new customers: by now, who opens a saving account before april, gets a 4,50% gross interest rate until end 2007.
• It’s safe, since it allow to move money from and to predetermined accounts, specified by the Conto Arancio owner.
• There are no activation or closing expenses, nor annual fees.
• Conto Arancio is linked to “Investimenti Arancio” and “Mutuo Arancio” (respectively, the consumer Investment Fund and Mortgage offer from ING Direct), that the customer can use coordinatedly.
• The website is clear and really painstaking, and seems to show a good attention to security issues.

Disadvantages

• There are other saving account that offer higher interest rates.
• Capitalization of interest is annual: in other words you receive interests only once a year. Other saving accounts (and most bank accounts) offer quarterly capitalization (interest are credited every three months), giving you a slightly higher effective intest rate (since credited interest become “capital”, thus generating other interest) and higher liquidity (you don’t have to wait a year to spend the interests you’ve earned).
• Conto Arancio rarely does promotions for who is already an owner of the saving account.

Other considerations

• There are holding periods (the time between when you order a money transaction and when the transaction is completed), and your money will be immobilized a few days when you move it from the bank account to the saving account. This may not be a problem, however, since you should only move to the saving account the money you don’t ordinarily need, so a few days of immobilization shouldn’t be a problem.
• With Conto Arancio you don’t have any credit or debt card (other saving accounts give you one). I don’t consider this a disadvantage, since a credit o debt card is a contradiction to the nature of a saving account. Moreover, I think this absence may increase security, especially if you consider that in a saving account you may keep more money than in a bank account, and maybe you won’t monitor continuosly a saving account balance, therefore if there’s a problem you may notice it after a longer time.

Italian translation of this post: Conto Arancio

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