Finally Banks have learned!!!

Finally banks are getting why consumers hate them....check out ING's new strategy. I hope this catches on industry-wide!

ING Direct has positioned itself as the Southwest Airlines of the banking industry. It's got low fees, dynamic employees who tweet often, thousands of devoted fans on Facebook and cool places to hang out. And it's zigging in another area where other banks are now zagging: overdraft coverage

And it's zigging in another area where other banks are now zagging: overdraft coverage.

With the Credit Card Accountability Responsibility and Disclosure Act going into effect this year, financial institutions are scrambling to figure out how to hold on to income from overdrafts that totaled $38.5 billion last year. Among the act's consumer-friendly provisions is one that requires customers to opt-in for overdraft coverage (and the resulting fees.) It also disallows interest-rate increases on fixed-rate accounts until an account is 60 days past due.

ING, however, sees the transition and customer confusion as an opportunity to market its terms. "We think that with the new regulations and things like banks pressuring customers to opt-in for overdraft coverage, that the market is really coming to us," said Todd Sandler, ING Direct head of product strategy. "We've seen a real shift, even in just in the past 45 to 60 days ... our business is up 70% to 80%."

Instead of a fee, ING's overdraft charge for its Electric Orange accounts is an "overdraft line of credit" system that allows customers to write checks or use a debit card for more than their balance (up to a preset amount usually no greater than $500) and pay back the overage with interest, which is the ING Direct prime rate plus 4% (currently 7.25%). While ING customers do pay for overdrafts, it's not a flat fee, but interest paid on the amount "borrowed." For example, on $100 at the current 7.25% rate, a customer would pay about 60 cents for one month.

Some of ING's new business is likely coming from people like this one online: @caitlin_thomps wrote on Twitter last week, "I just quit you @Citi/@INGDIRECT doesn't charge me arbitrary checking-account fees. Thanks for rewarding my 10 years of business with suck."