We recently reviewed a website which was a new twist on the idea of an online savings account. We’ll likely see a bunch of twists and variations on online savings and online checking accounts in the near future by banks in order to differentiate themselves from the rest of the crowd.

One of the banks offering a variation on a typical checking account is FNBO Direct. FNBO is offering what they like to call an “Online BillPay” account to their customers. Essentially it serves to replace a traditional checking account. The idea is that you would use this BillPay account to pay for your normal monthly bills, such as cable, utilities, cell-phone services, and the like, and then you would use a credit-card to pay for all of your other expenses, eliminating the need for a traditional checking account all together.

The interest rate that you’ll earn on any money sitting in your online bill pay account is currently 2.50% APY, which is fairly reasonable in today’s market. ING Direct is offering 1.75% on their Electric Orange Checking account. You can also move funds back and forth between your FNBO Direct Online Savings Account and your FNBO Direct Online BillPay Account seamlessly.

There are some fees to be aware of. Remember that this is a checking account underneath all of the smoke and mirrors. There’s an over-draft fee of $30.00 per each item and an additional $3.00 per day “Daily Overdraft Fee.” There’s a $30.00 stop payment fee and a $25.00 dormant account fee. The fee that’s really worrisome is the $5.00 “BillPay Account” fee. This means you need to pay $5.00 every single month for their BillPay services, this isn’t cheap, but it is a bit lower than what most major banks charge. Wells Fargo, for example, charges $6.95 a month for its BillPay Services.

FNBO Direct is offering a $25.00 bonus to its customers to open one of their new Online BillPay accounts, so it might be worth checking out if you’re looking to move to some sort of electronic checking account. It’s definitely a new take on the online checking account theory, which might actually work out quite well for some. For others that live a cash lifestyle and need frequent access to ATM machines and the use of checks, this account probably isn’t a solution.

This entry was posted on Sunday, August 17th, 2008 at 6:36 pm and is filed under reviews. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.