I had this on my mind ever since I activated my Electric Orange account at ING Direct. Whenever I log in to my account, it adds my overdraft line of credit to my available balance and happily displays the net result as “Spending Power”. Here is how it looks:
Now, I am all for personal accountability and careful management of one’s own money (and I also love ING in spite of their no-good interest rates of late), but stuff like this sounds like irresponsible marketing, doesn’t it?
I don’t understand this glorification of overdraft privileges. The kind of overdraft that ING is offering, it is a *line of credit* and it should be treated that way - it’s almost like a virtual credit card (a little bit worse because there is no grace period) - you borrow and you pay for what you borrow (ING charges 12.25% as of today on the overdrawn amount). Now, you wouldn’t call a credit card’s credit limit as you *spending power*, would you? So why call a overdraft line of credit as “spending power”. Everybody knows what happens when you assume that a credit card’s credit limit reflects your spending power - DEBT happens (duh!).
Overdraft should be viewed as an emergency *protection* - protection against the odd goof up when your brain thinks you have more money in the bank than your actual balance. Accordingly, ING Direct may term it as “Goof up Margin” or “Emergency Cushion” or “Line of Credit” or “Borrowing Power” or “Margin for Occasional Stupidity” or whatever ..but please stop including it under “Spending Power”.
With that rant out of the way, let me mention here that, in spite of how ING (or other bank) glorifies (and/or encourages) overdraft facilities, it is up to the customers to use (or abuse) such facilities. So, although I dislike the fact that ING calls it’s overdraft line of credit as “spending power”, I would be skeptical of someone who says “I am in debt because ING told me that I have a large *spending power*”.
Some resources on the subject of overdraft fees:
- Protecting Yourself from Overdraft and Bounced-check Fees [The Federal Reserve Board]
- The $10 Billion Overdraft Loan Market - PDF file [Center for Responsible Lending]
- Beware of Abusive Check Overdraft Protection Programs [Bankrate.com]
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That’s quite a marketting gimmick they have there.
Just watch, when people begin using that “spending powerâ€, they will begin increasing the limit. Those people will probably get a letter stating “Congratulations, we’re increasing your Spending Power”.
You shouldn’t complain too much, though. It is the people that use this “Spending power” that are paying for people like you and I getting good returns on deposits.
I’m with you - it is in poor taste for ING to encourage financial mistakes. I thought they prided themself in helping folks “grow” financially and become secure.
I don’t have an electric orange account and the “protection” is not something I would use, but I can see how this can be misleading to some folks.
I think ING should fix this pronto.
horrible on ING’s part, talk about misleading, but I guess then again that is what making money is all about… or well… can be all about…
broknowrchlatr: “It is the people that use this “Spending power†that are paying for people like you and I getting good returns on deposits.” ..completely agree on that - it’s similar to how credit card companies offer free miles/reward points to us because there are those who default and pay for those costs
D and Blain - yeah, it’s more sort of in *poor taste* than it is misleading - although it may be only mentally misleading for many - usually this shouldn’t be a problem in some ideal situation - but given the American tendency to get into debt fast, it is sure to have some effect on some poor sucker.
Blain - yep, it’s all about making money.
I didn’t like it because I didn’t really think ING Direct was out there with the other misleading folks. I think it’s my fault for expecting too much out of a financial institution. 
i never knew about this. thanks for the info
Unfortunately, companies are usually measured by the money they make and not the degree of good they do in this world.
Until something drastically changes in our society, expect to see more of these type of marketing efforts.
What happened to “Saving Power?”
If ING really wanted to do something revolutionary, they would decline all purchases or atm withdraws below $0. I don’t want a credit card, I want a debit/atm card.
i agree… but i can’t beat the interest rate and i’ve never overdrawn… so i’m sticking with it…
plus this month they are offering 1% cash back on all non pin number purchases…
Does having the mandatory Orange Line of Credit (OLOC) effect your credit score? Granted the min is only $165……
Should this be of any concern when considering opening a ING Electric Orange account?
Hi,
if you do get overdraft protection, doesn’t the overdraft depend on your credit?If so, what would happen if you have bad credit?
Thanks
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