Using a firewall account with ING Direct

By glblguy

I’m pretty vocal about how much I love ING Direct. One of the many features I like about them is the ability to create and rename accounts. If I have a need for a new savings account it literally takes just a few minutes to login and create an account. One of things I’ve done recently is create a firewall account with ING Direct. I first read about this from Jim over at Blueprint for Financial Prosperity.

A firewall account is a a special account that all of your money comes into (or goes out of). It’s the only ING Direct account linked to the outside world. The account general maintains a zero or almost zero balance. When funds come in, you immediately log into ING and transfer the money to another ING savings account that isn’t linked to the outside world.

Why would you want to to this? Two reasons:

  1. If for some reason your firewall, or maybe even an account linked to your firewall account, was comprised your money would be safe. The only risk you would have is the money in the firewall account. The firewall account also protects you against an invalid transaction as well. I’ve actually had this happen in the past where the bank posted another person’s withdrawal against my account. It was for a rather large amount as well!
  2. I also use Paypal as the primary payment service for my business. While I’ve never had this personally happen to me, I have heard of Paypal reversing payments, freezing funds, and even withdrawing money from accounts linked to Paypal. While I am sure they’ve grown enough to avoid things like this, having a firewall account in attached to paypal instead of one of “real” accounts just makes me feel safer.

Creating sub-accounts with ING Direct

I’m always surprised by the number of people who don’t know you can create what ING calls sub-accounts quickly and easily. Let’s create a Christmas Savings account. Here’s how:

  1. Log into your ING Account. This includes entering your ID, verifying your image and phrase and entering your PIN.
  2. You’ll then see your account list. At the bottom you’ll see an orange link that says: “Open another account”. Click it.
  3. Next you’ll be presented with the ever growing list of accounts types provided by ING. Select the first one, “Orange Savings Account”.
  4. You’ll then see a summary page showing all the great benefits of an ING Orange savings account. Just click the big orange “Open Now” button.
  5. ING then shows you a list of type of Savings accounts. Select the one appropriate for you  (most likely just Orange Savings Account) and click Continue.
  6. You’ll now see a screen prompting you for info about the account. In Nickname enter something like “Christmas Savings Account”. Then select the funding account and the amount to fund. Your account has to be funded with at least $ .50. Press Continue.
  7. You now will see a confirmation page. Select the check boxes (after reading the agreements of course) and press Open Account. You’ll now have a Christmas Savings account listed.

If you want to create a firewall account and already have an account that’s linked to the outside world, I’d suggest just renaming that account to be your firewall account and then creating new accounts to actually hold money. That is what I did.

Don’t have an ING Direct account? I’d seriously recommend you give them a try. They don’t have the best interest rate these days, but it’s very competitive and I’ve found their website to be incredibly user friendly and their customer service is top notch. I have an Electric Orange checking and at least 7 savings accounts with them right now.

Photo by: emarquetti

10 Responses (including trackbacks) to “Using a firewall account with ING Direct”

  1. Mrs. Micah Says:

    Very interesting idea. I suppose that if I were going to transfer money anyway, it would be done via computer, so I could also transfer the money to ING’s firewall account before I moved it elsewhere.

    What concerns me is the possibility of forgetting about it when using something like PayPal to pay for an item.

  2. Ben C Says:

    I don’t understand how this protects you? All of my INGDirect accounts are able to transfer money to the outside world. For instance, I have an Checking and two Savings accounts with ING. I also have a checking account with a local bank. From within ING I can transfer money to and from any three of my ING accounts to the local bank. I don’t believe I did anything to specify all the accounts could do a transfer, they all can automagically.

  3. No Debt Plan Says:

    Didn’t see it 100% clarified in your post, but that would need to be a checking account. You are limited on the number of transfers with savings accounts.

  4. glblguy Says:

    @Ben C – It protects on the outside, not on the inside. It keeps another bank or institution from pulling funds out of your firewall account. Yes, ING allows you to transfer from any of your accounts out, but only specifically linked ING accounts from outside ING.

    @No Debt Plan – Mine is not a checking and I’ve never ran into a limitation. Now maybe I just haven’t done enough transfers. I transfer money around from my savings to savings account all the time.

    I know there is a limit on withdrawals out of ING to another banks account, but wasn’t aware of a limitation on savings to savings inside ING.

  5. Frugal Vet Tech Says:

    Savings accounts can only have a certain number of withdrawals in a month – something like four or six (the exact number escapes me).

    Interesting idea… Is the transfer from ING account to ING account immediate or does it take a few days for the funds to transfer? If I needed the money out of ING within a few days, this could potentially cause problems if I have to wait for the money to get from one ING account to another before I can transfer to my non-ING account.

  6. glblguy Says:

    @FVT – Thanks, I was aware of the limitation on savings withdrawals, just not sure how ING treats it since it’s ING to ING.

    Transfering from one ING account to another is immediate. It only takes a few days if you transfer from ING to an outside bank.

  7. ChristianPF Says:

    I used to do something similar to this for different reasons. I used it as more of a float account, but I like the idea of using as a protector of the other accounts. Good idea, I will have to consider changing my current setup

  8. ldub Says:

    the number of allowed transfers out of any savings account by law per month is 6 – if you go over more than three times in a year, your account will be closed. ING helpfully only let me know about this after they’d let me make more than 6 transfers out of my accounts (because I keep several subaccounts and transfers among them count as transfers out) for two months. now i’m insanely careful, but also bummed because it made my money management tougher than i’d hoped for it to be when i set up the extra accounts. alas.

  9. Demex Says:

    I do this with a checking account (which has no limit). I have a couple savings accounts and when I ever need to pay something I use the checking account. That way if that checking account number is ever used I don’t have anything in there to ever get taken and my savings accounts are secure. And when you have multiple savings accounts you can break up your money between a few of them giving you even more transfers.