Ally Bank Review: Worth Opening Account?
Ally Bank is often named the best online savings account. You get 1.00% interest and there’s no account minimum. Read on to see if it’s what you need.
These days, interest is a joke.
With traditional banks paying an average interest rate of only 0.06%, we’re lucky if we can even find something that offers 1%.
Luckily, web-based banks are trying to provide a better solution. They’re often able to offer a higher interest rate. Over the last several years, Ally Bank has stood out as an online bank with a firm reputation.
Ally Bank has a long history; it was previously known as GMAC (the finance sector for General Motors). In 2010, it was rebranded as Ally Bank, an online bank built on a principle of providing better rates and service to customers.
So does Ally Bank deliver? Particularly in the area of savings accounts?
Read on for a detailed review.
Ally Bank offers a nice range of banking services that satisfy basic checking and savings needs:
- Online savings: Ally’s savings account offers 1.00% annual percentage yield (APY). We’ll go over it in detail below.
- Interest checking: Ally’s checking account gives you an interest rate of 0.10% for balances less than $15,000, and 0.60% for balances $15,000 and over.
- Money market: Ally’s money market account offers 0.85% APY. The difference between this type of account and savings is that you get freer access to your money. You’ll get a debit card and free checks.
- CDs (certificate of deposit): You get 3 different types of CDs to choose from: High-Yield CD (3 months to 5 years), Raise Your Rate CD (2 or 4 years), and 11-month No Penalty CD.
- IRAs: There are also 3 IRAs to choose from: IRA High-Yield CD (3 months to 5 years), IRA Raise Your Rate CD (2 or 4 years), and IRA Online Savings.
8 Reasons to Save with Ally Bank
This review is mainly for Ally’s online savings account. As far as savings accounts go in the industry, it’s a solid pick. Here are 8 good reasons we like Ally:
- Savings account with 1.00% interest. Ally Bank offers a very competitive 1.00% APY for their savings account. While this number may still seem laughably low, sadly, it is quite respectable by today’s standards.
- FDIC insured. Security is an extremely important factor when you’re talking about storing your hard-earned money. Ally Bank is FDIC insured. This means that if the bank defaults, the government will pay you every cent you had in the account (up to the FDIC maximum of $250,000).
- No minimum deposit and no maintenance fee. Many other savings accounts require a minimum deposit to open an account. And then you have to maintain a certain amount or you’ll be charged a monthly fee. But Ally Bank has no such requirements.
This means you can open an account with as little as you want and start earning interest right away. If you open an account with no deposit, you must fund it within 30 days of account opening.
- User friendly web interface. Ally consistently gets high user ratings for its easy-to-use website. They are completely transparent on their rates, so you won’t be blindsided.
- Deposit checks by phone. Got a check deposit? It’s easy to move it straight into your Ally savings account. Just take a picture on your phone and send it through the mobile app.
- 24/7 customer service support by phone and live chat. Completely web-based banking may make some people nervous because you lose the personal touch. But rest assured that Ally has a real human person who can help you at any time of the day.
- Unlimited number of accounts. You can open as many savings accounts as you want. This is great if you are saving for multiple goals. For example, you can have one account as the emergency fund, one for a future vacation, one for a car down payment, etc.
- You can link up to 20 external accounts. This comes in handy if you have a lot of other accounts that you want to transfer money to/from.
3 Reasons to Look Elsewhere
Here are some reasons why Ally Bank may not be right for you:
- You want a one-stop shop for all your banking needs. Ally is great if you’re just looking for basic checking and savings. But if you want something that’s more of an all-in-one financial services center, you may want to consider other banks. Ally doesn’t offer any investments in stocks/bonds.
- No ATM card for savings account. This may be a downside for some. The savings account doesn’t come with an ATM card, so you can’t make quick withdrawals at ATM machines. Instead, if you need some funds, you’d have to do an online transfer (or by wire, telephone, or check), which may take a few days.
Keep in mind: In accordance with federal law, you can only make 6 withdrawals a month. If you exceed that, you’ll be charged a fee of $10 per transfer.
- Checking Fees: If you want to use Ally for checking as well, the fees do seem to be rising lately. It used to be that Ally offered unlimited ATM reimbursement (for the checking account), but now it’s $10 a month. The overdraft fee is $25.
Picking a place to park your money deserves some thought. It’s smart to compare to a couple of other options. Let’s take a look at how Ally measures up to other online savings accounts. Pricing information were obtained on December 30, 2016 from published websites. Please review the bank website as information may change.
If you want a savings account with an ATM card:
Synchrony (which used to be part of General Electric) also doesn't require a minimum deposit or a minimum balance. And there's no monthly service fee either. The APY rate is slightly higher at 1.05%.
The biggest plus is that Synchrony comes with an ATM card. So you can withdraw savings quickly (up to 6 per statement cycle) instead of having to wait a few days for the transfer to be completed.
However, a downside is that they don’t have a real human available 24/7. So if you need help in the middle of the night or on a Sunday, you may be out of luck.
If you have $5,000 to save:
The Popular Direct Savings Account offers one of the higher interest rates at 1.15%. However, the minimum deposit is a whopping $5,000. And you must maintain a $500 balance in the account or else you'll be charged a $4 monthly fee. If you close the account within 180 days, there's an early closing fee of $25.
This option is better for those who have more to save and don’t need to move money around too often.
Ally Bank is one of the most reputable online banks in the industry. Its savings account is great for anyone, whether you’re just thinking about saving or need a better place to store your money. It has no minimum deposit, no account minimum, and no maintenance fees. So anyone can set up an account and start saving.
The 1.00% interest is pretty solid for today’s standards. And you may feel at ease knowing you can reach a real person at any hour of any day. There’s no real downside to opening an Ally account, since there are no fees.