As traditional banks struggle with customer frustration over hidden fees and insultingly low interest rates, Ally Bank has positioned itself as the antidote to these problems. By and large, it has succeeded, becoming one of the best all-around options for online banking today and The Simple Dollar’s pick for the best all-around savings account for 2016.
Ally, previously known as GMAC Bank, launched in 2009. It was rebranded after parent company GMAC — the financial arm of General Motors — received billions in bailout money from the U.S. government during the subprime mortgage crisis.
Despite its rocky beginnings, Ally Bank has grown and flourished. It now has more than a million customers, likely due to its appealing blend of competitive interest rates and low, clearly disclosed fees.
Ally at a Glance
If you’re just looking for basic checking or savings products, Ally has a particularly strong lineup. Here are the products and services you’ll find:
- Savings: Ally offers two main options: an online savings account and a money market account.
- Checking: There’s just one checking option, but it’s a good one: no-fee interest checking.
- CDs: Choose from three account options: the High-Yield CD, with seven terms ranging from three months to five years; the Raise Your Rate CD, with a two- or four-year term; or the 11-month No Penalty CD.
- IRA savings and CDs: Ally offers an IRA online savings account, or you can choose an IRA High-Yield CD or an IRA Raise Your Rate CD.
- IRA plans: Traditional, Roth, and SEP IRAs are available, too.
Ally also has a sizeable auto loans business, but you can’t apply for financing online — it’s only available at select dealers, including GM, Chrysler, and Maserati. It also has a business financing division, but only for sizeable transactions of more than $15 million. There are no mortgages, personal loans, business checking or savings accounts, credit cards, or non-IRA investment accounts.
Just like any reputable bank, your deposits with Ally are insured up to Federal Deposit Insurance Corporation limits. Firewalls, SSL data encryption, and multi-factor authentication are among the security measures that keep your data safe while banking online. Ally also offers free Webroot anti-virus software to its customers — a nice touch.
Ally Online Savings
Ally’s Online Savings account is one of the best options in the industry when you consider the high interest rate and lack of fees. In fact, it’s such a strong option that The Simple Dollar named it the best all-around savings account for 2016. Here are the main account features:
- No minimum deposit: You don’t need any certain amount to open your account, unlike some other banks that will require an initial deposit of $250, $500, or even $1,000 or more.
- No account maintenance fees: You also won’t pay a monthly fee to keep your account open, regardless of your balance.
- A very high interest rate: Your deposits will earn 1.15% APY currently, which is among the best in the industry.
- Mobile check deposit: It’s as simple as snapping a photo of a check with your smartphone using Ally eCheck Deposit.
- 24/7 account access and customer service: Get the convenience of online banking or connect with a customer service agent regardless of the time.
- Simple transfers: Move your money easily by scheduling transfers up to a year in advance, and link up to 20 external accounts to your Ally account.
The major benefit with Ally’s Online Savings is the interest rate, which is compounded daily. At 1.15% APY, it’s one of the most competitive rates in online banking. While this kind of interest certainly isn’t going to make you rich, it’s a lot better than the 0.01% (effective as of 9/18/17. Interest rates are variable and subject to change) APY you might receive with Chase Savings℠, Bank of America, or another major brick-and-mortar bank.
Another big benefit is the generous number of external accounts you’re allowed to link up: 20. It’s common for other banks to limit you to three linked accounts, so this could be a big advantage for anyone who wants to move money between several accounts. You can also open, nickname, and link multiple savings accounts all in one go if you want to maintain separate accounts for separate savings goals.
Ally is also impressively clear about its fees. As I mentioned above, you won’t pay for monthly account maintenance. You also won’t pay for unlimited deposits, transfers to non-Ally accounts, incoming wires, online statements, postage-paid deposit envelopes, or cashier’s checks. (There are still some fees to note, but they are reasonable — they include $9 for overdrafts, $10 for excessive transactions, and $20 for outgoing wires.)
As for cons, there aren’t many. But if you’re used to depositing cash, that won’t be an option for you with Ally.
Ally Money Market Account
Ally also offers an outstanding money market account with a lot of the same features as its online savings account. For instance, there is no minimum deposit, there are no monthly maintenance fees, and you still have the option of mobile check deposits.
The major difference is that you’ll be getting a slightly lower interest rate, currently 0.85% APY, in exchange for a couple of nice conveniences. With the money market account, you’ll get a debit card and checks. And you can use your debit card at any ATM nationwide without paying steep fees: Ally won’t charge you, and it will reimburse any fees that other banks charge for using their ATMs.
Ally Interest Checking
- No maintenance fees or minimums: Some banks charge monthly maintenance fees or require you to have a certain balance to avoid them. Not so with Ally.
- No ATM fees: Ally doesn’t charge you for ATM withdrawals, and it will reimburse you at the end of the month for any fees that other banks charge.
- Mobile check deposit: It’s as simple as snapping a photo of a check with your smartphone using Ally eCheck Deposit.
- Easy to pay other individuals: With the Popmoney feature, you can easily send money to anyone else who has a bank account as long as you know their email address or cell phone number.
- Earn interest on your balance: Ally’s Interest Checking earns 0.10% APY on balances less than $15,000, or 0.60% on balances of $15,000 or more.
One of the biggest benefits of Ally’s Interest Checking is the lack of ATM fees. Considering you can expect to pay an average of $4.35 every time you get money from an out-of-network ATM, not having to plan ahead to avoid fees is a nice convenience.
Of course, the absence of monthly maintenance fees and minimums is also appreciated — my own bank requires me to keep a pretty substantial balance to avoid shelling out $11 each month. Checks are free with Ally, too.
There are still other fees, including 1% for foreign transactions, $9 for overdrafts, $15 to stop payment, and $20 for outgoing wires. These fees are a good bit lower than industry averages, but note that if you travel abroad frequently or are concerned about overdraft fees, Capital One 360 doesn’t charge either one. (Note that you can protect yourself from overdraft fees by linking an Ally savings or money market account to your checking. Ally will pull money from the linked accounts in $100 increments to cover the overdraft, but you obviously have to have the funds in the linked account to avoid fees.)
There are also some better options out there if you’re looking for the best interest rate in a checking account. For instance, Bank5Connect offers 0.76% APY on any balance over $100, and FNBO Direct offers 0.65% with no minimum balance. However, since it doesn’t make much sense to think of a checking account as a long-term place to grow your money, I don’t consider this a major con.
Ally Certificates of Deposit
None of Ally’s CDs require a minimum deposit to open, which is a rare benefit. Interest is compounded daily. Ally also offers a 10-day Best Rate Guarantee on its CDs, which ensures you can snag the best rate Ally has within 10 days of opening or renewing your account. Here’s a rundown of your CD choices with Ally:
- High-Yield CD: This type of CD gives you the most flexibility on term: Go as short as three months or as long as five years. Of course, the shorter the term, the lower your interest rate, but a 12-month CD currently earns 1.05% APY. This CD is available for Ally IRAs.
- Raise Your Rate CD: You’ll only be able to choose a two- or four-year term with this option, which earns 1.29% APY or 1.40% APY, respectively. However, you get the chance to bump up your rate (once for a two-year CD, twice for a four-year CD) if Ally’s rates go up after you’ve funded your CD. This is also available for Ally IRAs.
- No Penalty CD: If the prospect of early-withdrawal fees is keeping you from opening a CD, Ally’s No Penalty CD lets you skip them entirely. The convenience means you’ll be getting a lower rate (0.87% APY), and there is only one term available (11 months).
Getting Started with Ally
Ally has a streamlined, easy-to-understand website, and opening an account is easy. In fact, you can open multiple account types at once, even linking a newly opened checking and savings account for overdraft transfer service right away.
If you prefer, you can also open an account over the phone or by mailing in an application. Online chat is available if you have any quick questions during account opening.
Online, all you’ll need to enter is your name, date of birth, Social Security number, email address, mailing address, and phone number. You’ll be able to fund your new account right away if you link a non-Ally account and transfer money electronically (you will have to verify ownership of the account). You can also mail a check, use mobile deposit to submit a check, or set up a wire transfer.
For savings and checking accounts, direct deposits are available the same day. You’ll wait up to three business days for transfers you request from linked non-Ally accounts. For most check deposits, you’ll have access to $200 within one business day and $4,800 in two business days. Any amounts over $5,000 won’t be available until the fifth business day. Ally may apply five-day holds for customers who’ve had a history of overdrafts.
Who is Ally Best For?
Ally is going to be one of your strongest overall options for online banking, but there are a few scenarios where it should definitely be your first choice:
- You want the best combination of high interest rates, low fees, and no minimums: Ally is very near the top of the heap on interest rates across the board. Of course, nothing is stopping you from chasing the very highest rate you can find, but the trade-off for that rate is often higher fees and high account minimums. If you’ve got a lot of money to stash, that might not be a concern, but for the average Joe, it’s a good compromise.
- You prize transparency: Ally is by far the clearest about fees of any of the banks I’ve researched, whether online or brick and mortar. Each product has a “Straight Talk Product Guide” that lays out everything you need to know about fees as well as important details such as when your money will be available.
- You want to bank online, but you don’t want to skimp on customer service: Ally has 24/7 customer service, and the time you’ll wait to speak to a representative is disclosed at the top of the website (it was never more than a few minutes each time I visited). If phone calls aren’t your thing, you can still email a representative, search a comprehensive set of FAQs, or start an online chat session.
Who Might Want to Skip Ally?
Of course, there are also a couple of situations where Ally might fall short:
- You want a one-stop shop: If you prefer to keep most or all of your financial dealings with one bank, Ally might not be the best option for you. It lacks several relatively common products, including mortgages, small-business accounts, and brokerage accounts. If this kind of variety is important to you, you’ll probably need a brick-and-mortar bank; if you want to stay with an online bank, Capital One 360 would be worth a look.
- You want to build a personal relationship with a bank: For all of its plusses, there is one thing Ally (and all online-only banks) can’t offer: the chance for you to be more than a number. While its customer service availability is as good as it gets for an online bank, some customers may find comfort in the facetime they can get at their community bank branch. These relationships may come in handy when you’re in a bind, and one common customer complaint about online banks is that problems can take a long time to get resolved.
- You need your money fast: Funds availability may be the Achilles heel of all online banks. While Ally isn’t the slowest online bank when it comes to transferring your money and making deposits available, it still generates plenty of complaints from customers who say holds were extended beyond what was promised, sometimes without explanation.
Ready to Bank With Ally?
Ally’s well-rounded personal account offerings should satisfy most of your everyday needs. The savings and checking options are particularly strong, or you can nab some of the benefits of both with a money market account
If you want to read up on your other options, take a look at The Simple Dollar’s other banking recommendations in our guides to the best free checking accounts, best savings accounts, and best money market accounts.