If you’ve been considering opening a high-yield bank account, then this Ally Bank review will give you the confidence to bank with Ally and get the process started. Almost all Ally Bank reviews point to happy customers who are earning over 1% on their savings.
In 2009, Ally Financial created Ally Bank, an online banking provider offering an array of low cost services not available at most other institutions. By not maintaining a physical location, Ally Bank is able to pass on the company’s savings to consumers in the form of lower fees and higher interest rates paid on deposits.
Since inception, the company has been dedicated to providing customers with 24/7 customer service support, and despite being an online bank, consumers always have easy access and the flexibility to move, deposit, or withdraw their money at any time.
Continue reading for an in-depth Ally Bank review that will answer all your questions about whether Ally Bank is the best bank for your needs.
Ally Bank History
For a little more background and history, Ally Financial used to be a subsidiary of General Motors. The company became a separate entity and re-branded itself in 2010 when General Motors was filing for Chapter 11 bankruptcy. Some customers were initially concerned about creating an account with Ally Bank because it was once part of the tainted General Motors brand.
However, U.S. consumers have quickly realized that Ally Bank is an excellent alternative to traditional commercial banks. Ally was even named one of the “five great Internet banks” in 2011 by PC Magazine.
Banking Options
Ally Bank offers a number of different services that customers can take advantage of, ranging from CDs without early withdrawal penalties, bank accounts without minimum deposit requirements, and savings accounts with interest rates close to 1.0% Annual Percentage Yield (APY). Here are some of the most popular services that you may want to consider.
High APY Savings Accounts
Ally Bank’s online savings accounts pay some of the highest interest rates in the country. The Federal Reserve has kept interest rates at record lows for the past four years and it looks like it will stay that way for the foreseeable future. The average commercial bank only pays about 0.20% interest for a standard savings account, which has made it very difficult for consumers to let their money grow.
Ally Bank offers to pay consumers almost 1.0% APY, or 5x the interest, on its online savings accounts, allowing families who save a significant portion of their income the ability to see their investment and nest egg grow. Obviously, a savings account should not be your family’s only investment option.
High Yield CDs
Ally Bank also has a number of different Certificate of Deposits that customers will find useful when diversifying their investment portfolio and maximizing returns. You shouldn’t have any trouble finding one that suits your needs. Here are some of the different Ally Bank CDs and safe investment options that you can review for your financial needs:
- Raise Your Rate CD. CD rates can fluctuate considerably throughout the year, especially if you lock yourself into a long-term CD and the Federal Reserve begins to increase rates. This can leave you locked in with a lower than market yield. To avoid this issue and maintain long-term customer loyalty, Ally Bank gives you the option to take out a “Raise Your Rate CD”, which allows you to increase the interest rates that you earn once every two years. For example, if you hold a 2-Year CD, you can increase your interest rate to the current market rate once; for a 4-Year CD, you can do this twice. The other benefit of the Raise Your Rate CD is that it offers a higher rate of return than a traditional CD.
- High Yield CDs. Ally Bank also offers a number of other competitive interest rate CDs with a term life between three months and five years. The rates currently vary between 0.30% and 1.55% depending on the term period. These rates are currently among the highest in the industry. Furthermore, Ally has the “Ten Day Best Rate Guarantee” to make certain customers get the best interest rate the bank has to offer within 10 days of opening an account. Lastly, contrary to other commercial banks, Ally does not require a minimum deposit or dollar amount for opening a CD.
- No Penalty CD. Customers can earn a much higher interest rate on a CD than they can with an online savings account. However, many customers are reluctant to put their money in a CD because they may have to pay a penalty if they want to withdraw from it before it matures. Ally customers can have the best of both worlds by taking out a No Penalty CD. This CD pays a slightly higher interest rate than the typical savings account, but doesn’t carry any penalties for early withdrawals.
Most Ally customers said that they are very happy with the different CDs that Ally provides, most of all because the bank has some of the most competitive rates in the industry along with very flexible and consumer-friendly terms and conditions. We suggest that everyone consider taking out a CD with Ally Bank because it is so difficult to find one that pays a reasonable interest rate these days.
Money Market Account Options
Similarly, Ally customers can open a money market account. These accounts are almost identical to the online savings accounts, but the only difference is that customers have the added convenience of being able to use debit cards and checks.
There are no extra fees to use the cards or checks, and Ally doesn’t charge any ATM fees and reimburses ATM fees from other banks in the country. The money market account comes with free standard checks for the life of the account, and the APY is the same as the online savings account.
Ally Bank – Pros and Cons
There are a number of factors that you will need to take into consideration before you can decide whether or not you want to open up an account with Ally Bank. Here are a list of advantages and disadvantages of working with an online bank, such as Ally, versus other traditional banks.
Advantages of Ally Bank
Here are a few examples of the way Ally Bank differentiates itself from its competitors.
- No monthly fees. Many brick-and-mortar banks try to cover their expenses by charging monthly fees on checking and savings accounts unless you maintain a certain high balance level. Ally has a low-cost corporate structure and does not need to charge any monthly fees to their customers. This means no monthly costs or fees for opening or maintaining any account.
- No minimum deposit or minimum balance. Ally doesn’t require a minimum deposit to open an account like most banks. Ally Bank also doesn’t require you to have a minimum balance to keep your account open.
- No penalty for early withdrawals. As we mentioned previously, Ally Bank gives you access to your money anytime, anywhere. Generally, other banks pay you a higher interest rate for choosing a longer-term investment period, but will charge a penalty if money is withdrawn from the CD before the maturity date. Ally Bank gives you the option to invest in a No Penalty CD.
- Online banking. You don’t need to visit a bank to make a deposit. You can deposit money by mailing a check, wiring money, or scanning and submitting a deposit/check via their eCheck option. The eCheck option is similar to what many other traditional banks are offering customers now, but it greatly increases the flexibility and convenience of having an online checking and savings account.
- Daily compounded interest. Most banks compound interest once a month. Ally Bank compounds interest daily, helping you accrue more of a payout.
- No ATM fees. Unlike other commercial banks who charge a flat transaction fee when customers use a non-affiliated ATM, Ally provides free ATM use to all members.
- Real time advice. Ally does everything it can to help you earn as much money on your accounts as possible. The bank will email you every time you have the opportunity to take advantage of a special deal or better interest rate on your cash.
Ally has been consistently ranked as one of the five best online banks in the world. As you can tell, one of the reasons that Ally has been ranked so well is that it charges much lower fees than its competitors and is truly invested in being consumer-friendly and helping their members find the best deals.
Disadvantages of Ally Bank
Although Ally Bank offers excellent service and value, there are some drawbacks that you need to be aware of as well. Here are some of the factors that you need to consider before opening an online account:
- Limited customer service. Ally Bank has an excellent customer service team. However, you can only speak with them over the phone or Internet. This may not be ideal for customers who need more personal attention, such as getting to know tellers and private bankers who can tend to your needs with immediate assistance.
- Unavailable services. Ally should not be a complete substitute for a relationship with a traditional bank because the company does not provide mortgage, business or personal loans, or business accounts altogether.
- Fees for overdrafts and returned items. Many banks offer overdraft protection and won’t charge extra fees for returned checks. While the company does offer free overdraft protection, Ally does charge fees for overdraft items paid and returned. You will have to pay $9 a day if your account is overdrawn and $7.50 for every returned deposit item. Fortunately, $9 per day is the most you’ll ever pay for an overdraft, even with multiple occurrences in one day.
- Security risks. Online banking does have security threats, although all banks now have online banking services so this risk isn’t just specific to Ally Bank. The company spends a lot of time and money on cyber security to keep bank accounts secure, but there will always be exposed vulnerabilities and hackers. You also won’t be able to safeguard your items in safe boxes the way you could in a traditional bank. Nevertheless, the bottom line is: how many times have you heard a major bank being hacked? None. Security risks exist, but are negligible and not worth being paranoid.
- Transferring money takes time. It can take up to a week to complete withdrawals or deposits. This can be very inconvenient if you need money right away and can’t access it with a debit card. These delays also make it difficult for customers to switch banks or transfer funds to their retirement accounts at Fidelity or Vanguard.
- Review competitors. Although Ally Bank is one of the most popular online banks, other online banking services, such as ING Direct or EverBank, regularly offer promotions and deals, too. Always compare all your options – if you can find a better interest rate or deal at ING or EverBank, take your business there.
Summary
Many customers may be nervous about doing all their banking online, but they are rarely disappointed after opening an account with Ally Bank. Most customers and reviewers have spoken very highly of the company. They offer the convenience of online banking along with some of the lowest fees and best interest rates in the industry.
