Ally Bank was one of the first financial institutions to make online banking cool. It’s a full-service operation, offering products from checking accounts to home loans, but there are no branch locations. Customers have to do everything digitally, a practice which has become much more common in recent years. The upside is that you’ll typically benefit from lower fees and higher yields than what traditional banks offer.
Annual percentage yields (APYs) and account details are accurate as of September 6, 2023.
Ally Bank basics
- Checking accounts: Ally Bank Spending Account.
- Savings accounts: Ally Bank Savings Account.
- Money market: Ally Bank Money Market Account.
- Certificate of deposit (CD): Ally Bank High Yield Certificates of Deposit, Ally Bank Raise Your Rate CD and Ally Bank No Penalty CD.
- Other Accounts: Credit cards, mortgages, auto loans, home renovation loans, medical treatment loans and a brokerage platform.
- Bank branches or online only: Online only.
Pros
- No service fees or minimum balance. None of Ally’s accounts have monthly service fees or minimum balance requirements. Its checking account does have a tiered reward program, requiring a balance of $15,000 to earn the top rate. However, that the bank offers rewards checking at all (when few other banks do) is a boon.
- Competitive rates. Ally offers competitive rates on their savings accounts and CDs. For instance, Ally’s savings account offers a higher yield than most CDs offered by Bank of America or Wells Fargo. That you can net more from a variable savings account than a fixed rate CD, which should theoretically pay you more yield in exchange for locking up your cash for a specific period of time, is a solid win for consumers.
- Strong customer service. Ally scores well on independent customer service rankings, including the influential J.D. Power U.S. Direct Banking Survey. In the most recent edition, Ally finished tied for third place among digital financial institutions. Additionally, Ally offers services within its products that can help you better manage your cash. For instance, there’s a feature that allows you to separate your balance into buckets on both the savings and checking accounts, giving you insight into how much money you have set aside for various goals, such as groceries or a downpayment.
Cons
- No in-person branches. Since Ally is 100% online you can’t speak to someone in person if you need to. All communication is done online or over the phone.
- No cash deposits. Ally works well if you receive your income through direct deposit or even as a physical check (you can deposit the check with your phone). However, those who deal in cash should consider a bank with branches, since you can’t deposit cash with Ally.
About Ally Bank
Ally Bank was founded in 1919 by GM Motors to help buyers finance vehicles. It was called GMAC and kept that name until 2009 when it became Ally Bank.
Today it is one of the top 25 largest banks serving 11 million customers. It operates as a fully online bank and offers a wide variety of financial services—from checking accounts to investment accounts.
Ally Bank Spending Account
Ally Bank calls their checking account a spending account and is currently offering a $200 cash bonus on new accounts. To qualify for the bonus you’ll need to use code GET200 by Nov. 30, 2023 and make sure to fund the account within 30 days of account opening and set up a direct deposit that totals at least $1,500 in the first 90 days of opening the account. You also can’t already have an Ally Bank Spending Account.
Another interesting feature is that you can create different buckets within the one account. For example, you could put money you need for bills in one bucket and your fun money in another. That way you can always make sure you aren’t accidentally spending your rent money going out.
You can also get your direct deposit up to two days earlier with their early direct deposit feature. You’ll need to receive two direct deposits within a six-month period for this service to work.
If you overdraft your account the bank will automatically transfer money from your savings to cover your spending. If you don’t have money in savings the transaction may be rejected but there are no overdraft fees in either scenario.
Ally also offers a service called CoverDraft. If you overdraft your account, CoverDraft makes a deposit up to $250 to keep your account from going into the negative. You will have 14 days to bring your account back into the positive. To qualify for CoverDraft you’ll need to have a direct deposit of at least $250 per month. This is an optional service and can be turned off.
This account doesn’t have a minimum balance requirement and there are no monthly fees, overdraft fees or incoming wire fees. You can use Allpoint ATMs for free and Ally Bank will reimburse up to $10 per month for any ATM fees if you use a different network.
Savings
The savings account offered at Ally Bank offers a very competitive 4.25% APY for all balances.
Just like in the checking account, you can create buckets of money in the one savings account allowing you to easily save for multiple goals at once, such as an emergency fund, vacation, down payment or gifts.
Ally offers several ways to help you save more. First off, you can set up recurring transfers from your checking account so that you can ensure you are saving regularly.
They can also monitor your linked checking account for additional savings opportunities and move money automatically from your checking into savings. These are funds the algorithm determines are safe to remove from checking.
Lastly, you can have the transactions in your linked checking account rounded up and the change deposited into savings. Spend $4.75 on your morning coffee and $0.25 will be set aside for savings. When you have $5 saved up it will move out of your checking account and into savings.
Also, Ally Bank does not charge any maintenance fees or require a minimum balance.
If you aren’t interested in the additional features from the savings account you might want to consider the Money Market account. It offers a 4.40% APY and you can easily withdraw money with a debit card at Allpoint ATMs for free.
Certificates of deposit (CDs)
Ally offers seven CD terms, ranging between three months and five years, however most terms are 18 months or less. The most competitive rates hover in the nine to 18-month range, and therefore you should consider Ally as part of a short-term CD ladder.
Other products
- Credit cards: There are four credit cards available through Ally, including one that is only available to nurses and educators. None of the cards charge overlimit fees or foreign transaction fees and you can earn up to 3% cash back depending on which card you choose.
- Auto loans: You can get a loan to buy, lease or refinance your vehicle. They offer loans for both personal and business vehicles.
- Mortgages: Ally offers mortgages for home purchases or to refinance. You can get pre-approved and there are no lender fees.
- Personal loans: Personal loans can be taken out for medical procedures or to make repairs and upgrades on your home.
- Investing: Ally has a variety of investment options allowing you to invest in a wide array of investments, including margin accounts and options. You can self direct your account, use a robo advisor, or have a human financial advisor.
How Ally Stacks up
Ally vs. Discover Bank
Discover Bank offers many of the same features as Ally, including a high APYon the Discover Online Savings account which is currently 4.30% with no minimum deposit or monthly fees.
They also have a checking account that allows you to get your direct deposit early and doesn’t charge overdraft fees. However, they do not offer a service similar to Ally’s CoverDraft.
Ally vs. Capital One
The biggest difference between Ally and Capital One is that Capital One has physical locations, including their Capital One Cafes. If you’ve ever wanted to have a muffin while doing your banking, this is your chance.
They offer the Capital One 360 Performance Savings account which is currently earning 4.30% APY with no fees or minimums. Their checking account also has no fees or minimum balance requirements and doesn’t charge overdraft fees but will likely decline any transactions that would put you in the negative.
Ally vs. CIT
CIT bank has the highest APY on the list with balances over $5,000 earning 5.05% in the CIT Bank Platinum Savings account. However, if you have less than that you’ll be better off in the CIT Bank Savings Connect account earning 4.65% on all balances. However, there is a $100 minimum opening deposit.
The checking account also has a $100 minimum opening deposit but no monthly service fee or overdraft fees. CIT bank will reimburse up to $30 a month in other bank’s ATMs compared to Ally’s $10 per month.
Frequently asked questions (FAQs)
Ally Bank’s checking account is best for those who budget with an envelope system and will use the buckets feature within the account. That is not a feature you often see in checking accounts and will come in very handy for those who need it. Also, if you find you frequently overdraft your account, the free CoverDraft feature may be a valuable service.
Ally’s Savings account doesn’t offer the very highest rate out there but it’s still quite respectable. If you are already banking with Ally it’s a good addition to your Ally accounts.
Like all banks, Ally will require your name, social security number, date of birth, address, occupation, contact info and current bank information for your initial deposit if you are making one. They will also need your mother’s maiden name, presumably for security purposes.
Ally’s deposit accounts are all FDIC insured up to $250,000 per depositor. Their investing accounts are SIPC insured up to $500,000.
