Thinking about opening a bank account and wondering if that bank should be Ally Bank?
Ally Bank is an online bank with high-interest checking and savings accounts that will embarrass your local brick and mortar bank options.
Years ago, I made Ally Bank my main online bank. I still keep a Bank of America account for quick ATM access, despite Ally's ATM reimbursement program, but I keep that around because of inertia more than any other reason. It's the center of my financial map and one of my favorite savings accounts available.
In this review, I'll go through all of their offerings and you can decide if it's the bank for you.
Is Ally Bank Safe?
Ally Bank started as GMAC, the financing division of General Motors, and only got into banking services in 2000 with the creation of GMAC Bank. They were founded all the way back in 1919 and expanded their financing operations in the 1940s to include trains, then household appliances (1951), and financed their 75th millionth vehicle in 1977. In 2009, they rebranded from GMAC Bank into Ally Bank.
Ally Bank (FDIC #57803) is completely safe and FDIC insured up to $250,000.
Ally Bank has an extensive history in lending but for the purposes of this review, I look at their core banking and deposit products and my experiences with them as an online bank. They also acquired TradeKing and rebranded it Ally Invest (which I use as my discount broker too) so you can do nearly everything under one roof.
Ally Bank Deposit Products
Ally Bank offers the full suite of deposit products – savings, checking, and certificates of deposit (a High Yield, a Raise Your Rate, and a No Penalty CD).
Interest Checking Account
The interest checking account has no minimums, no maintenance fees, and an interest rate that crushes traditional brick and mortar banks. The interest rate is tiered, currently at 0.10% APY for balances under $15,000 and 0.50% on balances over $15,000. You can transfer instantly between the savings and checking account (keep in mind the Fed's 6 ACH transfer rule) so you should keep the minimum you need in the checking.
The checking account also offers bill pay and Zelle for payments to other individuals. The debit card is nothing extraordinary, it's a regular debit MasterCard.
How do I withdraw cash from my Ally Bank account? To get cash from your Ally Bank checking account, you have to use your debit card at another bank's ATM. Ally Bank won't charge you a fee when you use another bank's ATM and they will automatically reimburse the other bank's fees of up to $10 each statement cycle. They have also partnered with the Allpoint ATM network (43,000+ ATMs) so if you use that network's ATMs then you won't be charged a fee.
With a brick and mortar banks, if you use another bank's ATM then you usually pay two fees – one by the bank that owns the ATM and one by your bank. Many online banks partner with ATM networks to give you fee-free ATM access but not many offer reimbursement of fees like Ally does.
With their debit card, you can also get cashback from purchases without a fee.
Ally Bank has a daily ATM withdrawal limit of $1,000 per day.
How do I put money into my Ally Bank account? You can transfer money into your account via an ACH transfer, you can deposit checks through the app, and you can mail in checks using their prepaid envelopes (or mail it directly yourself to Ally Bank, P.O. Box 13625, Philadelphia, PA 19101-3625). You can't deposit cash directly into the account, Ally Bank doesn't accept cash deposits. To get your cash into an account, you have one of two options. You can deposit at a different bank account and then transfer it or you can buy a money order and deposit the money order.
Online Savings Account
The online savings account has no minimums, no maintenance fees, and a high-interest rate that applies to all balance tiers.
The Online Savings Account interest rate is 1.25% APY and compounds daily.
Ally Bank also has a money market account with a tiered interest rate:
- < $5,000 minimum daily balance: 0.75% APY
- $5,000 minimum daily balance: 0.75% APY
- > $25,000 minimum daily balance: 0.75% APY
I mention it because it exists, and may become a factor in the future, but right now it's inferior to the savings account.
Savings Buckets Feature
Ally Bank recently added a new feature to their savings accounts – “buckets.” Buckets are ways to organize your savings without having to create separate savings accounts. There are ten pre-made buckets (Emergencies, Home, Vacations, Occasions, Education, Family, Tax Payments, Bill Payments, Vehicles, Pets) and a “Make Your Own”. When you pick the ones you want, you'll get those plus one called “Core Savings.”
Afterward, you can distribute the amount in your savings across the various buckets to help you understand how your money is being allocated. It's all still in your savings account but can help you understand how you're saving towards each goal.
Finally, you can set how you want new money to be allocated into each bucket. You can keep it 100% Core Savings and manually distribute it or you can set percentages on each category.
Finally, you can set the bucket where interest is deposited (you can only select one category for this).
Savings Boosters are under the “Optimize” tab and consist of two features:
- Recurring Transfers: Set up a referring transfer to help you save money.
- Surprise Savings: This is where Ally analyzes your checking account (that you add yourself) and it transfers money when it could work harder in savings. It never transfers more than $100 at a time and only does it on Monday, Wednesday, or Friday.
Surprise Savings transfers do not count towards the 6 ACH limit.
These two features are less exciting than buckets but they're nice little bonuses.
Certificates of Deposit
There are three types of CDs:
- High Yield CD: This is their name for a standard certificate of deposit. They have all the standard maturity periods up to 60 months (5yr).
- Raise Your Rate CD: This type of CD allows you to raise your rate should rates increase for your term and balance tier. It's available as a 2yr and 4yr CD. You can increase the rate one-time on the 2yr and two-times on the 4yr.
- No Penalty CD: You can withdraw your money at any time and pay no penalty. The only exception is that you can't withdraw within the first six days. This is currently available for 11-month terms only.
On top of all this, they have a “Ten Day Best Rate Guarantee.” If the rate for your CD's maturity and balance tier goes up in the first ten days of opening, they will increase your rate to that higher rate. There's no fear that you open a CD and suddenly the rates go up and you miss out.
Finally, when you renew your CD you get a “Loyalty Reward.” When rates were higher, I saw Loyalty Rewards of almost half a percent. It's less generous these days but still better than nothing!
Hi Jim, we currently offer a .05% Loyalty Reward for CD renewal, and will keep the community updated on any future offerings as they become available. Please let us know if we can answer any further questions! ^KM
— Ally (@Ally) February 22, 2018
Retirement CDs & Savings
At Ally Bank, you can open an IRA, Roth IRA or SEP-IRA version of the High Yield CD, the Raise Your Rate CD, and even an IRA Online Savings account – all with rates that are comparable with the non-IRA versions. As someone who is in their mid- to late-thirties, this isn't appealing BUT it might make sense for someone who is nearing retirement and looking to squeeze a little extra return out of their retirement cash holdings.
Ally Bank App Features
The Ally Bank app has all the features you'd need in a bank app including transferring funds, paying bills, using Zelle to send and receive money, deposit checks, manage your CDs, lock and unlock your cards, order checks, view old statements and tax forms, and even contact the bank.
The app offers a series of alerts that can notify you when your:
- account is overdrawn your account and you are charged overdraft fees,
- balance goes above or below a certain amount,
- account receives a deposit above a certain amount,
- account has a debit transactions that go over a set amount,
- CD is about the mature.
The only thing you can't do with the app that you can do in a branch at another bank is deposit cash – but no online banks have this feature.
Ally Invest is the investment brokerage that was formerly known as TradeKing. I used TradeKing back in the day because they offered $4.95 commission equity trades with no minimum account balances and no other “surprise” fees. In my quest to simplify my finances, I was tempted to transfer all those assets to Vanguard just to keep the management simpler.
Fortunately, Ally Bank did me another solid – they acquired TradeKing in early 2016! Since then, nothing has changed about it except the branding. I can now access my TradeKing account with my Ally Bank login and my life is simpler. Thanks, Ally!
Ally Invest has everything you need in a broker plus they also have a Cash-Enhanced Managed Portfolio product, similar to what companies like Betterment offers. The annual advisory fee on the Cash-Enhanced Managed Portfolio is 0.00% – lower than Betterment, Wealthfront, and many others. You can't get lower than 0.00%!
I've never used it so I can't speak to how it compares. The Cash-Enhanced Managed Portfolio has a $100 minimum.
As for the brokerage, they do not charge a commission on U.S. stocks, ETFs, and options. While this is a great option, I'm more of a buy and hold forever type. I haven't sold stock in my Ally Invest account in years.
Ally Invest New Account Promotions
|Initial Funding||Bonus Amount|
|$10,000 – $25,999||$50|
|$25,000 – $99,999||$200|
|$100,000 – $249,999||$300|
|$250,000 – $499,999||$600|
|$500,000 – $999,999||$1,200|
|$1,000,000 – $1,999,999||$2,500|
|$2,000,000 or more||$3,500|
Ally Bank CashBack Credit Card
Ally Bank's debit card may be pedestrian but the Ally CashBack Credit Card offers some solid rewards for a bank's rewards card:
- Unlimited rewards, 2% cashback at gas stations and grocery stores, 1% everywhere else
- 10% Ally Deposit Bonus when you deposit those rewards in an Ally Bank account
- $100 bonus when you make $500 in purchases in the 1st three months
- NO annual fee
They also have a 0% introductory APR on balance transfers for 12 months with a standard fee of 3% of the transfer, $5 minimum.
A solid rewards card that doesn't introduce any of the typical gotchas banks use to limit the benefits.
Ally Bank Fees & Penalties
Ally Bank has no monthly maintenance fee, no minimum account balance, and no fee for incoming wires. You can get cashier's checks for free and get unlimited deposits too.
You do pay a fee for:
- Returned deposit item: $7.50
- Overdraft item (maximum 1 per day) $25
- Excessive transactions: $10 per, this is based on the 6 ACH rule
- Outgoing wires (domestic): $20
Another area where fees are important is with certificates of deposit.
Ally Bank has one of the most generous CD early withdrawal penalties I've ever seen.
Here's the penalty schedule based on maturity:
- 24 months or less: 60 days of interest
- 25 months – 36 months: 90 days of interest
- 37 months – 48 months: 120 days of interest
- 49 months or longer: 150 days of interest
Here's Bank of America's schedule:
- 90 days or less: greater of all interest earned or 7 days of interest
- 90 days up to 12 months: 90 days of interest
- 12 months – 60 months: 180 days of interest
- 60 months or longer: 365 days of interest
Ally Bank's penalty is lower in every single category.
I love their customer service – you can email, call, send mail, and even chat online. I love using the chat online because it lets me do a variety of things at once, including taking care of simple banking tasks (like ordering new pre-order envelopes).
If you prefer the phone, that's speedy too, just call 1-877-247-2559.
Pros and Cons
The Pros are that Ally Bank offers every good feature of a bank and avoids any negatives. A competitive interest rate on all their products as well as no minimums and no maintenance fees.
The certificates of deposit rates are competitive with a generous early withdrawal penalty, should you need to, plus a small loyalty renewal bonus if you re-up a CD. The No Penalty CD and Raise Your Rate CD options are nice for some flexibility but their rates are typically lower than the regular CD, but that's to be expected since you are paying for that flexibility.
Ally Bank has a very easy to use a smartphone app that includes eCheck depositing, a must these days because who wants to mail checks for deposit? If that describes you, they offer postage prepaid envelopes you can use to mail the checks.
Finally, if you want a straightforward rewards card, it's there for you and even gives you a bonus for signing up.
As for Cons, I really can't think of any that apply to Ally Bank and not to other online savings accounts. Sometimes it's nice to be able to go to a branch but I may love the idea of it more than actually doing it as I haven't been to a branch of a bank to do more than visit an ATM in years. The only feature that another bank offers that Ally doesn't is the ability to quickly create new savings or checking accounts, as I do with Capital One 360.
If you're comfortable with an online bank, I can't think of a better one than Ally Bank. It's the reason why I opened an account with them many years ago and the reason why I still use them today.