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.
About Ally Bank
Ask any consumer today what they think of Ally Bank and they probably picture a commercial like this one:
A brief history lesson – Ally Bank may have IPO'd in 2014 but their history goes back a much longer way. They got their start in auto financing in 1919 as GMAC, the financing division of General Motors, and only got into banking in 2000 with the creation of GMAC Bank. In 2009, they changed their name to Ally Bank.
Ally Bank (FDIC #57803) is, of course, 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. Most of one's interactions with a bank are on the deposit side so that's the priority. They also recently acquired TradeKing (which was 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 0.60% 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.
With ATMs, Ally Bank does not charge a fee and Ally will reimburse ATM fees of $10 each statement cycle. They use the fee-free Allpoint ATM network and their 43,000+ network. Many banks don't reimburse customers any amount when using other ATMs. In some cases, they rely on larger networks which mitigates the need to reimburse.
Online Savings Account
The online savings account has no minimums, no maintenance fees, and a high-interest rate that applies to all balance tiers. That interest rate is currently 1.60% APY and compounds daily.
Ally Bank also has a money market account with a tiered interest rate:
- < $5,000 minimum daily balance: 0.90% APY
- $5,000 minimum daily balance: 0.90% APY
- > $25,000 minimum daily balance: 1.00% 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.
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 comprable 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 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. In the time since, nothing significant has changed about TradeKing 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 Managed Portfolios too, similar to what companies like Betterment offers. The annual advisory fee on the Managed Portfolios is 0.30%, lower than the industry average and just 5 basis points higher than Betterment. I've never used it so I can't speak to how it compares. The Managed Portfolio has a $2500 minimum.
As for the brokerage, the $4.95 commission on equity trades is still one of the cheapest. Etrade charges you $6.95 and only gives you $4.95 commission trades if you execute more than 30 in a quarter. If you do trade 30+ times a quarter, Ally Invest only charges you $3.95 (this pricing is also available if you have a balance of $100k+). I haven't traded a stock in my Ally Invest account in years.
Finally, if you're into options, Ally Bank charges $4.95 plus 65 cents per contract.
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, like a maximum rewards amount per cycle.
Ally Bank Fees & Penalties
When it comes to fees, 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 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 others. 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.