Ally Bank: A review
Awhile back, my dad emailed me suggesting I switch to Ally Bank because of their high-interest savings accounts. I planned to do some research and get to it later. That was two years ago. So when my editor recently asked if I'd be interested in reviewing Ally, it was a convenient kick in the pants.
I've read a few glowing comments about Ally from GRS readers, and my dad also seems to think they're great. Before I share the details, a little background:
A brief history of Ally
In 1919, people wanted to buy cars. The General Motors Acceptance Corporation (GMAC) founded Ally Financial to help finance consumer craving for the automobile. Fast-forward 66 years later, and Ally began to finance mortgages too. Then, in 2008, GMAC became a bank holding company, and in 2009, Ally Bank was introduced.
In 2011, my dad sent me an email raving about their interest rates. Word about Ally was spreading quickly. They exceeded 1 million customer accounts in 2012. Recently, Money magazine included them in their list of "The Best Banks in America."
Here's why Ally is getting rave reviews from customers and experts alike.
Competitive interest rates
Interest Checking accounts
Ally's biggest draw seems to be their policies, but the fact that their checking accounts bear interest on balances at fairly high rates doesn't hurt! There is no minimum balance, but a higher balance (along the lines of $15,000) earns a higher interest rate. My current checking account doesn't even offer interest.
Savings accounts and CDs
Ally's high-interest savings accounts and CD rates are naturally even better than the checking account rates, and it's not hard to imagine why people took notice. On the widget, you can see how Ally's savings rate compares to the All Bank Average. You can even compare it to your own bank's savings rate if you like. Granted, savings account interest rates rise and fall; but for a low-maintenance, no-fee account, Ally's rates are appealing.
Ally's high-yield CDs earn a variety of interest rates, depending on the term you select (up to a five-year term); but, rates aside, I especially like the fact that, just like their savings accounts, interest is compounded daily -- not monthly, quarterly, or even annually, but daily. If you want to see your savings dollar grow fast, daily compounding is a necessity.
No maintenance fees
This is one area where Ally gets another big point. I don't struggle with overdraft anymore, but before I had my money in order -- yowza -- did I ever have issues. Unfortunately, I think a lot of people do too. And even more unfortunately, many banks have a history of taking advantage of that. I was impressed to discover Ally's fee-related perks, which include:
- No maintenance fees on CDs
- No maintenance fees on online savings or money market accounts
- No maintenance fees on their Interest Checking account
- Overdraft fees are limited to one a day
I don't think overdraft protection should be a part of anyone's banking decision, as I hope people have the financial know-how to avoid overdraft altogether. But in a culture of overspending, those are high hopes. I appreciate a bank that doesn't appear to take advantage of customers' weaknesses.
No minimum balance
The maintenance fee is tempting enough to switch on principle. Last year, my bank began charging a $12 monthly maintenance fee if you have less than $1,500 in your checking account. While this might be an effective hack for making sure you have a financial cushion, I have my own savings habit. I direct deposit into my checking, then "pay myself first" by moving my savings into a separate account. I don't like that my current bank charges me $12 to do things their way.
In short, the fact that Ally's penalties are minimal and their maintenance fees are non-existent is a big draw. I don't like having to call my bank periodically to learn about some silly fee that eluded me.
Here a few more notable Ally incentives:
- No ATM fees; they pay any fees charged by other banks
- Free checks
- 24/7 customer service, including an online ticker that provides a wait time
- Customer security. Ally recently began offering customers a free download of security software that protects your identity and personal information as you shop and bank online. Obviously, they take online security very seriously.
Online-only banking: The convenience factor
Ally is an online-only bank and, for some, that may be a disadvantage. But for me, the convenience of online banking is one upside to living in a world that's becoming increasingly virtual. I hate driving out of my way to the bank. I hate waiting in line. I hate searching for a nearby branch when I'm out of town. That's why I use direct deposit and online transfers (both of which Ally offers, of course). Here are a few more advantages I find to online-only banking:
- You can go to any ATM for free.
- You can scan checks using their smartphone app or your computer. (If you don't want to make a virtual deposit, Ally provides free, postage-paid envelopes to mail your checks.)
- Because there are no storefronts, Ally can afford not to charge the same fees that other banks charge.
- Ally also offers Popmoney, a seemingly easy way to send money to friends or family.
If you're looking for a low-maintenance, straightforward bank with competitive interest rates, Ally seems like a good choice. If you're wary of the world of online banking because it seems unsafe or overwhelming, Ally is a great option if you decide to give in to the convenience factor and join the virtual world.