In an increasingly digital world, banking with a brick and mortar bank isn’t a necessity any longer. You can house your checkings, savings, and even your auto loans and home mortgage under the same digital roof if you want.
If you’re looking for a new bank that offers convenience, low fees, and high rates, you should check out Ally Bank. It’s not a perfect bank, but it comes close for anyone seeking the digital-only experience.
What Products Does Ally Bank Offer?
Ally Bank is an online bank with full service. It offers high-yield deposit accounts including checking, savings, CDs (certificates of deposit) and money market accounts. It also extends loans including auto loans, home mortgages, and credit card financing.
You can also do your investing from Ally Bank’s investment platform, Ally Invest, which is a low-cost brokerage company. When you have multiple accounts at Ally Bank, you can view them all from the same website. That makes tracking your financial progress much easier.
What Are Ally Bank’s Rates on Deposit Accounts?
The centerpiece of every person’s financial life is their checking account. Ally Bank has an online checking account that doesn’t require any monthly maintenance fees.
Technically, it is a high-yield checking account, though it offers a paltry 0.1% interest rate on balances up to $15,000. The 0.1% fee is not quite as high as some other banks, but it is competitive. Ally offers a 0.6% APY on balances over $15,000, which is quite a bit higher than the national average.
The account gives you free access to any Allpoint ATM. It will also reimburse you for any other bank’s ATM usage fees up to $10 per month. You also get free checks and cashier’s checks, and incoming wires are free.
The one “gotcha” with Ally Bank has to do with its overdraft fees. If you make an overdraft, you’ll pay a $25 fee each day that you’re in overdraft. In good news, you’ll pay a maximum of one fee per day. Learn more about Ally Bank’s fees (including a 1% currency conversion fee) here.
Currently, Ally Bank offers a 1.9% APY on all savings accounts. While it’s possible to find slightly higher rates (Marcus by Goldman Sachs currently offers 1.95% APY), Ally has historically been a rate leader for savings accounts.
You’re limited to six transactions per month in your savings account, but that is standard for all savings accounts.
Money Market Accounts
Although Ally Bank is a consistent leader for savings accounts, its money market accounts aren’t very exciting. Currently it offers 0.9% APY on accounts with less than $25,000 and 1% on accounts with over $25,000 for the daily balance.
Right now, the money market accounts at Ally Bank don’t make a ton of sense. It’s far better to keep your money in the high-yield savings account instead.
Certificates of Deposit (CDs)
One of Ally Bank’s most outstanding products is its mix of CDs. CDs are mid-term savings products that provide higher interest rates than other savings vehicles. Many people use “CD ladders” to help provide stable cash flow during retirement (or another period of time when you’re living off of savings).
Ally Bank offers three distinct CD products. Here are the details on Ally Bank’s CDs.
The high-yield CD has maturity dates ranging from three months to five years. If you withdraw your money early from the account, you’ll pay 60 to 150 days of interest in penalties.
Rates on these CDs range from 0.75% for a 3-month CD to 3% on a 5-year CD. If you’re willing to lock your money up for a full year, you can earn a 2.5% interest rate which is nearly impossible to beat right now.
Raise Your Rate CD
The Raise Your Rate CD is sort of a hybrid savings/CD product. If Ally Bank raises its rates on CDs, you have the opportunity to lock in your CD at a higher interest rate. You’ll have this opportunity once on a two-year CD and twice on a four-year CD.
The Raise Your Rate CD offers a two-year or four-year term. You’ll pay 60 to 120 days of interest in penalties if you withdraw your money early.
Currently, the rate on both products is 2.5% APY.
No Penalty CD
Ally Bank offers a No Penalty 11-month CD. You won’t pay any penalties for withdrawing your money early (provided you keep the money in the CD for at least six days).
Rates for the No Penalty CD are 1.75% for accounts with less than a $5,000 opening deposit, 2.00% APY on accounts with a $5,000 to $25,000 opening deposit, and 2.10% on accounts with a $25,000 minimum opening deposit.
Will You Pay Fees If You Bank at Ally?
Like most online banks, Ally has very few fees. You won’t pay monthly maintenance fees on any of the deposit accounts (including checking), and you can avoid most ATM fees.
If you have a savings account and a checking account at Ally Bank, you can even protect yourself from overdrafts by setting up free overdraft protection (which allows you to transfer money from savings into checking to cover overspending).
If you’re really struggling with financial management, you may want to choose an even more protective bank (like Chime or Simple) which do not charge overdraft or NSF fees.
Final Take on Ally Bank
If you’re looking for an online bank that checks all the boxes, Ally Bank is tough to beat. It offers more products than most online-only banks. Plus, it offers higher interest rates (on average) than most online banks.
Anyone who wants to keep most of their accounts in one “house” will have a tough time beating Ally Bank on fees, service, and rates.
Ally Bank doesn’t always offer the best rates on its savings products, but it’s consistently near the top (and it has been for several years). People who don’t want to spend their life rate-chasing can expect to be happy with Ally Bank for years to come.