Ally Bank Review - Great Interest Rates and Low Cost Investing
Why bank online? Better interest rates, no fees and if you bank with Ally, you’ll also find a low cost investment platform.
- Extremely low fees
- High yield savings account
- Multiple CD terms
As an online bank, Ally Bank appears to be a young company. But it’s actually nothing of the sort. It’s the successor company to the once popular General Motors Acceptance Corporation (GMAC), once one of the largest auto lenders in the world. Founded in 1919, GMAC became Ally bank in 2009.
Auto financing remains one of Ally Bank’s primary lines of business, and they offer some of the most innovative auto financing anywhere (which we’ll cover in this review). In making the transition from GMAC, Ally Bank is a full-on online bank. It’s well known for providing some of the highest interest rates on checking and savings accounts, money markets, and certificates of deposit (CDs).
In 2016, Ally Bank moved into the investment universe, with the acquisition of TradeKing–a digital wealth management company that also offers online brokerage services. The TradeKing division was reestablished as Ally Invest–which we’ll also briefly cover in this review.
Ally Bank now has more than 7,900 employees, with over $78 billion in customer deposits and more than $167 billion in total assets.
The company has all this, and no physical bank branches anywhere!
Deal of the Day: Chase is now offering a $200 cash bonus when opening a Total Checking Account. No minimum deposit and all deposits are FDIC insured up to the $250,000 per depositor maximum.
The basic account features of Ally Bank include:
Available accounts – Checking and savings accounts; CDs; traditional, Roth and SEP IRAs.
Minimum account balance – There are no minimum balances required to open an account. However, CDs and certain savings products do have minimum balance requirements in order to get in on various interest rate tiers.
Zelle – Ally Bank offers this service as an easy way to send or receive money to and from just about anyone with a U.S. bank account. All you need is their email address or mobile phone.
Account funding – You can fund your Ally Bank account through remote check deposits with Ally eCheck Deposit from your mobile device, as well as through online transfers, direct deposit, wire transfers, and checks by mail. Since Ally Bank has no physical branches, you won’t be able to deposit cash into your account.
Account access – Your Ally Bank account comes with both checks and a debit card. You can also access your account by electronic transfers or online bill payments. On savings and money market accounts, you’re limited by federal law to six withdrawal transactions. If you go over the limit, there’s a fee of $10 per transaction.
ATM access – Ally Bank accounts can be accessed through Allpoint ATMs throughout the U.S. There’s no charge if you use one of these ATMs and the network has more than 43,000 locations across the country.
You can access your Ally Bank account at out-of-network ATMs, but you will pay a fee for the service. However, Ally Bank will reimburse you up to $10 per statement cycle for any fees charged by those ATMs.
Mobile App – The Ally Bank Mobile App is available for iPhone and Android devices. You can do virtually anything on a mobile app that you can on the website. This includes depositing checks using Ally e-Check Deposit. With it, you can make a deposit simply by taking a picture of the check you’re depositing. You can also use the mobile app to pay bills, transfer funds, or find ATMs.
Customer service – You can contact Ally Bank by secure email, online chat, or by phone. Customer service is available Monday to Friday, 8:00 AM to 11:00 PM, and Saturdays from 9:00 AM to 7:00 PM (Eastern time). Ally Bank representatives are not available on Sundays.
Account protection – All accounts at Ally Bank are protected by FDIC insurance on deposits of up to $250,000 per depositor.
Ally Bank fees – There are no monthly or annual fees charged on any Ally Bank products, including credit cards.
Prepayment penalties for early CD withdrawals – Ally Bank’s CD prepayment penalties are as follows:
- CD terms of less than three years – 60 days interest
- CD term of 3 years – 90 days interest
- CD term of 4 years – 120 days interest
- CD term of 5 years or more – 150 days interest
Ally Bank offers online checking, savings, and money market accounts, as well as CDs. Each pays some of the highest interest rates available in the banking industry.
Ally Bank Interest Checking Account:
Interest Checking pays interest based on two tiers (as of June 14th, 2019):
- 0.10% APY for balances under $15,000
- 0.60% APY for balances of $15,000 or more
As noted earlier, your Ally Bank Interest Checking Account comes with both checks and a debit card. You can make payments using online Bill Pay, which is offered as a free service.
Ally Bank Online Savings Account:
Ally’s Online Savings Account is currently paying 1.80% APY (as of October 9th, 2019) on all account balance amounts. Interest is compounded daily, and there are no monthly maintenance fees.
And here’s a quick reference comparison table:
Ally Bank Money Market:
Ally Bank Money Market has two interest rate tiers (as of June 14th, 2019):
- Balances from 0 to $24,999 – 0.90% APY
- On balances of $25,000 or greater – 1.00% APY
The account comes with both checks and debit card access. Interest is compounded daily.
Ally Bank offers three different CDs:
- High Yield CD
- Raise Your Rate CD
- No Penalty CD
The details on each are as follows:
High Yield CD:
This CD product is available for both regular accounts and IRAs. The high yield CD comes with the Ally Ten Day Best Rate Guarantee. This means you will get the best rate offered within 10 days of funding your CD.
Yields on the High Yield CD are as follows (as of June 14th, 2019):
|CD Term/ Balance||All Balances||Less than $5,000||$5,000 to $24,999||$25,000 or More|
|3 Months||0.75% APY|
|6 Months||1.00% APY|
|9 Months||1.25% APY|
|12 Months||2.35% APY|
|18 Months||2.30% APY||2.40% APY||2.45% APY|
|3 Years||2.30% APY||2.40% APY||2.45% APY|
|5 Years||2.50% APY|
Raise Your Rate CD:
This CD product is available in terms of two years or four years. Either term pays an interest rate of 2.15% APY (as of October 9th, 2019), compounded daily. It is available for both regular accounts and IRAs. Also comes with the Ally Ten Day Best Rate Guarantee in which you will get the best rate offered within 10 days of funding your CD.
The raise your rate feature is what makes this CD unique. You lock in your rate when you first open your CD. Should rates increase, you will then have the opportunity to increase your rate once on a two-year term CD, or twice on a four-year term CD.
No Penalty CD:
This is an 11-month term CD. You can withdraw your full balance, including interest, at any time after the first six days following the date you fund the certificate. No early withdrawal penalty will be charged.
Like the other CDs offered by Ally Bank, this one is available for both regular accounts and IRAs.
There are three interest rate tiers (as of October 9th, 2019):
- Balance less than $5,000 – 1.65% APY
- Balance from $5,000 – $24,999 – 1.80% APY
- $25,000 or more – 2.00% APY
With Ally Bank, you can apply for your mortgage online. They have a team of dedicated loan experts to help guide you through the process. Mortgage products available include fixed rate loans, with terms of 10, 15, 20, 25 and 30 years. They also offer 5/1, 7/1, and 10/1 adjustable-rate mortgages (ARMs). They provide Jumbo mortgages, and participate in the Fannie Mae’s HomeReady mortgage program for first-time home buyers.
The Ally CashBack Credit Card is a Visa card issued by TD Bank, N.A.
The card comes with the following features:
- Introductory 0% APR for 12 months on balance transfers (3% fee on amount transferred)
- Regular APR after the introductory period is 14.74% to 24.74% APR on both purchases and balance transfers
- $100 bonus when you make $500 in eligible purchases during the first 90 days
- No annual fee
- 10% Ally Deposit Bonus when you deposit your cash rewards into an Ally Bank money market, checking, or non-IRA online savings account
- Unlimited 2% cash back at gas stations and grocery stores (including superstores and warehouse clubs)
- 1% cash back on all other purchases
- Can be added to Apple Pay and Samsung Pay
- 3% foreign transaction fee
As the successor to the once popular GMAC, Ally Bank has perhaps the widest selection of some of the best auto financing programs available anywhere. The company is the largest auto financing institution in the country. They work with more than 18,500 car dealerships, providing auto financing for more than 4.3 million consumers.
Ally Bank offers financing for personal and business vehicles, as well as recreational vehicles. They even have financing for specialty vehicles, like those with wheelchair lifts and right-hand drive capability. They offer both loans and leases.
Some of the loan and lease programs include:
Ally Buyer’s Choice
This program combines the benefits of buying and leasing. It gives you the option to continue making your regular lease payments, or to sell the vehicle to Ally Bank at a predetermined price and date. You have a choice of terms of either 48 months or 60 months, but you can also trade in the vehicle at any time during the contract. The program is available in every state except Nevada.
Ally Balloon Advantage
Under this program, your monthly payments are lower, because you make a large, one time payment at the end of your contract. You start with a fixed APR and monthly payments, with a single large payment at the end. You can sell or trade in your vehicle at any time as long as you pay off the remaining balance on the loan.
The program can make it easier to qualify for a loan, with lower monthly payments that will enable you to save the money needed to make the balloon payment at the end of the term.
Ally Balloon Advantage applies to all new GM, Chrysler and Mitsubishi vehicles. But it also extends to use vehicles up to four model years old (except Saab and Suzuki). The program is available in every state except Maryland, Nevada, New Hampshire, North Carolina and Pennsylvania.
Ally offers shortened financing terms that give you the flexibility to get a new vehicle more often, and even includes select pre-owned models.
Ally Pre-Owned SmartLease
You can use Ally Pre-Owned SmartLease to lease a used vehicle. This will extend the benefit of leasing (lower monthly payments) to pre-owned cars.
The program lets you lease vehicle models based on the following criteria:
- You have clean history reports
- The vehicle is less than 4 model years old
- It has fewer than 75,000 miles
Along with the lease, you’ll also receive automatic Guaranteed Auto Protection and the ability to purchase maintenance coverage similar to what’s offered for new models.
As if Ally Bank’s banking and lending services aren’t enough, their Ally Invest platform enables you to invest with the same company where you bank.
The platform allows you to trade stocks and exchange traded funds for just $4.95 per trade–$3.95 if you’re a frequent trader (at least 30 trades per quarter). But you can also trade bonds, mutual funds, options, Forex and futures. Since they are a successor to TradeKing, Ally Invest is particularly strong with options trading. There is no minimum balance requirement to open a self-directed account.
If you’re not interested in self-directed investing and prefer robo-advisors, you may want to try Ally Invest Cash-Enhanced Managed Portfolios. Receive a fully automated investment portfolio with a $100 minimum investment. Ally will create and manage the portfolio, offering periodic rebalancing as well as dividend reinvestment. There are no advisory fees for the Cash-Enhanced Managed Portfolio. About 30% of the portfolio will be put in a cash buffer earning about 1.80% interest.
They offer both taxable accounts and IRAs for both self-directed trading or the robo-advisor.
Ally Bank Pros and Cons
- Earn high interest on savings products. Ally Bank pays interest rates that are at or near the top of the interest rate range for all banks.
- No fees on checking, savings, and money market accounts, or even on credit cards.
- Unlike many online banks, Ally Bank provides many traditional banking services, including credit cards and mortgages.
- Ally Bank auto financing programs are among the most innovative available.
- Invest where you bank with Ally Invest.
- No branch locations, but this is typical of online banks.
- Cannot accommodate cash deposits.
- Ally CashBack Credit Card has a 3% foreign transaction fee, which is not charged by most major credit cards
- No availability of FHA or VA mortgage programs through Ally Bank Home Loans.
At a time when local banks–and even some of the best-known banks in the country–are paying interest rates on savings of well below 1%, online banks are becoming the go-to source for higher interest rates. Ally Bank pays some of the highest rates available. But unlike many online banks, Ally Bank also offers many of the services traditionally associated with banking, including home loans and a credit card.
They’re virtually the industry leader when it comes to auto financing. Whether you need a loan or lease, Ally Bank has a program for you. Ally Pre-Owned SmartLease even enables you to lease a used car, which is a unique financing arrangement all by itself.
And finally, with Ally Invest you can invest money with the same company where you do your banking. Ally Invest offers an attractive combination of low cost self-directed investing, as well as a competitive professionally managed robo-advisor.
All in all, Ally Bank offers a comprehensive package that’s virtually unmatched in the industry.
If you’d like more information, or if you’d like to sign up for an account, you can visit the Ally Bank website.