Ally Bank is an Internet bank that was started in May of 2009. Ally Bank is a subsidiary of GMAC Financial Services, which has been around since 1919. General Motors Acceptance Corporation’s financial unit officially changed its name to Ally Bank on May 15th, 2009. I know you may be nervous about General Motors being in the name, but Ally Bank is a completely separate entity from General Motors. Ally Bank is a FDIC insured bank and the company website emphasizes that the bank is well capitalized. The name Ally Bank was chosen because the bank is considered your “ally” or friend that helps you achieve your financial goals.
Opening an Ally Bank account is a four step process. Here’s how to do it:
1. Select your account type.
- Single owner
- Joint owners
- Multiple owners
2. Enter personal information.
- Name
- Social security number
- Home address
- E-mail address
- Date of birth
- Phone number
3. Fund your account with opening deposit.
You can fund your account by linking it to any existing checking or savings account.
4. Set your account options.
You can establish automatic contributions to build your savings.
Ally Bank’s Financial Products
High Yield CD – The high yield CD offers up to 1.84% APY, which is significantly higher than the current average CD rates. Ally offers the Ten Day Best Rate Guarantee which means that you get the best rate Ally offers for your CD within ten days of opening an account. A high yield CD can be opened with as little as one dollar.
Raise Your Rate CD – The raise your rate CD is a 2 year CD that gives you the option of locking in a one-time rate increase. Assume you invested $1,000 in a 2 year CD with 2% interest. If interest rises to 3% the next year, then you can take advantage of the option and increase your interest income an additional 1%. The current rate on the “raise your rate” CD is 1.60% APY. This rate is nearly double CD rates offered at Bank of America, Chase and Ally Bank.
No Penalty CD – Most CDs have early withdrawal penalties that can cost you as much as 10% of your balance. The no-penalty CD lets you withdraw your entire balance any time without any penalties. The current interest rate offered is 0.96% APY.
Online Savings – The online savings account offers one of the highest interest rates in the industry. Six transactions are allowed monthly. The online savings account is currently paying 0.89%.
Money Market Account – Ally’s money market account is very similar to the online savings except you receive a check card and checks. There are no ATM fees, and the first 50 checks are free. Ally’s standard checks are always free. The MMA rate offered is 0.89%.
Daily Interest Checking – Ally’s checking account pays 0.80% on balances greater than $15,000 and 0.50% on balances less than $15,000. Plus, you get the following features:
- Cash back when you shop
- Free online bill pay
- Free checks and unlimited check writing
- No ATM fees
Advantages
- No monthly fees like traditional banks.
- No minimum to open an account.
- No minimum balance requirement.
- Customer service is available 24 hours per day, 7 days a week.
- Variety of banking products.
- Interest is compounded daily.
- FDIC insurance up to $250,000 per account.
- No penalty for withdrawals from certificate of deposit.
- Ten day best interest rate guarantee on certificates of deposit.
- Website is very user friendly.
- Bank seems to be in good financial shape.
Disadvantages
- The only term for no penalty certificate of deposit is 9 months.
- All of the rates are not as high as some online banks.
Final Thoughts
Is Ally Bank right for you? Ally Bank seems like a pretty decent option if you are looking for a direct bank. The customer service is the best part of Ally Bank. Every time that I visited the website, a customer service agent was available and ready to assist me through an online chat window. The phone response time was good as well. You can reach a customer service representative 24 hours a day, 7 days a week with virtually no wait time. All of the accounts are FDIC insured, and the interest rates are very competitive with other online banks. I think that the CD rates at Ally Bank are some of the best around. However, the interest rates on the savings account can be beat. SmartyPig, Capital One and a few other banks offer better rates on their savings accounts.
Ally Bank should be considered a viable option for anyone looking to get started with an online bank account.
