Ally Bank was started in 2009 by a bank holding company, Ally Financial, as an online retail bank. Ally Financial states that when it launched Ally Bank, the intention was to offer low fees by reducing the costs of maintaining a physical location.
Furthermore, the bank set out to provide customers with 24/7 support, as well as the flexibility to move their money at any time. Since its inception, Ally has quickly grown to become a well-respected financial institution by many customers, and was even hailed as one of the “five great Internet banks” in 2011 by PC Magazine.
Ally Bank provides a number of different services to its customers, including a variety of CDs on which early withdrawal penalties are not charged and no minimum deposit is required.
- High Yield CD. The high yield CD account currently offers a very competitive annual percentage yield (APY) for 12 months. Also, Ally offers the “Ten Day Best Rate Guarantee,” ensuring that its customers receive the best rate the bank offers within 10 days of opening an account. Ally does not require a minimum deposit for opening a CD.
- Raise Your Rate CD. Ally provides the option to raise the rate you earn on their CDs. The frequency at which you can raise the rate depends on the term of the CD. For instance, if you hold a two-year CD, you can increase the rate once at your discretion during the time you hold the CD, and twice if you hold a four-year CD. Also, the rates on the Raise Your Rate CDs are higher than the high-yield CD.
- 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 at any time without any penalties. The caveat to this, however, is that the interest rate is a bit lower compared to the High Yield CD.
- Online Savings. Ally Bank’s online savings account offers one of the highest interest rates in the industry. Six transactions are allowed monthly.
- Money Market Account. Ally’s money market account provides the same benefits as the online savings account, except customers receive a debit card and checks. Like the savings account, six transactions are allowed monthly. There are no ATM fees, and the first 50 checks are free. In fact, if you stick with the standard checks, they are always free with this account. The APY is currently the same as that of the online savings program.
- Interest Checking. The Ally Bank checking account pays interest with the rate depending on the account balance. Other features include cash back when you shop, free online bill pay, free checks and unlimited check writing, and no ATM fees.
Ally Bank’s online banking system provides a number of benefits customers may not receive from brick-and-mortar financial institutions. These benefits include:
- Accounts Are Managed Online. You don’t have to go into a bank to deposit or transfer money. Transactions are conducted by mailing a check, wiring money to Ally, or scanning and submitting a deposit with Ally eCheck Deposit.
- You Can Start an Account With $0. This is a feature that is provided by Ally Bank’s money market, interest checking, and high yield savings accounts. You can simply register for an account and put money in whenever it is convenient for you.
- No Minimum Balance Required. Most banks will require you to maintain a minimum balance. As long as you are with Ally Bank, you can maintain whatever balance you’d like.
- No Monthly Fees. Many banks charge a fee for their services. Ally Bank does not charge anything to maintain an account.
- Interest Is Compounded Daily. Almost all banks compound their interest once per month. Ally Bank accounts, however, accrue interest every day. Over time, this can significantly increase the amount of interest your account receives.
- No Penalty for Early Withdrawal From CD. CDs pay a higher interest rate than regular savings accounts under the condition that the money is left untouched. Generally, banks will charge a hefty penalty if money is withdrawn early from the account, which often amounts to six months interest. However, Ally Bank does not charge any fees for early withdrawal from its No Penalty CD.
- No Fees on ATMs. Many bank policies charge users every time they use a non-affiliated ATM, but Ally Bank provides free ATM usage to all members.
- Real-Time Suggestions to Move Money. Ally Bank will email you every time you have an opportunity to earn more money by creating a new account. These alerts save you the time of having to keep up with the different accounts offered and track interest rates for the best deals.
Although most online banks operate very efficiently, many other online banks do not provide the same perks as Ally. For example, of the top online banks according to Consumer Reports, ING Direct is the only one that does not require a minimum balance. Also, Ally Bank’s APR on its savings accounts is higher than four of the seven banks on the list.
Despite its excellent services, Ally Bank still has a few limitations and drawbacks, as do all online banks, that customers should be aware of:
Disadvantages of All Online Banks
- Security Threats Exist. Electronic accounts in all online banks are vulnerable to hackers. Although Ally takes measures to keep its accounts secure, this is always going to be a concern for anyone who keeps money in their accounts.
- Switching Banks Is Complicated. If you change your mind and would like to transfer your funds to a different bank, it is going to be more difficult to do so with an online account. Therefore, customers should only consider opening an account with Ally Bank if they are seriously committed to it.
- Deposits and Withdrawals Can Take Longer. Transactions conducted online take longer than with brick-and-mortar banks. The wait time on transactions for some customers making deposits has been up to two weeks.
- No Physical Assurance of Assets. While traditional banks provide safe deposit boxes where customers can store their valuables, online banks obviously cannot provide such a service.
Disadvantages of Ally Bank Specifically
There are several problems specific to Ally Bank that customers need to take into consideration before creating an account:
- Certain Services Aren’t Available. Ally does not provide loans or business checking accounts, which is frustrating for many clients who would like to set up both business and personal banking with the same institution.
- Lacks Personal Services. Although Ally is recognized for providing excellent customer support, there is only so much that they can offer online and via phone. Many online banks have physical locations where the tellers and bankers get to know you personally and can offer more immediate assistance.
- Not Accessible With Smartphones. Customers have complained that one of the problems with Ally Bank is that they cannot use smartphones to access their accounts. Other providers such as ING Direct allow customers to use smartphones.
- Website Is Difficult to Use. Some reviewers have stated that Ally’s website is not as easily accessible as ING Direct’s. Although they feel the Ally Bank site has a good layout, it still doesn’t provide the same search features offered by ING Direct or other online banks.
- Lacks Overdraft Protection. Ally charges a $9 fee for every day an overdraft takes place. However, Ally does not charge more than $9 in overdraft fees in any day, even if there are multiple overdrafts.
- Some Rates May Be Lower at Other Online Banks. Look around and compare your options before you set up an account with Ally. You may be able to get a better deal with institutions such as ING Direct or EverBank.
Ally Bank has many great features, charges low fees, and frequently offers better rates than many of its competitors. Also, Ally is recognized for the wide array of services it offers. However, Ally does not offer business banking, nor do they have any brick-and-mortar locations set up at all. This can be a problem if you’re looking for occasional in-person financial services.
Have you used Ally Bank? Would you suggest setting up an account with Ally, or do you prefer other online banks?