Online banks are powerful personal finance tools that offer convenient access to funds – but, not all are created equal. As one of the first online-only institutions, Ally Bank has developed a reputation for responsive customer service, high interest rates on checking and savings accounts, and reasonable fees.
Like many online banks, Ally has no physical branches, but it is an FDIC member, which means its customers’ deposits are insured up to $250,000. Despite the lack of a physical footprint, it has one of the most generous ATM fee reimbursement schemes around. Ally customers enjoy fee-free access to virtually every U.S. ATM.
Since its spinoff from GMAC in 2009, Salt Lake City-based Ally has accumulated nearly a million customers. With $54 billion in total deposits, it’s currently the 29th largest U.S. bank.
Ally Bank’s noteworthy features include the following:
Interest Checking Accounts
Ally customers can open an interest-bearing checking account that comes with free checks and a MasterCard debit card. It doesn’t require a minimum balance to open, nor does it charge a monthly or annual maintenance fee. However, like all other Ally accounts, you can’t make deposits in physical cash.
At the moment, Ally’s interest checking accounts pay a competitive interest rate: 0.10% for balances of less than $15,000 and 0.65% for balances above $15,000.
High Yield Savings Accounts
Like its interest checking account, Ally’s savings account lacks opening deposit and minimum balance requirements, as well as monthly maintenance fees. Federal regulations allow for up to six outbound transfers per 30-day statement period.
Currently, the high yield savings account yields 1.25%, although this figure may fluctuate on a daily, weekly, or monthly basis. You can make six free outbound transfers per month. Ally charges $10 apiece for any transfers that exceed this limit.
Multiple CD Options
Ally offers three CD products. All come with 10-day best rate guarantees, meaning new accounts are automatically bumped up to higher yields if rates rise within 10 days of opening.
- High Yield CD: Available in terms of 3, 6, 9, 12, 18, 36, or 60 months. Rates currently vary from 0.30% for the 3-month vehicle (under $5,000 opening deposit, with slightly higher rates for larger deposits) to 2.25% for the 60-month vehicle (all balances).
- Raise Your Rate CD: If interest rates increase during your CD’s term, you can bump up your starting yield to Ally’s highest available yield at least once per term. On the two-year Raise Your Rate CD, you get one raise per term. On the four-year version, you get two. Both yield 1.50% to start.
- No Penalty CD: This one has a fixed 11-month term. It yields 1.00% on balances under $5,000, 1.25% on balances between $5,000 and $25,000, and 1.50% on balances above $25,000. You can cash it out at any time without incurring interest penalties, which apply to all other CD types.
CD Laddering Tools
Ally’s CD Ladders are designed to mitigate one of the major drawbacks of long-term CDs: their tendency to tie up holders’ funds for years. Ladders consist of identically sized CDs whose terms range in length from one to five years. Upon maturity, each CD is automatically renewed at your maximum specified term, ensuring you have access to it on the same date every year. If you withdraw funds from a maturing CD, the other CDs in the ladder won’t be affected.
Money Market Accounts
This product lacks monthly balance requirements, fees, and minimum deposits, and comes with a Visa debit card. Outbound transfers, including point-of-sale purchases with the debit card, are limited to six per statement period. However, there’s no limit on ATM withdrawals.
It currently yields 0.90%, far more than competitors such as Wells Fargo and U.S. Bank.
Retirement Accounts (IRAs)
Ally’s IRA accounts allow you to invest in standard CDs, savings accounts, or Raise Your Rate CDs. These all follow the same rules and are available in the same term lengths as their non-IRA counterparts. You can open a Roth, traditional, or a SEP IRA if you’re a small business owner.
Auto Financing Products
With a separate log-in area for auto loan customers, Ally has a whole suite of auto financing products for individuals and fleets that buy or lease. It also offers a Buyer’s Choice option that allows you to sell your vehicle to Ally after making 48 monthly payments. For specific information about rates and terms, visit a dealership and begin the pre-qualification process.
You Might Also Like: If you’re in the market for a different vehicle right now, check out our guide to choosing between a new or used car. And, if you’re a DIYer at heart, review our comprehensive primer on selling a car in a private party transaction.
Commercial Financing Options
Through Ally Financial, its parent company, Ally Bank offers commercial financing solutions for businesses with revenues of at least $50 million. These include term loans with fixed principal amounts which must be repaid within a specified timeframe.
Ally also offers revolving credit lines, which can be tapped or repaid within pre-set limits at your discretion. These products are designed to finance activities such as leveraged buyouts, mergers, and operational restructuring.
Check directly with Ally for more information about its commercial financing products.
Ally’s banking services are mobile-friendly. You can access all parts of your account, including balances, transfers, automatic bill-pay, and Ally’s ATM-finding tool, from your smartphone or tablet. You can also use the e-Check Deposit tool by taking a photo of the front and back of your endorsed check.
Ally’s P2P transfer feature lets you transfer funds between your checking or savings accounts and the U.S.-based bank accounts of your friends, family members, third-party vendors, and business associates. This mobile-friendly platform doesn’t require you to exchange bank account information, just email addresses or phone numbers.
Online Security Software
Ally offers free downloads of Webroot SecureAnywhere AntiVirus software for all account holders. It also uses standard, federally compliant encryption and other security features in its online banking suite.
Ally Bank offers revocable and irrevocable living trusts, which can be efficient ways to preserve wealth or set aside gifts for others.
Revocable trusts can be altered or canceled by the grantors who set them up, with earnings and assets remaining under their control until death. They’re sometimes known as trust funds for this reason. Irrevocable trusts can only be changed by their beneficiaries.
Any Ally account can be opened as a trust, and the company’s employees can walk you through the process online or over the phone.
Overdraft Transfer Service
You can tie your checking account to an Ally savings or money market account and opt into the bank’s free Overdraft Checking Service.
In the event of an overdraft, Ally automatically transfers funds to your checking account in increments of $100. Each increment counts as one of six withdrawals that can be made from savings and money market accounts per statement period. Ally charges $10 per outbound transfer over that limit until the period’s end.
Ally reserves the right to decline the Overdraft Transfer Service and levy a $9-per-item fee if you overdraft repeatedly or are otherwise not in good standing with the bank.
Ally’s banking customer service team is available by phone 24/7. Wait times are posted on the website in real time. They’re usually minimal – the longest I’ve seen is eight minutes.
Ally’s auto service team is available 8am to 11pm Eastern on weekdays, with shorter hours on the weekend. Hours for other verticals, such as commercial financing, may vary.
- 24-Hour Customer Service With Short Wait Times. There’s a good reason why Ally touts its 24/7 customer service assets. Its call center is open around the clock, including on holidays, and actual employees answer online chats at all hours as well. The bank’s home page prominently displays call-in wait times. Some online banks, such as Capital One 360, only offer phone support during extended business hours. And, while TIAA Bank also has 24-hour live phone support, it doesn’t make its wait times available online.
- Fee Reimbursement at Any ATM With No Restrictions. Ally reimburses customers who use their debit cards to make checking or money market account withdrawals from any U.S. ATM. This covers fees charged by third-party machines, such as those found at restaurants or bars, as well as fees charged by bank-owned machines. The company claims that this service applies to more than 400,000 ATMs across the country. Few banks offer such a generous reimbursement scheme: Wells Fargo customers can use the bank’s own ATMs for free, for instance, but those who don’t maintain a minimum balance of $250,000 must pay a $2.50 fee for each withdrawal. TIAA Bank offers unlimited reimbursements for Yield Pledge Checking Account customers who maintain minimum account balances of $5,000.
- Attractive CD, Savings Account, and Money Market Yields. Ally Bank’s CD, savings account, and money market yields compare favorably to those of other online banks. For instance, yields on its savings account and 12-month CD exceed those on comparable Capital One 360 vehicles by 0.12% and 0.59%, respectively. Unlike Capital One 360 and TIAA Bank, Ally also offers a No Penalty CD, which doesn’t penalize you when you terminate your CD early. TIAA Bank takes back 25% of the total projected interest on prematurely terminated CDs, regardless of when you request your funds back. Capital One charges three or six months’ interest, depending on the terminated vehicle’s original term length.
- Raise Your Rate CDs. If Ally’s CD rates rise, you can request a rate increase on your Raise Your Rate CD. You’re allowed one bump on a two-year RYR CD and two bumps on the four-year version. Once honored, the new rate is effective for the remainder of the CD’s term or until you request (for the four-year version) another hike. Unlike some rising-rate CDs, Ally’s version can’t be bought back, or “called,” by the bank before maturity. Many online banks, including Capital One 360 and TIAA Bank, still don’t offer rate-flexible CDs.
- Comprehensive Auto Financing Services. The scope of Ally’s auto financing offerings is impressive. The bank easily accommodates large fleet customers and offers a flexible Buyer’s Choice option for individuals who aren’t sure how long they want to keep their cars. Other online banks, like Capital One 360 and TIAA Bank, don’t offer auto lending services.
- Convenient P2P Transfers and Billpay. Ally’s free P2P transfer tool facilitates easy, low-cost peer-to-peer and point-of-sale transactions between its customers and third parties. Among banks, this isn’t unique: Bank of America, Wells Fargo, and Chase all offer mobile-friendly peer-to-peer payments. What is unique is the pricing structure: Most other banks, and fintech peers like PayPal, charge fees for repeated transfers.
- 10-Day Best Rate Guarantee on CDs. Every newly opened Ally CD comes with a 10-day grace period. The CD continues to accrue interest during this time, but its long-term rate isn’t set until the period’s end. At that point, you receive the best rate Ally offered during the period on that type of CD, even if it’s not currently in effect. A hypothetical example: If the rate on a 36-month CD began at 1.49% on day 1 of 10, rose to 1.55% on day 4, and fell to 1.52% on day 10, you’d get the 1.55% rate for the CD’s entire term, including the 10-day grace period. Capital One 360’s CDs don’t come with such flexibility.
- No Mortgage Department. There are no mortgage services at Ally Bank. Customers of Capital One 360 and TIAA Bank, as well as many brick-and-mortar banks, including Wells Fargo and Bank of America, have the advantage of consolidating their savings, auto loans, and mortgage loans within a single institution.
- No Brokerage. Unlike some online banks, Ally Bank has no brokerage services. You can’t use it to buy or sell stocks, mutual funds, bonds, ETFs, commodities, currencies, or any other security. This may be a particular drawback for IRA customers who only have access to leverage CDs and savings accounts which don’t yield more than 2% per year, barely outpacing the rate of inflation. Some larger banks have affiliated brokerages.
- Few Services Targeted to Small Businesses. With high minimum loan limits, Ally’s commercial financing services definitely cater to medium-sized businesses with substantial capital needs. And unlike Capital One 360, which offers business-only savings accounts and 401k services, Ally has virtually nothing for small business owners. The only exception is its SEP IRA, which is a traditional IRA that can be structured as a retirement plan for companies with multiple employees, as well as self-employed individuals.
- No Account Opening Bonuses. To attract new customers, many companies are offering juicy bonuses for new account holders. For instance, Capital One 360 adds $50 to new savings accounts, and TIAA Bank offers a higher interest rate for the first six months in which a savings account is open. Ally doesn’t offer such incentives. That said, many of its accounts come with higher interest rates that may eventually compensate for the lack of an opening bonus. If you’re interested in juicy new account bonuses, check out our monthly roundup of the best new account promotions and offers.
- No Cash Deposits. Ally explicitly forbids customers from making cash deposits into their accounts. If this is your first bank account and you’ve previously dealt mostly in cash, this might be a problem. Some online banks, including Capital One 360, do accept cash deposits.
- Overdraft Transfer Isn’t True Overdraft Protection. Though its Overdraft Transfer Service provides limited coverage for overdrafts, Ally doesn’t guarantee that it covers all NSF (non-sufficient funds) transactions. If you’ve already exceeded the Overdraft Transfer Service limit in a given statement period, Ally may decline further such transactions. Banks like Wells Fargo and U.S. Bank offer actual overdraft protection, which provides guaranteed coverage in exchange for a per-item fee (usually $25 or $35). If you’re looking for a bank that offers true overdraft protection, Ally’s not it.
Ally Bank has nearly a million individual customers and is among the 30 largest banks in the U.S. by deposit size. It has several advantages over its peers, including generous yields on its savings vehicles, a lax fee and balance structure that favors smaller depositors, a robust auto lending department, and a responsive customer service team that’s always available. Its drawbacks may prevent it from being a one-stop shop for all your saving needs, but if you’re willing to have your mortgage and brokerage accounts elsewhere, Ally is a good option.
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