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Ally Bank Launches an Interest Checking Account

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Ally Bank
Ally Bank has added a checking account to its online products. It's an interest checking account that currently pays 1.15% APY on balances over $15K and 0.50% APY on smaller balances. Some important features include:
  • No minimum balance or monthly fees
  • Free Online Bill Pay
  • Free standard checks and no limit on check writing
  • You can use any ATM worldwide and Ally will automatically refund ATM fees charged by other banks
As I mentioned on Wednesday, Ally Bank's money market account can be used as a checking account if you don't need to write many checks (no more than 6 per month).

Comparison to Other Interest Checking Accounts

With this new checking account, Ally has an edge on many of its internet competitors including ING Direct and HSBC. There is a concern about future rates at Ally since there is the rate cap issue that I mentioned on Wednesday. But if Ally can stay near the top on rates, its banking features will still give it an edge in my opinion. As I mentioned on Wednesday, it has one of the best bank-to-bank ACH transfer services. Some reasons why it's one of the best include: No limit on the number of links to your other bank accounts, transfers are fast and it doesn't place small limits on the amount that can be transferred. Not many banks have all these features.

The features and the rates of Ally's interest checking account make this competitive compared to others such as Schwab Bank High Yield Investor Checking which has similar features and a 0.75% APY on all balances as of 1/15/10. Ally's checking interest rate is not great, but compared to other internet non-reward checking accounts, it's competitive. If you want higher rates in a non-reward checking account, Alliant Credit Union and Clear Sky Accounts would be two good choices. Incredible Bank currently has the highest rate of 2.02% APY, but this is a newcomer, and it's hard to say if it will be able to stay competitive over the long run (see review). For other high-yield, non-reward checking accounts, DepositAccounts.com has a table of classic checking accounts.

If you want rates higher than 2% from a checking account (or any liquid account), your only option is a reward checking account. It'll require some work to meet the monthly requirements. You can find reward checking accounts at the reward checking section of DepositAccounts.com. To learn more about reward checking, please refer to this reward checking overview.

  Tags: Ally Bank, checking account

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