This morning, Ally Bank increased the rate of its Online Savings Account (OSA) by 10 basis points to 2.00% APY. Ally’s IRA Online Savings Account also had this same rate hike. These were the only rate hikes at Ally Bank today.
Ally Bank is the latest internet bank to raise its savings account yield to 2%. A few of Ally’s competitors have already increased their savings account yields to 2.05%. These include Barclays, Synchrony and Goldman Sachs Bank USA. Nevertheless, this rate increase by Ally Bank is keeping them fairly competitive with the large and well-established internet banks. It’s nice to see Ally Bank is still willing to keep the OSA competitive even with the Payback Promotion underway.
The list below shows how the nationwide internet banks have increased rates in the last three months around the time of the September Fed rate hike. American Express National Bank’s Personal Savings Account also reached 2% APY today. The September Fed rate hike is in bold, and the Ally rate hikes are in purple.
- Nov 15: Ally Bank Online Savings: 2.00% APY
- Nov 15: American Express National Bank Personal Savings: 2.00% APY
- Nov 14: MySavingsDirect MySavings: 2.35% APY
- Nov 14: Discover Bank Online Savings: 2.00% APY
- Nov 13: Vio Bank High Yield Online Savings: 2.27% APY
- Nov 9: Capital One 360 Money Market: 2.00% APY, $10k+
- Nov 6: Synchrony High Yield Savings: 2.05% APY
- Nov 5: SFGI Direct Savings: 2.07% APY
- Oct 31: Vio Bank High Yield Online Savings: 2.25% APY
- Oct 30: Barclays Online Savings: 2.05% APY
- Oct 29: Citizens Access Online Savings: 2.25% APY, $5k+
- Oct 26: Goldman Sachs Bank USA High-yield Savings: 2.05% APY
- Oct 19: FNBO Direct Online Savings: 2.00% APY
- Oct 18: Sallie Mae Bank Money Market: 2.12% APY
- Oct 15: CIBC Agility Savings: 2.16% APY
- Oct 12: Vio Bank High Yield Online Savings: 2.15% APY
- Oct 11: Discover Bank Online Savings: 1.90% APY
- Oct 3: Discover Bank Online Savings: 1.85% APY
- Oct 2: Synchrony High Yield Savings: 1.90% APY
- Oct 12: Goldman Sachs Bank USA High-yield Savings: 1.95% APY
- Oct 5: Sallie Mae Bank Money Market: 2.00% APY
- Oct 5: Ally Bank Online Savings: 1.90% APY
- Sep 28: Citizens Access Online Savings: 2.12% APY, $5k+
- Sep 27: American Express National Bank Personal Savings: 1.90% APY
- Sep 27: Barclays Online Savings: 1.90% APY
- Sep 26: Federal Reserve Target Funds Rate: 2.00% to 2.25%
- Sep 19: Goldman Sachs Bank USA High-yield Savings: 1.90% APY
- Sep 19: Vio Bank High Yield Online Savings: 2.11% APY
- Sep 10: HSBC Direct Savings: 2.01% APY
- Sep 7: CIBC Agility Savings: 2.10% APY
- Sep 7: SFGI Direct Savings: 1.91% APY
- Sep 5: MySavingsDirect MySavings: 2.25% APY
- Aug 31: Ally Bank Online Savings: 1.85% APY
- Aug 31: Discover Bank Online Savings: 1.80% APY
- Aug 24: Capital One 360 Money Market: 1.85% APY, $10k+
Ally Bank’s Online Savings Account has no balance tiers, no minimum balance requirements, and no monthly maintenance fee. Even though the OSA has rarely been a rate leader for online savings accounts, Ally’s online banking features give it an advantage over other internet banks, especially the new and small ones. An important online banking feature is Ally’s online transfer capabilities. It’s easy to link multiple external accounts for transfers. Ally allows large transfers to and from external accounts, and the transfers take place in one business day.
Thanks to DA reader buckeye61 for posting on this rate increase in the DA Forum.
No Rate Changes on Ally’s Money Market and Checking Accounts
Unfortunately, the rates of Ally’s Money Market Account (MMA) and Interest Checking Account haven’t changed in a long time. The MMA rate hasn’t changed since January when the top tier APY increased to 1.00%. Unlike the OSA, the MMA has two rate tiers with the top rate requiring a minimum $25k balance. Another difference is that the MMA offers debit cards and checks. So I consider this a “real” money market account. Like the OSA, there’s no monthly maintenance fee, and like all savings and money market accounts, federal regulation limit the number of withdrawals to a total of 6 per statement cycle (ATM withdrawals are excluded in this limitation).
|1.00*%||$25k||-||Ally Bank||Money Market Account|
|OTHER TIERS: 0.90% → Up to $25k|
Ally’s Interest Checking Account hasn’t had a rate increase since we began tracking its rate in 2010. The OSA rate is now more than 3x the top-tier rate of the Interest Checking Account. If the balance is under $15k, the Interest Checking Account earns only 0.10%, only about 1/20th of the OSA rate.
|0.60*%||$15k||-||Ally Bank||Interest Checking Account|
|OTHER TIERS: 0.10% → Up to $15k|
On the positive side, the Interest Checking Account has no monthly maintenance fee, and Ally offers free standard checks. It also has a friendly ATM policy (free usage of Allpoint ATMs in the U.S. and reimbursements up fo $10 per statement cycle for fees charged at other ATMs nationwide) and a friendly overdraft policy (free overdraft transfers).
Ally’s overdraft transfer service can be useful to maximize your interest on your liquid savings. You may need a checking account if you write checks, use online bill pay and prefer making purchases with a debit card. Due to the low rates of the Interest Checking Account, you won’t want to keep a large balance in this account. Instead, most of your liquid savings should be in the OSA. Ally’s overdraft transfer service makes it easy to keep most of your liquid savings in an OSA to maximize the interest you earn. It’s a free service that allows you to link your Ally savings account to your Ally checking account. If you exceed your checking balance, Ally will automatically transfer available funds in increments of $100 from your savings account to cover the transaction(s)–at no charge to you. By using this service, you can keep the vast majority of your funds in the savings account earning the higher rate.
The only potential gotcha with using the overdraft transfer service this way is that each overdraft transfer counts toward the 6-per-month withdrawal limit. So you may want to have at least two Ally savings accounts with one of them linked to the checking account. That will reduce the chance that you’ll go over the 6-per-month withdrawal limit (and incur a $10 fee for each withdrawal over the limit). Another advantage of having a separate savings account linked to the checking account is that you limit the loss from a fraudulent check or transfer. Ally will reimburse you for fraudulent transactions if you report them within 60 days from when your statement is made available, but that reimbursement process may take some time.
CD Rates Remain the Same - Few Reminders About Ally CDs
No Ally Bank CD or IRA CD rates were changed today. Last Friday, Ally Bank increased rates on most of its CDs. Please refer to our Ally Bank CD rates table for the full listing of CD and IRA CD rates.
In addition to raise CD rates last Friday, Ally Bank introduced a new limited-time Select CD. The 14-month Select CD has a very competitive 2.75% APY. There’s no minimum deposit to open.
Ally has the following description of its early withdrawal penalties on its website for CDs purchased or renewed after 12/07/13:
- 24 months or less: 60 days of interest
- 25 months – 36 months: 90 days of interest
- 37 months – 48 months: 120 days of interest
- 49 months or longer: 150 days of interest
One downside with Ally’s CDs is that they don’t allow partial early withdrawals. If you need some of your CD principal before maturity, your only option is to close the CD and withdrawal the entire amount.
Few internet banks offer the features that Ally offers for online CD management. When you log into your account, you can change things like how interest is disbursed. Ally allows you to have the interest paid monthly, quarterly, semi-annually or annually. You can also change how interest is paid. You can choose for the interest to be credited back to the CD, paid out to your account or paid as a check. The software can also be used to change renewal options and to request an early withdrawal. The software lets you see the current balance and the post-penalty balance before you make the decision to close the CD early. You have the choice to have the funds from the closed CD transferred online to your account or sent as a check. If it’s transferred to an Ally account, the funds will be available immediately.
Rate Bonus for Ally CD Renewals - Way to Boost Your Ally CD Rates
Ally Bank has a tradition of offering existing customers a 5-bps rate bonus when CDs are renewed. A 3-month CD ladder can be useful for this. DA reader Cumulus described his useful CD strategy that uses this rate bonus to get higher rates on all of his Ally CDs in this DA forum post.
FDIC Insurance for Over $250k
Another nice aspect of all of Ally’s accounts is the ability to designate beneficiaries. You can choose up to 10 beneficiaries for each of your non-IRA accounts, and you can choose the designation of either “In Trust For” or “Payable On Death”. Beneficiary designations can be done online in the application or with the account management software after the account has been opened. These features make it easy to maintain FDIC insurance on deposits in excess of $1 million. I described how this can be done in this blog post.
Ally also allows customers to open an account in the name of a Trust.
Headquartered in Midvale, Utah, Ally Bank is currently the 16th largest bank in the country, with assets in excess of $146 billion and just under 3 million customer accounts. Ally offers its services and product line to individuals 18 years or older, who have a valid Social Security number and a U.S. mailing address.
Applying for an Ally account can be done using Ally Bank’s online application or by calling Ally (877-247-2559). You can fund your new account in a few different ways:
- Transfer from an Ally or non-Ally account
- Check (by mail or Ally eCheck Deposit)
- Wire transfer
Ally Bank (FDIC Certificate # 57803) has an overall health grade of "A" at DepositAccounts.com, with a Texas Ratio of 3.55% (excellent) based on June 30, 2018 data. In the past year, Ally has increased its non-brokered deposits by $12.1 billion, an excellent annual growth rate of 16.96%. Please refer to our financial overview of Ally Bank for more details.
How the Ally Bank Online Savings Account Compares
When compared to Savings Accounts and Money Market Accounts tracked by DepositAccounts.com that are available nationally with similar minimum balance requirements and without maximum balance limitations, 16 savings accounts and 8 money market accounts have higher rates than Ally Bank’s Online Savings Account rate.
|Interest Rate||Account Name||Credit Union/Bank|
|2.35% APY||MySavings Account (no min/no max)||MySavingsDirect|
|2.27% APY||High Yield Online Savings ($100 min to open/no max)||Vio Bank|
|2.25% APY||Online Money Market ($50 min to open/$1m max)||MemoryBank|
|2.00% APY||Online Savings Account (no min/no max)||Ally Bank|
The above rates are accurate as of 11/15/2018.