Ally Bank Cuts Online Savings Account Rate

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Ally Bank is the first major online bank to cut its savings account rate after the Fed opened the door to rate cuts at its meeting last week. This morning, Ally Bank’s Online Savings Account APY fell from 2.20% to 2.10%. The same rate cut also took effect to the IRA Savings Account. No other rates changed at Ally Bank today.

APYMINMAXINSTITUTIONPRODUCTDETAILS
2.10*%--Ally BankOnline Savings Account
Rates as of July 23, 2019.

I had not expected the online banks to cut their savings account rates before the Fed actually started to lower the federal funds target rate. Even before the Fed meeting last week, signs have been pointing to falling rates as large declines in long-dated Treasury yields resulted in inverted yield curves. Once the Fed opened the door to rate cuts at its last meeting, online banks were quick to cut their CD rates, and now the cuts to savings account rates are starting.

Another trend that may be impacting rates at Ally Bank is their growth in deposits. Deposit growth has been strong, and the growth has been accelerating. As of March 31st, Ally had $115.3 billion in total deposits. That was an increase of 6.8% from the previous quarter and an increase of 16.9% from the previous year. When deposits are growing strong, banks are more willing to cut deposit rates.

For the well-established online banks, Ally Bank has kept its Online Savings Account rates near the middle of the pack for no-minimum online savings accounts. With this rate cut, Ally Bank moves closer to the back of the pack, matching rates with Discover Bank and American Express National Bank. Goldman Sachs Bank USA and Synchrony continue near the front of the pack with 2.25% APY. The newer and smaller online banks continue to lead the well-established online banks with online savings account rates in the 2.25% to 2.50% range.

Ally Bank’s Online Savings Account has no balance tiers, no minimum balance requirements, and no monthly maintenance fee. Even though Ally 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, and Ally allows large transfers to and from external accounts.

Thanks to long-time DA reader buckeye61 for posting on this rate cut in the DA Forum.

No Penalty CD - Good Alternative to Savings Accounts

The savings account rate cut has made Ally’s 11-month No Penalty CD more appealing. The No Penalty CD rates remained the same. Deposits of at least $25k currently earn 2.30% APY. Deposits of at least $5k and up to $25k earn 2.15% APY. Thus, even if you have only $5k in savings, you can benefit from the No Penalty CD.

APYMINMAXINSTITUTIONPRODUCTDETAILS
2.30*%$25k-Ally BankNo Penalty 11-Month CD
OTHER TIERS: 1.80% Up to $5k | 2.15% $5k - $25k
Rates as of July 23, 2019.

Besides the higher rate, the No Penalty CD’s rate lock has a big advantage over the savings account when rates are likely to fall. Of course, if you don’t need the liquidity, longer-term CDs should be considered. When today’s No Penalty CD matures in 11 months, rates may be much lower if we are truly heading into a falling rate environment.

11-Month No Penalty CD Issues and Features

Here are some issues and features of the No Penalty CD to consider before applying. These are the same ones that I mentioned last year.

  • The No Penalty feature allows you to withdraw all your money, including interest earned, without any penalties, any time after the first 6 days following the date you fund your account. The 6 day exception is due to Federal Regulation D.
  • You can only withdraw your full balance early - you cannot make a partial early withdrawal.
  • Be careful if you open multiple CDs with funds from your savings account. As DA reader slovokia warned in the Forum, “each withdrawal from your savings account used to fund an Ally CD counts as a transaction against your 6 transaction limit.” If you plan to opening many CDs, you should consider funding the CDs from your Ally Interest Checking account which does not have this withdrawal limitation. If you exceed six electronic withdrawals per statement period in your savings account, Ally charges a $10 fee per transaction over the six transaction limit.
  • Ally Bank does not offer an IRA version of this No Penalty CD. All other of its CDs do have IRA versions.
  • Using Ally Bank’s online CD management system, you can close a CD without help from a CSR. According to an Ally Bank CSR, “when you make the request online via the Manage CDs link, the account is normally closed and the funds transferred internally immediately.” You can still make the request by phone or secure chat, but that may take “up to 1-2 business days.”
  • Another potential concern of any CD is that you’ll lock into a rate right before the CD rate goes up. To relieve these fears, Ally Bank has long had its “Ten Day Best Rate Guarantee.” This guarantee says that if you fund a new CD within 10 days of opening the account, you’ll get the best rate Ally offers for your term and balance tier if Ally’s rate goes up during that time.
  • You have 60 days to fund a CD before it closes automatically. Be aware that the rate guarantee only last ten days. If the CD rate drops after 10 days, and you still don’t have the CD funded, you’ll get the new lower rate instead of the rate that was in effect when the CD was opened.

Availability

Headquartered in Midvale, Utah, Ally Bank is currently the 16th largest bank in the country, with assets in excess of $162 billion and just over 3.5 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

Bank Overview

Ally Bank (FDIC Certificate # 57803) has an overall health grade of "A" at DepositAccounts.com, with a Texas Ratio of 4.38% (excellent) based on March 31, 2019 data. In the past year, Ally has increased its non-brokered deposits by $14.56 billion, an excellent annual growth rate of 17.55%. Please refer to our financial overview of Ally Bank for more details.

The above rates are accurate as of 6/25/2019.

To review the best savings account rates, both nationwide and state specific, please refer to our Savings Account rates table.

Related Pages: Salt Lake City savings accounts, savings accounts, nationwide deals, Internet banks

Comments
Robb
Robb   |     |   Comment #1
Glad I cut bait with Ally last year. During this down cycle they have been one of the leading banks to cut rates. The 1 Year CD has been cut at least 3 times over the past couple of months.
QED
QED   |     |   Comment #2
I'm unclear as to why I would want to bother with an Ally 11 month NPCD at only 2.3% when I can have a PurePoint. 13 month NPCD paying 2.5%. The interest rate at Ally is 8% lower, and the lock in at Ally is 15% shorter. Given this, together with a now lower savings interest rate, how Ally Bank retains customers is one of life's mysteries. They certainly do not have my business.
111
111   |     |   Comment #5
My guess is they retain at least some customers because they have large ACH transfer limits, fairly competent CSRs (or maybe I've just been lucky), no minimum-balance fees, and a website that allows customers to perform some functions themselves without having to call. For example, when I cashed out my Ally no-penalty CDs last year, I used their website to move the funds to my Ally liquid account. At AgFed (where I still have several 2.4% no-penalty CDs that don't expire until 2021), I have to call to have that same function done.

Also, every once in a while Ally offers good specials like the $1K one last year, and that retains some customers. However, I'm perfectly willing to move most funds from Ally but leave my account open, and wait for the next special.
GreenDream
GreenDream   |     |   Comment #12
Plus inertia. While rate chasers (like many who read this blog) will be quick to switch banks, average citizens are slower to do so.
Mee
Mee   |     |   Comment #27
All of the above. IMO they are the best "hub" Bank on the net. You can do many things on their website without having to talk to anyone that you can't do on most other sites. That saves time reduces communication errors and makes transactions more accurate. Many of the things that are either "I'll have to check with someone and get back to you on that," or "sorry you can't do that," are "can do" at Ally. Not surprisingly you pay for the advantages by not having the best rates. Chances are if they also remained a rate leader they would take away so much business from the other banks they'd be involved in an antitrust suit.

Another little tidbit about Ally... If you have a CD that matures, and you roll it into another CD at Ally, they give you 5 basis points extra on the rate. That's not much, but it's an interesting piece of trivia.
Matt83
Matt83   |     |   Comment #3
The worst of the major online banks.
First to cut, last to raise. Back to PurePoint I go.
Att
Att   |     |   Comment #4
Northern has guaranteed 2.5 % savings rate till the end of year (Not sure if still available). Earlier last year they were guaranteeing 2.25% which was a top rate st that point. They have an ACH limit but just initiate from another account to bypass the limit. Also, they give you a check book.
Mee
Mee   |     |   Comment #19
The 2.5% at Northern is only valid for existing customers who already have the savings account.
willy12
willy12   |     |   Comment #23
Incorrect. Northern Bank Direct's Money Market (2.50% APY) Available Again
POSTED ON WEDNESDAY, JUNE 12, 2019 BY Ken Tumin

https://www.depositaccounts.com/banks/northern-bank-direct/offers/
willy12
willy12   |     |   Comment #6
Ally is good for Webroot so I am not closing my account. But my total balance is less than $40.
Mikey1
Mikey1   |     |   Comment #7
I justify leaving my ALLY Savings account open because of their generous promotion at the start of the year which paid many of us $1,000. I’m more than happy to hang around in case they offer something competitive. But I’m not staying with anything sizable. And it will take a lot more than 2.1% to get it.
Frugal Guy
Frugal Guy   |     |   Comment #8
Sallie Mae Bank Money Market Rate still 2.30 % APY

Liquid funds
Jean
Jean   |     |   Comment #9
I will keep an eye on Ally for any future specials. In my humble opinion, PenFed is the stand-alone rate cut leader. They've had several lowering of rates since January.

Agree with the others regarding PurePoint. For liquid savings, I can't buy those 13-month NPCDs fast enough. But I fear a cut coming there too, on all their products.
Jean
Jean   |     |   Comment #10
And the ad on this page is another good alternative to the ALLY savings account, the Marcus by Goldman Sachs 13-month NPCD @ 2.35%.
milty
milty   |     |   Comment #11
Ah, gee . . . and here I was going to make Ally my number one Hub Account . . . thanks for the heads up, DA. It seems this is going to get ugly, trying to keep up with the rate cuts . . . a pox on this booming economy.
QED
QED   |     |   Comment #13
Just for the record, I agree with other posters here that the PurePoint. 2.5% NPCD is "too hot not to cool down". Add to that we have only three business days and a few hours remaining in this QUARTER, not to mention the month of June!! This is why I have been buying those things like mad. A 2.5% APY for liquid funds, locked for thirteen months, is a darn good deal.

But I'm afraid next Monday morning, when I awaken and glance back, it is gonna look like a GREAT deal. Bird in the hand. Get 'em while you still can. And if this turns out to be poppycock, you can always turn in the CD after seven days or any time you want. You can escape the deal early, but PurePoint. cannot!
#14 - This comment has been removed for violating our comment policy.
vman
vman   |     |   Comment #15
Ally has the absolute right to lower their rates; it's a free country.. And I have the right to take all of my money out of Ally; which I will do!
buckeye61
buckeye61   |     |   Comment #16
You got it! Ally is the biggest Online only bank(Deposits) by a large margin and it has seen great growth recently as Ken mentioned which is likely a factor in today's rate cut. If a large number of Ally customers start moving funds out to other financial institutions it could reduce the likelihood of more rate cuts, but all of these banks will eventually follow the market and adjust their deposit rates accordingly.Things are going to get ugly!
#17 - This comment has been removed for violating our comment policy.
Vxg
Vxg   |     |   Comment #28
Will be doing the same if they drop the rate below 2.1%.... it makes a big difference when dealing with large sums of money.... 500G to be precise....
TheBombingRange
TheBombingRange   |     |   Comment #18
Open up 2.50% guaranteed Northern Bank Direct Money Market, and use Ally as a hub for transfers and bill pay while leaving basically nothing in there. It's been working well since last year. I used to love their NPCDs but Northern's guaranteed helped me close all of mine out last year.
Mee
Mee   |     |   Comment #20
I see the Northern 2.5% deal mentioned constantly. But no one ever seems to mention that it's only for people who already have an existing savings account. You can't open an account and get that rate anymore.
Deplorable 1
Deplorable 1   |     |   Comment #22
That Northern deal is back again with a guaranteed rate not just for us "grandfathered" folks. Go snag it now before it's gone.
Deplorable 1
Deplorable 1   |     |   Comment #21
Pretty lame to cut their already low rate without even a FED cut. I prefer Ally demand notes over their MMA as there is no 6 withdrawal per month limit for paying bills. The rate isn't that high but checking accounts pay 0% unless you want to go the rewards checking route with all the debit card transactions.
Anon1
Anon1   |     |   Comment #25
The demand notes are not FDIC insured, though. So you're comparing apples and oranges.
HARK!
HARK!   |     |   Comment #26
Dep 1 you're a smart guy but for the life of me I can't figure out why you're in these things.......so many better and.....more importantly......SAFER places to put money.
deplorable 1
deplorable 1   |     |   Comment #29
I only keep bill pay cash in there 2.10% for the $15,000 tier level the cash goes in and out as I pay 100% of my bills from this account each month. No debit card hoops. I use GM right notes for extra liquid cash in between CD specials 2.788 APY and again it goes in and out. These are just temporary holding places for liquid cash. Never lost a dime in 30 years in any corporate debt account. When a FDIC insured bank deal comes along that beats them then I'll move my cash out.
#30 - This comment has been removed for violating our comment policy.
HaroldAsh
HaroldAsh   |     |   Comment #24
I will continue to keep the bulk of my savings at CIT, still paying a nifty 2.4%. I only use Ally for a small savings balance, checking and ATM withdrawals. I'd rather only have one bank but I'll play the game if I have to.
norcal
norcal   |     |   Comment #31
Ally has the best support of trust accounts that I've found. Everything can be done online. The rate cut prompted me to split my online savings account three ways -- about 1/3 in a NPCD, 1/3 in a high-yield 1-year CD, the remainder staying in the account. I thought that, because I have a trust account, it might take a couple of days. Nope...I started the process one evening and everything was ready the next day. The highest-rate online banks don't support trust accounts. I don't understand why as it shouldn't cost that much more to do. So I'm sticking with Ally for that support, and for some of the most customer-friendly banking technology that I've encountered.
RRR
RRR   |     |   Comment #35
It's true, many banks and credit unions do not support trust accounts. And that includes many of the rate leaders. It's yet another cost (an opportunity cost) associated with maintaining and administering trusts that lawyers don't tell you about when they encourage you to set up a trust. The main reason many institutions don't allow trust accounts is that it's complex and they have to have lawyers and specially trained staff which is expensive. So the trust accounts are not as profitable for them.
willy12
willy12   |     |   Comment #32
Email from Ally yesterday:

a message from your ally.
if you've been paying attention to the economic news lately, you've seen that after a period of increases, interest rates are on the downswing and projected to fall further. These market conditions impact all kinds of things, from mortgages to CDs to savings accounts. Because of this, beginning on 6/25/19, your Online Savings Account rate moved from 2.20% to 2.10% Annual Percentage Yield (APY) on all balance tiers. We wanted to make sure you were aware of this change, because to us, being straightforward is the right thing to do.

What does this mean for you?

For every $1,000 in your savings account balance, you'll earn one dollar less over the course of a year. Even with this change, your rate is still 20x the national average — so you can rest assured that your money is in the right place.

It's always a good idea to keep track of your rates. You can find your rate online or in the Explore section of your mobile app.

What's next?

Keep an eye out for some exciting news coming later this year to help you maximize your savings, regardless of what's happening with interest rates. Our commitment to delivering you the latest technology and leading customer service will remain the same, because no matter what, we're always your ally.
investorken
investorken   |     |   Comment #33
I just got notified that my Marcus savings rate would drop from 2.25% to 2.15% effective 6/28/19.
bankingar
bankingar   |     |   Comment #34
I really like Ally and their online banking software. However they've been paring back on support and rates for a little while and the cracks are beginning to show.

I also bank with PurePoint and I like them so far. Their rates and service/support are better than Ally's but their software is harder to use and their security model is the harshest I've even had to deal with. They make me wonder if I am who I say I am.
RRR
RRR   |     |   Comment #36
"They make me wonder if I am who I say I am."

I got a belly laugh out of that one!
anon
anon   |     |   Comment #38
Purepoint dropped rates significantly overnight.
jjflyman
jjflyman   |     |   Comment #37
I grabbed several 5 year CD's at Ally just before they dropped that rate a couple weeks ago. I know I could have done slightly better at a few banks, but Ally is my main "hub bank", and IMO nobody beats Ally's CS and website. My main online banks are Ally, Synchrony, Citizens Access, and Comenity.
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