Deal Summary: Online Savings Account, 1.15% APY, No minimum balance
This morning, Ally Bank increased the rate of its Online Savings Account by 10 bps. The new rate is now 1.15% APY. This same rate change also took effect on the IRA Online Savings Account. The 1.15% APY applies to all balances. The account has no monthly maintenance fees and no minimum balance requirement.
|1.15*%||-||-||Ally Bank||IRA Online Savings Account (Traditional, Roth, SEP)|
|1.15*%||-||-||Ally Bank||Online Savings Account|
It’s yet another example that the recent Fed rate hikes are having an effect. The last Ally savings account rate hike was on April 21st when the APY increased from 1% to 1.05%. It’s nice to see the rate increase by 10 bps this time. It’s a sign that as we see additional Fed rate hikes, deposit rate increases should accelerate. Eventually, savings account rate hikes of 25 bps or more may become common as the Fed continues its rate hikes. We saw those savings account rate hikes back in 2005 during the last rising rate environment.
The title of this post may look familiar. When I reported on Ally’s April rate hike, the 1.05% APY was the highest rate on the Ally savings account since 2011. The new 1.15% APY is now the highest since November 2010 when the APY was 1.19%. We probably are going to have to wait a long time before I’m able to say “highest since 2009”. In early January of 2010, the Ally savings account APY was 1.50%.
Ally’s savings account doesn’t have a history of being a rate leader for internet banks, but it has remained competitive for many years. Today’s rate hike continues this trend.
One reason Ally is able to attract and retain deposits without being a rate leader is due to its online banking features that most other internet banks lack. One 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. I can give an example of the one-day transfer. Yesterday, I initiated a transfer at Ally just before 7:30pm ET, and the funds are now available in my Ally Checking account.
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. Ally also allows customers to open an account in the name of a Trust. 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.
Thanks to DA reader buckeye61 who posted on the higher rate in the DA Forum.
Ally Bank Money Market and Interest Checking Accounts
Ally Bank’s money market account rate still remains at 0.85% APY for all balances. The advantage of the money market account over the savings account is that it offers limited check writing and debit card access. For several years, Ally’s money market account used to have the same rates as the savings account. That ended in January 2014 when the savings account rate started to rise above 0.85% while the money market rate held steady.
An important similarity between the money market account and the savings account is the 6-per-month withdrawal limitation. If you need to exceed this number of withdrawals, the Ally Interest Checking Account is useful. Like the MMA, there was no change in Ally's Interest Checking rates. It has two balance tiers (0.60% APY for $15k+ and 0.10% for under $15k). These rates have held steady since May 2014.
|0.60*%||$15k||-||Ally Bank||Interest Checking Account|
|OTHER TIERS: 0.10% → Up to $15k|
Ally Bank CDs
For savings and money market accounts, it has been a long time since Ally has been a rate leader. However, for CDs, Ally currently has a product which ranks as the best short-term CD deal, and due to its unique nature, you don’t see it mentioned in many places. The product is the 11-month No Penalty CD which currently has a top rate of 1.50% APY for balances of $25k+. The rate on the $5k balance tier is also competitive (1.25% APY). The 1.50% is close to the best 1-year CD rates, but the no-penalty feature of this CD makes it a much better deal than a standard 1-year CD. Since it can be closed at anytime after 6 days of opening without a penalty, it can be made to have any term from 7 days to 11 months. I have more discussion in my recent Ally No Penalty CD review. Please note, the 1.50% APY is unlikely to last long. When Ally came out with a top rate on this CD in December, it lasted less than three weeks. The 1.50% APY has been in effect now for 10 days.
|1.50*%||$25k||-||Ally Bank||No Penalty 11-Month CD|
|OTHER TIERS: 1.00% → Up to $5k | 1.25% → $5k - $25k|
The other good Ally CD deal is its 5-year CD (2.25% APY on all balances). It isn’t a rate leader, but it’s close enough to the 5-year rate leaders to be a good deal due to Ally’s mild early withdrawal penalty (5 months of interest). You can see how this CD compares to other 5-year CDs and to short-term CDs in our CD Early Withdrawal Penalty Calculator.
Headquartered in Midvale, Utah, Ally Bank is currently the 21st largest bank in the country, with assets in excess of $122 billion and over 2.3 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 1.70% (excellent) based on March 31, 2017 data. In the past year, Ally has increased its non-brokered deposits by $11 billion, an excellent annual growth rate of 18.63%. Please refer to our financial overview of Ally Bank for more details.
How the Online Savings Account Compares
When compared to 206 nationally-available savings accounts from banks and credit unions tracked by DepositAccounts.com, only 8 banks offer higher rates for deposits under $10k. Three internet banks (CIT, Synchrony, and Barclays) also offer 1.15% APY on their savings accounts. The table below shows how Ally’s savings account compares with three of the top nationally-available savings accounts:
The above rates are accurate as of 6/30/2017.