This morning, Ally Bank increased the rate of its Online Savings Account (OSA) by 20 basis points to 2.20% APY. Ally’s IRA Online Savings Account also had this same rate hike. The 2.20% APY is effective as of 1/17/2019. These were the only rate hikes at Ally Bank today.
|2.20*%||-||-||Ally Bank||IRA Online Savings Account (Traditional, Roth, SEP)|
|2.20*%||-||-||Ally Bank||Online Savings Account|
Payback Time Promotion Earnings Emails
Yesterday, Ally Bank notified customers who participated in the Payback Time promotion of the bonus they earned. Here’s an excerpt of the email with personal info redacted:
Hi, [name]. At Ally Bank, we're all about delivering on better, and what's better than a little payback? As a thanks for taking advantage of our Payback Time promotion, a cash bonus of [$$$$] will be deposited into your account ending in  on or around February 5, 2019.
Thank you again for letting us be an ally for your financial well-being. This is just the start of our commitment to deliver better for any need you have, 24/7.
Your path to Payback Time:
In October Ally launched its Payback Time promotion that offered both new and existing customers an opportunity to earn up to $1,000 in cash bonus on top of the interest earned. There were concerns about several details of the promotion. It appeared that if customers weren’t careful, they might receive a smaller bonus than expected. Based on the reports that I’ve seen, customers who participated in this promotion have been happy with the reported bonus amount listed in these Payback promotion emails.
For those who participated in the promotion, was the reported bonus what you expected?
Online Savings Account Rate
Ally Bank was a little late with this rate increase. It has been over two months since the last rate increase (November 15th). At least it was a large increase, the APY rising 20 bps. This is the largest one-day rate hike of the OSA since we’ve been tracking the OSA. Perhaps Ally wanted to wait to the end of the Payback promotion before hiking the rate in hopes that it will encourage customers to keep their money at Ally.
This rate increase places Ally Bank in the middle of the pack of the large and well-established internet banks. The list below shows how the large and well-established internet banks have increased rates around the time of the last two Fed rate hikes. The Fed rate hikes are in bold, and the Ally rate hikes are in purple.
- Jan 17: Ally Bank Online Savings: 2.20% APY
- Jan 11: Discover Bank Online Savings: 2.10% APY
- Jan 4: Goldman Sachs Bank USA High-yield Savings: 2.25% APY
- Jan 3: CIT Bank Savings Builder: 2.45% APY
- Dec 27: Barclays Online Savings: 2.20% APY
- Dec 25: Synchrony High Yield Savings: 2.20% APY
- Dec 20: American Express National Bank Personal Savings: 2.10% APY
- Dec 19: Federal Reserve Target Funds Rate: 2.25% to 2.50%
- Dec 13: FNBO Direct Online Savings: 2.15% APY
- Nov 21: CIT Bank Savings Builder: 2.25% APY
- Nov 15: Ally Bank Online Savings: 2.00% APY
- Nov 15: American Express National Bank Personal Savings: 2.00% APY
- Nov 14: Discover Bank Online Savings: 2.00% APY
- Nov 9: Capital One 360 Money Market: 2.00% APY, $10k+
- Nov 6: Synchrony High Yield Savings: 2.05% APY
- Oct 30: Barclays Online Savings: 2.05% APY
- Oct 26: Goldman Sachs Bank USA High-yield Savings: 2.05% APY
- Oct 19: FNBO Direct Online Savings: 2.00% APY
- Oct 12: Goldman Sachs Bank USA High-yield Savings: 1.95% APY
- Oct 11: Discover Bank Online Savings: 1.90% APY
- Oct 5: Ally Bank Online Savings: 1.90% APY
- Oct 5: CIT Bank Savings Builder: 2.15% APY
- Oct 3: Discover Bank Online Savings: 1.85% APY
- Oct 2: Synchrony High Yield Savings: 1.90% APY
- 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%
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 shak 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 2018 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 almost 4x 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 1/22nd 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. Ally’s CD rates haven’t changed since December 19th. On that date, Ally increased the rates of its 11-month No Penalty CD and 12-month CD. It also increased the rate of its 14-month Select CD which remains one of Ally’s best CD deals (2.85% APY for all balances). According to the promotions page, it’s scheduled to last through 2/28/2019.
The 11-month No Penalty CD APY remains at 2.30% for balances of at least $25k. However, the APY is only 2.15% for balances between $5k and $25k. For balances under $5k, it’s only 1.80%. Unless you plan to deposit at least $25k, the OSA now makes more sense.
|2.75*%||-||-||Ally Bank||High Yield 12-Month CD|
|2.30*%||$25k||-||Ally Bank||No Penalty 11-Month CD|
|OTHER TIERS: 1.80% → Up to $5k | 2.15% → $5k - $25k|
Please refer to our Ally Bank CD rates table for the full listing of CD and IRA CD rates.
Noteworthy Ally Bank CD Features
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 $151 billion and just over 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 3.74% (excellent) based on September 30, 2018 data. In the past year, Ally has increased its non-brokered deposits by $9.39 billion, an excellent annual growth rate of 12.23%. 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, 11 savings accounts and 4 money market accounts have higher rates than Ally Bank’s Online Savings Account rate.
The above rates are accurate as of 1/17/2019.