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Federal Reserve, the Economy and CD Rate Forecast - Sep 13, 2022
Ally Bank Plans to Launch a Checking Account by End of This Week
POSTED
ON BY Ken Tumin
A reader mentioned this news about Ally's new checking account, and I just confirmed it with a CSR via Ally's online chat. Unfortunately, the CSR didn't have any additional details. Here's what the CSR said:
If it's like the checking accounts at other online banks, the rate will probably be much lower than the savings and money market accounts. The benefit of the checking account is that it shouldn't limit the number of transactions. The savings and money market accounts have a limit of 6 per month. Also, I would assume it'll offer online bill pay.
Ally's Money Market Account as a Checking Account Alternative
For those who don't need to make many transactions per month, Ally's money market account is a good alternative to a checking account. You're allowed to write up to 6 checks per month. Note, the check limit for money market accounts used to be 3, but the Federal Reserve changed the regulation to 6 transactions of any type including checks. I'm glad to see Ally has updated its rules to match this regulation change.
Money Market Rates and Rate Changes
Ally Bank used to change rates on Fridays, but now rate changes are happening on any day. The 12-month CD yield just fell from 1.80% to 1.79% APY today. Last week, the money market and savings account yields also fell by 1 basis points. They're now 1.49% APY as of 1/13/10. Ally's rates have remained competitive, but the only question now is how much will their rates be constrained by the FDIC. According to this November WSJ article, the FDIC is forcing Ally to keep rates below the nation's top five rate payers, as measured by Bankrate.com. This might explain why they've been cutting their rates by just one basis point. Currently on Bankrate.com, there are only 4 savings accounts with APYs higher than 1.50%. By dropping their rate to 1.49% APY, they're below the top 5.
Even if Ally Bank will no longer be a rate leader, 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.
Thanks to the reader who mentioned this news in the comments.
It will be introduced by the end of the week. We don't have many details other than it will be a checking account.
If it's like the checking accounts at other online banks, the rate will probably be much lower than the savings and money market accounts. The benefit of the checking account is that it shouldn't limit the number of transactions. The savings and money market accounts have a limit of 6 per month. Also, I would assume it'll offer online bill pay.
Ally's Money Market Account as a Checking Account Alternative
For those who don't need to make many transactions per month, Ally's money market account is a good alternative to a checking account. You're allowed to write up to 6 checks per month. Note, the check limit for money market accounts used to be 3, but the Federal Reserve changed the regulation to 6 transactions of any type including checks. I'm glad to see Ally has updated its rules to match this regulation change.
Money Market Rates and Rate Changes
Ally Bank used to change rates on Fridays, but now rate changes are happening on any day. The 12-month CD yield just fell from 1.80% to 1.79% APY today. Last week, the money market and savings account yields also fell by 1 basis points. They're now 1.49% APY as of 1/13/10. Ally's rates have remained competitive, but the only question now is how much will their rates be constrained by the FDIC. According to this November WSJ article, the FDIC is forcing Ally to keep rates below the nation's top five rate payers, as measured by Bankrate.com. This might explain why they've been cutting their rates by just one basis point. Currently on Bankrate.com, there are only 4 savings accounts with APYs higher than 1.50%. By dropping their rate to 1.49% APY, they're below the top 5.
Even if Ally Bank will no longer be a rate leader, 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.
Thanks to the reader who mentioned this news in the comments.
>> 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.
Indeed ... Ally has these nice features matched by only a few banks. USAA is one such bank that matches these features.
In addition USAA also permits one to add the account that are not owned by the account holder for only transfer out ( There is an entry which one can use to indicate that s/he is not the owner of the other account. ) So as an example, I can transfer funds out into my Son's account which is not owned by me. ( Transfer in of course is not possible when the account holder is not an owner. )
Two credit unions I know (TechCU and Patelco) also match these features of the bank.
.
This was not always the case.
>> However USAA does not offer a
>> competitive interest rate on
>> their accounts. It is downright
>> dismal.
True ... on both counts.
Even TechCU and Patelco's rates are (at present) no match to Ally's.
A while back USAA's FDIC Insured Money Market account was very very competitive, but times have changed and so has the rate.
Anyways ... these and the 'other' facilities that USAA offers (e.g. Mutual Funds, Annuities), are what I like/utilize frequently.
I have similar thing going for Patelco: Their branch is nearby, and I like/utilize their some of the other services (e.g. Free Notary, Automatic payment of Credit card issues by them, Health Savings Account) they offer.
.
Times do indeed change and while I have numerous accounts with USAA, I do not keep excess cash there or Ally (anymore) for that matter.
Love the USAA checking account and their ATM rebates. Same for insurance and credit card services.
Features she said the account would have include:
-platinum check card
-free bill pay
-unlimited atm fee refunds
-unlimited check writing
-interest-bearing
also said there was going to be a new 24-month CD that features the option to bump up the interest rate once during the term.
i already have schwab's checking account, so i won't be switching right now. i will recommend it to others though (it sucks to have to see my friends put up with ATM fees)
0.55%: Below $25,000.
0.60%: $25K to $99,999.99.
0.65%: $100,000+.
NOW, of course, means negotiable order of withdrawal, an old name for interest-bearing checking accounts.
Another good bet is Alliant Credit Union. Presently 2% on savings and 1.75% on checking. The checking requires one ACH, or direct deposit monthly and you must opt for online statements. You get a free credit score quarterly. They also offer the ability to directly deposit checks by scanning them at home which I've found useful.
Ally checking is great for those who don't want to hassle with brokerage/trading. I would recommend it to anyone who doesn't already have a schwab checking account.