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Higher Rates at Ally Bank After It Announces Growth Milestone


Ally Bank finally rejoined the 1% club today. Its Online Savings Account rate increased by one basis point to 1.00% APY. The last time Ally’s Online Savings Account rate was at or above 1% was in August 2011. In addition to the savings account rate, Ally also increased the rates of its 18-month CD (9 bps to 1.19% APY) and its 3-year CD (10 bps to 1.50% APY). Both the savings account and the CDs have no minimum deposit requirement. The APY applies to all balances.

1.55*%$25k-Ally BankHigh Yield 3 Year CD
1.30*%$25k-Ally BankHigh Yield 18-Month CD
Accounts mentioned in this post. Rates as of October 25, 2016.

Ally Bank’s money market account rate remains at 0.85% APY. 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.

Credit Freeze and Account Opening

If you still only have an Ally Money Market Account, it makes sense to open the Online Savings Account to take advantage of the higher rate. If you’re already an Ally Bank customer and you’re planning to open a new Ally Bank account, there is something to be aware of. If you are using a credit freeze to protect yourself against identity theft, you will need to lift the credit freeze for a short period of time to enable Ally to confirm your identity. One DA reader who was already an Ally CD customer tried to open a new savings account. According to the reader, Ally required that he lift his credit freeze so they could do a credit check. He was hoping that since he was already an Ally customer, that would not be required. I confirmed with Ally today, that even an existing customer will have to lift a credit freeze for a short period of time before initiating the account application so that Ally can confirm the customer’s identity.

Growth Milestone

Ally’s Online Savings Account isn’t the most competitive savings account rate. Several internet banks have savings accounts with rates 5 to 10 basis points higher. However, the rate is higher than the savings accounts at other big internet banks like Capital One 360 (0.75%) and Discover Bank (0.95%). This brings up an important question. As Ally Bank grows, will its rates remain competitive?

Ally Bank just recently announced in a press release that "it has surpassed the 1 million mark for retail deposit customers." The press release mentioned the following growth statistic:

As of the end of August 2015, Ally Bank had $52.9 billion in retail deposits, representing an average annual growth rate of approximately 22 percent since 2009.

The FDIC indicates that Ally Bank’s total deposits at the end of June 2015 were $61.8 billion. As a comparison, Discover Bank’s total deposits were $48.4 billion. Before ING DIRECT was acquired by Capital One, its total deposits were $86.8 billion.

Growth isn’t always good for depositors. A bank that grows its deposits too much has less of a reason to keep its deposit rates competitive. A bank like Ally will want to keep a reputation of being competitive with their rates. However, they don’t have a reason to offer the highest rates. If you want the highest rates, don’t expect to stay with any one bank or credit union for multiple years.

Related Pages: Ally Bank, Salt Lake City, savings account

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Anonymous   |     |   Comment #1
Funny.....They don't want to increase rates on their "raise your rate" CD's (2 and 4 year).......Gee I wonder why?   I guess Ken forgot to mention that.....seeing that he is in love with this bank.
Anonymous   |     |   Comment #2
Is Ally Bank doing hard or soft credit checks to open an Ally Online Savings account?
Anonymous   |     |   Comment #9
Think about it..."they" need a credit check for you to put money in when you have an existing account...what if you wanted to withdraw at maturity?  Do they ask for another credit check when you move money out?  Probably not, i.e. they don't care who you are when/if you take money!  Silly!  Find another place or have them to pay the cost of releasing the credit freeze!
Cracker   |     |   Comment #3
This is excellent news.  Ally has always paid great rates, and now they're even better.  I have the savings account and keep a decent amount in it. The one area where they have been declining is their CD loyalty bonus.  It used to be .25%, but they have been steadily decreasing it, and the last time I used it the rate was only .05%.  I hope it goes up too.
Cracker   |     |   Comment #4
One thing about their online savings account is that it actually pays more than their no penalty CD.  I actually closed one out and put the proceeds into the online savings because the rate was higher and still liquid.  Yes, I suppose rates could drop, but it seems unlikely to happen.
Robert (anonymous)   |     |   Comment #5
I got this e-mail from Ally today:

At Ally Bank, we're committed to banking in your best interest and offering consistently competitive rates. As part of that commitment, we're introducing the following balance tiers on November 7, 2015:

Less than $5,000
$25,000 or more

How we determine your rate will depend on your account type
Anonymous   |     |   Comment #6
And, that is?  If in our "best interest" what are those rates?
rjm (anonymous)   |     |   Comment #7
I suspect this means that lower balance accounts will get lower rates.

This isn't a positive, its a negative.
Anonymous   |     |   Comment #8
What account(s) are they referring to..the online savings, money market, checking, or all of them?
virgquest (anonymous)   |     |   Comment #10
According to the email, the tiers will be added to all account types: Checking, Savings, MMA, CDs, etc. I contacted Ally today via chat and the CSR I spoke with (Samantha Mc) said that although they don't have the new rates available yet, they are adding higher rates for higher balances, NOT lowering rates for lower balances. Hopefully, her information is correct and the current rates will hold for the <$5k tier. I would very much like to see Ally back on the CDs leaderboard with top rates, even if a minimum balance of $5k or $25k is required to get them.