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Ally vs. Synchrony - How Do They Compare?


Written by David Rodeck | Published on 3/29/2019

If you’re looking for an online bank, Synchrony and Ally are two names that should be on your list. They have won numerous awards for their customer service, generous interest rates and low fees.

Synchrony Bank is an online banking subsidiary of Synchrony Financial, an S&P 500 company based out of Connecticut. It was originally part of General Electric before spinning off into a separate organization in 2015. Synchrony offers a savings account, a money market account and certificates of deposit, but it does not have a checking account.

Ally Bank started as a brick-and-mortar bank when it was a division of General Motors in 1919. In 2009, during the financial crisis, it decided to shift from physical branches to an online bank. Ally offers a complete range of deposit accounts as well as credit cards, home loan, auto loans and investments.

Ally vs. Synchrony: Rates

Online banks have lower expenses than regular banks because they aren’t paying to run branches. They can pass these savings to their customers, which is why the average rates at online banks are so much higher than the national average. Ally and Synchrony are two great examples of this because their rates are sky-high, even compared to the typical online bank.

Synchrony Ally National Average Online Bank Average
Savings 2.25% APY 2.20% APY 0.273% APY 1.52% APY
Checking N/A Balance below $15,000: 0.10% APY $15,000 and up: 0.60% APY 0.189% APY 0.41% APY
1-year CD 2.80% APY 2.75% APY 1.356% APY 2.09% APY
5-year CD 3.10% APY 3.00% APY 2.255% APY 2.70% APY
All rates listed above are accurate as of 3/29/2019

When it comes to rates, Synchrony and Ally are nearly identical. However, Synchrony has slightly higher rates for all of its accounts. We suspect that they try to match each other in what they are offering.

Synchrony and Ally pay rates that are higher than both the national and online bank averages for their savings accounts and CDs. Their savings accounts are particularly good because they pay nearly 10 times the national average.

Only Ally offers a checking account. Its checking rate is below average when you have less than $15,000, but it turns quite good when you have a balance over $15,000.

Ally vs. Synchrony: Account options

In terms of account options, the biggest difference is that Ally offers a checking account while Synchrony does not. If you sign up with Synchrony, you’ll need to handle your regular banking with someone else as all its products are designed for long-term saving.

Besides that, Synchrony and Ally are quite similar. They offer one type of savings account, a money market account and a variety of CDs. Both their CDs range from three months up to 60 months (five years.) They also offer IRA CDs, so you can set up a retirement plan with both Synchrony and Ally.

For the CDs, one difference is that all the Synchrony products are regular, fixed-rate CDs. You can only make a deposit when you sign up, and the rate will not change over time. Also, you owe a penalty for taking out money early.

Ally offers these regular CDs, but it also has a few other options. One is a 11-month, no-penalty CD where you can take out money early without owing a penalty. It also offers raise-your-rate CDs where, if interest rates go up, you can request a one-time increase for what your CD is paying.

Ally vs. Synchrony: Fees

Synchrony Ally
Standard savings account No monthly maintenance fee or minimum balance requirement No monthly maintenance fee or minimum balance requirement
Standard checking account N/A No monthly maintenance fee or minimum balance requirement
ATM fee You can make free withdrawals from ATMs in the Plus and Accel networks. It does not charge for out-of-network withdrawals, though the ATM owner might have a fee. It refunds up to $5 per statement cycle from domestic out-of-network ATM charges. It does not charge ATM fees. You can make free withdrawals from Allpoint ATMs. If you make an out-of-network withdrawal, the ATM owner could charge a fee. It refunds up to $10 per statement cycle in out-of-network ATM fees.
Overdraft fee None for its savings account $25 (maximum of one per day)

Both Synchrony and Ally do an excellent job controlling fees on their deposit accounts. Neither bank charges a monthly maintenance fee. They also do not have a minimum balance requirement, so you don’t have to worry about how much is in your account. You’ll still earn interest and won’t owe a fee.

When it comes to ATMs, they offer large networks of free ATMs. Also, neither bank charges a fee when you use an out-of-network ATM, and they also include a refund for ATM owner fees. Ally is a little better for ATM access because it refunds up to $10 per statement cycle in out-of-network charges, while Synchrony only offers up to a $5 reimbursement.

But Synchrony is better for overdrafts because it does not charge a fee if you accidentally withdraw past your balance in the savings account. Ally charges $25 when this happens.

Who should bank with Synchrony?

If you want a savings or money market account, Synchrony is the better choice. While Ally and Synchrony pay roughly identical rates, the Synchrony savings account has lower fees. First, it doesn’t charge an overdraft fee.

It also does not charge an excess transaction fee when you make more than six of certain withdrawals in a statement cycle. Synchrony could close your account if it happens too frequently, but it won’t lead to a fee. If you make more than six transactions using the Ally savings account, it charges you $10 for each extra withdrawal.

For money market accounts, Synchrony is also excellent — and pays even more than Ally. The Synchrony CD rates are also quite good, but they only come as regular, fixed-term CDs that do not include bonus features like no-fee early withdrawals or a future rate bump.

The biggest drawback about working with Synchrony is that it does not offer a checking account. This means you’ll need to work with another bank to handle your day-to-day financial needs while keeping your long-term savings with Synchrony. That’s extra work, though the high rates at Synchrony can make it worth your while.

Who should bank with Ally?

Ally is a good choice if you want to open both a checking account and a high-yield savings account. Its checking account gets the job done because it doesn’t charge a monthly fee, has solid ATM access and earns interest on all balances. You can keep whatever you need for regular spending in Ally checking while transferring anything extra to one of its higher-earning accounts.

Ally also offers better ATM access than Synchrony, so if you don’t like planning where to go to make a withdrawal, that’s something to consider. Ally has free access to any ATM in the Allpoint network. More importantly, it refunds up to $10 per month in out-of-network ATM fees — double the Synchrony refund.

But Ally is not as good for a stand-alone checking or savings account. As mentioned above, it has higher fees than Synchrony on its savings account. Besides that, its checking account doesn’t pay a competitive interest rate unless you have a $15,000 minimum balance. It’s convenient when you combine this account with its savings account. But if you only want checking, you can do better elsewhere.

Alternatives

While Synchrony and Ally are fine choices in the right situation, they aren’t necessarily the best fit for everyone. Checking accounts are a weakness for both of them. The Ally checking account doesn’t pay much interest unless you have at least $15,000, while Synchrony doesn’t even offer this type of product.

If these two banks didn’t grab your attention, you have plenty of other options. The most likely way to earn a top rate is by working with an online bank since they have lower costs than traditional banks. But that’s not always the case, so make sure to do your research.

To see what else is out there, check out the free resources on DepositAccounts. There, you can compare rates and reviews for over 11,000 banks and credit unions nationwide. It’s your best bet for finding the best bank account.

Comments
PE Teacher
PE Teacher   |     |   Comment #1
I chose Synchrony because of its higher APY and the ease of use. They provide a debit card to get money out of the account easily. The only part that I wish could be better is that you must transfer money from another account and wait a few days for it to be in your Synchrony account. Over all, I think that Synchrony is the better choice.

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