It used to be revolutionary to hold your money with a bank that didn’t have any brick and mortar locations for you to visit.
Now high yield online savings accounts are more common and the decision comes down to which online bank you should open an account with.
There are many key factors in that decision — high interest rate, customer service, and account fees — that Ally Bank’s online savings comes out on top if you compare to other accounts.
What is Ally Bank?
Ally Bank’s story sounds eerily familiar to the mythical firebird phoenix that is rebirthed out of its own ashes.
That might sound strange for a bank, but Ally Bank is the new edition of GMAC or General Motors Acceptance Corporation.
GMAC was originally founded in 1919 and grew over the course of time, but like many banks a few years ago, got caught up in the financial crisis due to loose mortgage lending standards. The bank had to take on TARP funding from the government and was rebranded to shed some of the bad image associated with the financial crisis. A significant portion of the company is still owned by the US government, although the company is actively repaying on the funds it received. (And a majority of the problems are on the mortgage side of the business, not on the personal banking side that Ally is on.)
Why on earth would I open an account with a bank like that?
We try to be honest with the reviews of companies we perform at Free From Broke. We won’t sugarcoat bad news just to spin a positive review. But in this case, Ally Bank does seem to be a good place to open an online savings account.
For starters, Ally Bank as it exists now is significantly different from the GMAC bank of old. Some of the changes are so significant that they’re the main drivers that you should be interested in opening an account.
We’ll talk about that in a moment.
Secondly, any bank you deposit funds into needs to be covered by the FDIC limit of $250,000 per depositor at a bank. Even if you opened an account with Ally today and three years from now they disappeared, as long as your total deposit with the bank is less than $250,000, you wouldn’t lose any money. (Not to mention the likelihood of that is very slim!)
You’re not risking anything by saving money with an FDIC insured bank. So why not take the one with some of the best perks in the industry?
Why Open an Online Savings Account?
Online savings accounts are one of the best places for you to store your money for a future goal.
The savings account at your local brick and mortar bank is fine, too, but you won’t earn hardly any interest on it. Online savings accounts will always pay a higher interest rate on your savings than a brick and mortar bank.
Why? Because online accounts don’t have the overhead cost of all those branches.
Plus, when you use an account with a brick and mortar bank it becomes very easy to dip into your savings for every small emergency that pops up.
With an online savings account you must transfer money to an account that is linked to the online account. That transfer usually takes 2 or 3 days. It can be inconvenient when you find yourself in a money pinch — but it forces you to come up with cash or suddenly decide those concert tickets didn’t qualify for digging into savings. It’s like having a built in pause button on a money transaction.
In the long run that’s a very good thing.
What Makes Ally Different?
Think of your old bank: you can never get a live person on the phone to help you. Your interest rate is at or close to 0% on your savings. And they keep introducing new fees.
Ally Bank was formed to specifically avoid all three of those issues.
No Monthly Fees
One of the first things that makes Ally different is you can earn an industry leading interest rate on your savings without paying a monthly fee. When the bank was reborn one of its core focuses became having no monthly fees to trap customers with. There is no account balance fee (in fact, no minimum balance requirement at all), no monthly fees for the honor of having an account with the bank, none of that.
Highest Interest Rate Available
As of the time of this writing, Ally Bank offers the highest online savings account interest rate available of the major bank options. The other contenders are close (within 0.04%), but Ally is still at the top.
With Ally you’re combining no fees with the best interest rate available, all under the umbrella of FDIC insurance on your deposits.
Scan Checks to Deposit Them
One of the cool things you can do with your account is to scan in a check that you need to deposit with Ally’s eCheck DepositSM.
One of the frustrations of users in switching to using just online accounts is there is no where to deposit checks that you get from time to time.
With Ally, you don’t have to worry about that.
Just scan your check in and it will be deposited in your account for you. (Just make sure you remember to void and shred the check when you’re done!)
Bank From Your Phone
Need to check your balance while you’re out? How about make a transfer? Yup, there’s an app for that!
Ally introduced their mobile banking app that allows you to check your balances, make transfers between Ally accounts, arch transactions, and search for ATMs. All from your iPhone® or Android™ device. They have more features in the works as well.
Live Human Beings in Customer Service
The company isn’t kidding when they say you will be able to access a live human being in customer service 24 hours per day, 7 days per week.
Getting to that human being is easy, too.
There isn’t a 17 step phone tree that you have to press 1, then 2, then 1 again to try and reach someone. You’ll get a live customer service agent on the phone quickly to help resolve your problem.
Give Ally Bank Online Savings a Try
At the end of the day, as a saver, I’m looking for the best interest rate that has the least amount of hassle to it.
That’s what you’re getting with Ally.
You don’t have to worry about your balance getting too low and getting hit with a big fee. You get the best interest rate available, great online access, live customer service, and maximum savings potential.
Open up an account and try depositing a little bit of money each week into the account. You’ll get to test drive the bank, earn some interest, and if you end up not liking it, you can always close the account. I bet if you’ll try it, you end up liking what you find.