In its review of the best online banks, Kiplinger declared that Ally was tied with ING in the category of “no fees, no strings” banks. Ally Bank is an online bank that’s part of Ally Financial, which was previously known as GMAC. Ally Financial has an interesting history. GMAC, which stands for the General Motors Acceptance Corporation, was originally founded in 1919 to provide financing to automotive customers. The company has since distanced itself from GM. In 2008 the company received $5 billion as part of TARP, and in 2009 an additional $7.5 billion. In 2009, GMAC’s banking unit officially changed its name to Ally. The government currently owns 55% of Ally, which is planning to IPO during 2011. So why am I telling you this? Well, Ally has made a lot of headway in the online banking industry, but I think it’s important to understand the history of a bank, even if it does not really reflect where the bank is currently. Ally focuses on providing simple banking products without hidden fees. Below is one of Ally’s commercials, which I think sums up its positioning pretty well:
One of the first things you need to do when looking at a bank, particularly an online one, is to ensure that it’s FDIC insured. A quick Google search shows that Ally bank is FDIC insured. Now that that bit of preliminary research is over, let’s get on with the review.
Let’s start off with Ally’s online savings account, which I’m sure many of you are interested in. It’s rate as of this review is 1.09%, which is on par with ING’s Orange Savings rate of 1.10%. ING has long been a favorite of those who choose to utilize an online bank account. You know what’s really cool? Ally isn’t afraid of telling you what other banks are offering. That’s how confident it is. It’s easy to make a list of competitor banks who are offering a lower return and throw it up on the site. But Ally even tells you that ING is offering a higher rate!
That’s pretty awesome if you ask me. You don’t see Best Buy showing you that everything it offers is cheaper on Amazon. If you go to the sign-up page, you’ll notice that Ally clearly states the terms of the account. There’s a $0 minimum balance. This is quite uncommon for a savings account. Ally also makes sure you know you’re going to be limited to 6 transactions out per month. That isn’t an Ally-only restriction, it’s actually a federal requirement on savings and money market accounts. I’ve found, though, that many banks bury that fact in the small print. As a user of the savings account, I can attest to its ease. Every month I move my savings over the my Ally accounts. Any time I want the money I can either write a check, or I can transfer it to one of my checking accounts.
I think Ally’s checking account is even more noteworthy than its savings account. Who said checking accounts can’t deliver high rates?
As I’m sure you’ve realized, banks everywhere are offering less than 2% return on CDs. This is pitiful by historical standards, which is even more reason to take note of the account that offers you 0.5% (1.05% on balances over $15k) and allows you to remain completely liquid. Ally’s checking account features no fees, no minimum balances, free checks, and no ATM fees. For many, the absence of an ATM network is often cited as a reason for not using an online bank. Ally removes this argument by paying the ATM fees for you. At the end of the month Ally will reimburse any fees you pay to use ATMs at other banks.
Ally offers a number of different CDs. Though the rates are not the absolute highest (you can find higher rates by going to no-name banks), you simply aren’t going to get more transparency anywhere else. Ally’s No Penalty CD delivers 1.19% APY and features no fees. Not only that, but Ally offers you a 10-day rate guarantee. If they increase their CD rates in the next 10 days after you invest, you’ll get that rate. You can also withdraw your funds with absolutely no early withdrawal penalty. Any time after the first six days you can request your money back and they’ll give you all of the accumulated interest. Ally also offers a 2-year, 1.55% fixed CD. If at any time during the two years Ally is offering a higher rate, all you have to do is call them up and they’ll increase your rate to the current rate.
My Experience with Ally
So far, all I’ve done is covered the information you can find online yourself. Now, it’s time for me to give you my opinion. I’ve been using Ally for a few months now. When you first sign up your account will be opened immediately. Funding the account took days to transfer from my bank. Within a week I had my welcome pack in the mail. Within the first week I created my second Ally account. Ally, like ING, will allow you to open as many savings accounts as you’d like. It’s essentially a sub account. You don’t have to do any additional approval process or anything. You can add a new account within 5 minutes. I’ve started setting up new accounts for each of my savings goals. It works great in conjunction with Mint.com. When you set up a goal in Mint you can assign one of your Ally accounts to your goal. For example, say you’re saving for a trip to Europe, you can put this savings in your Ally Europe Trip Savings account and Mint easily keeps track of your progress and alerts you if you’re ahead or falling behind in your savings for the trip.
I haven’t yet had to interact with Ally customer service. I think that’s a good thing, but unfortunately, that means I can’t comment on their customer service. I’ve heard, however, that it’s quite excellent. Seems easy to contact them by phone or by chat. At this point I highly recommend Ally. I’ve been loving being with them and they’re the place where I park my savings. I’ll be sure to update this post when I have any interaction with customer support or if my opinion of them changes in any way.
Have you had any experience, good or bad, with Ally? If so, please post below.