Ally Bank Review: A Comprehensive Guide, With Pros and Cons
Impressions of the World's Most Popular Online Bank
Ally Bank is an online-only bank offering competitive deposit accounts and other financial services. Ally originally launched as GMAC Bank and rebranded in 2009 as a friendly, straight-talking online bank.
Who Is Ally Bank Best For?
Ally Bank should appeal to most consumers who want an online bank account. It may be a particularly good fit for customers who want to:
Types of Accounts
Ally Bank offers the following types of accounts:
- Online Savings Account
- Money Market Account
- Interest Checking Account
- CD accounts
- IRA and trust accounts
Investment and loan options are also available.
Online Savings Account
Ally’s Online Savings Account pays a relatively high annual percentage yield (APY) on deposits.
- Earn 1.9 percent APY, regardless of your account balance.
- No minimum initial deposit or ongoing minimum balance requirement.
- Fund your account by transferring money from another account, mailing checks for deposit, wiring funds, or mobile check deposit.
- No monthly fees.
To use your savings, transfer funds to your linked bank account or to another Ally Bank account.
The Online Savings Account does not include an ATM card, but you can open a Money Market Account or Interest Checking Account if you’d like to have easier access to your cash.
Money Market Account
The Ally Money Market Account pays a competitive rate of interest and makes it easy to spend your money periodically. This account is a hybrid of checking accounts and savings accounts: You earn interest, but you can spend your money instantly.
- With balances below $25,000, earn 0.90 percent.
- With balances above $25,000, earn 1.00 percent.
- Get a debit card and free checks for spending your money.
- Pay no monthly maintenance fees.
- Same ATM access as the Ally Checking Account (see below).
Certain withdrawals from the Money Market Account are limited to six per month due to federal regulations. You can withdraw cash as often as you want (at an ATM, for example), but payments and transfers out of your account count toward the limit.
The Ally Money Market Account pays more than most megabanks, but it’s not always the leader among online banks. For example, Discover Bank currently pays 1.90 percent on money market balances. That said, the savings account at Ally is higher than the money market rate, so it makes sense to keep cash in savings and move it to the money market when you plan to spend. At Capital One 360, the money market pays more than savings.
Ally’s Interest Checking Account is a free checking account that pays a modest return on your cash.
- Earn 0.10 percent on balances of less than $15,000.
- Earn 0.60 percent on balances greater than $15,000.
- Pay no monthly maintenance fees.
- Withdraw cash at any Allpoint ATM for free. There are over 43,000 Allpoint ATMs located at convenience stores, restaurants, and financial institutions.
- Receive up to $10 per statement cycle in ATM fee rebate charges at other U.S. ATMs.
- Send instant and secure P2P payments to friends and family with Zelle.
- Deposit checks to your account with the mobile app.
- Pay bills on demand or schedule recurring payments with free online bill pay.
If you need an account for everyday spending, the Ally Interest Checking Account is an excellent option. You earn interest on your account balance, you can easily pay bills online, and you get a debit card for cash withdrawals and everyday spending. Still, for better consumer protection you may want to use a credit card for ongoing spending—and pay off the balance every month. Also, remember that there are no Ally branches, so you may need to plan ahead for occasional transactions that require a cashier’s check or money order.
Ally has a variety of CDs, including standard CDs and liquid options.
High-Yield CDs. Ally High-Yield CDs are standard CDs that require you to commit to leaving funds with the bank. As a result, they may pay higher rates at issue. The rate stays the same, for better or worse, until maturity.
|Ally High-Yield CD Available Terms|
|CD term||Annual Percentage Yield|
If you cash out of a High-Yield CD early, Ally may withdraw a penalty from your proceeds.
|24 months or less||60 days interest|
|25 months – 36 months||90 days interest|
|37 months 48 months||120 days interest|
|49 months or longer||150 days interest|
Raise Your Rate CDs. Ally Raise Your Rate CDs have rates that can potentially rise, preventing a situation where you get stuck with a low CD rate for several years. If Ally raises rates on the product you own, you can log in and ask for an increased rate. With a two-year CD, you have one opportunity during the term to request an increase. With four-year CDs, you have two opportunities. The APY for both two- and four-year Raise Your Rate CDs is 2.60 percent.
No Penalty CDs. Ally No Penalty CDs are liquid CDs that address the primary drawback of using a CD: you need to commit to leaving your money in the account for a set amount of time. But life brings surprises, and you may need to cash out early. You might even want to cash out to take advantage of higher interest rates in new CDs. No Penalty CDs are 11-month CDs, but you can withdraw 100 percent of your money after waiting six days.
- Earn 1.75 percent if you deposit less than $5,000.
- Earn 2.05 percent if you deposit between $5,000 and $25,000.
- Earn 2.20 percent if you deposit more than $25,000.
Individual Retirement Accounts
If you’re saving for retirement, Ally Bank offers Traditional, Roth, and SEP IRAs. You can use a standard savings account, High Yield CD, or Raise Your Rate CD inside of your account. Ally does not offer SIMPLE IRAs. Trust accounts are also available.
Investment (Nonbank) Options
Ally provides self-directed trading accounts for DIY investors and other wealth management services. Self-directed investors can select their own stocks, bonds, exchange traded funds (ETFs), and mutual funds. For hands-off investors, Ally Invest is an automated investing platform that places funds into ETFs. Investment accounts are not FDIC-insured, and you may lose money whether you do it yourself or outsource to Ally Invest. What’s more, fees on those accounts are different than they are for bank products.
Loans From Ally
If you like one-stop shopping, Ally can provide several types of loans. They may be able to help with credit cards, auto loans, and home loans (for purchases and refinancing).
How to Bank With Ally
To open an account, visit Ally.com or call 1-877-247-2559. As with any financial institution, you need to provide personal information:
- Names of all account owners
- Social Security Number (SSN) or Tax ID Number (TIN) of all account owners
- A physical address of account owners (mailing address optional)
- E-mail address and phone numbers of account owners
- Bank account information for any accounts you wish to link to Ally
Again, Ally accounts typically don’t come with monthly fees, but you may have to pay for certain transactions in your account:
- Returned deposit item: $7.50
- Overdraft item paid or overdraft item returned (maximum one fee per day): $25.00
- Excessive transaction(s) fee: $10.00 per transaction
- Expedited delivery: $15.00
- Outgoing wires (domestic only): $20.00
- Account research: $25.00 per hour
Money market accounts and checking accounts bring the potential for additional fees:
- Cross-border / currency conversion transaction: Up to 1 percent of the transaction
- Stop payment item: $15.00
- Overnight Bill Pay (delivery by mail): $14.95
- Same-Day Bill Pay (electronic delivery when available): $9.95
When you add money to your account, Ally Bank (and all banks) may hold the funds temporarily. Plan ahead whenever you transfer funds, use mobile check deposit, or mail checks to Ally. Deposits should show in your account, and should even start earning interest, once the deposit hits, but the money may not be available for withdrawal for several days.
Typical hold times are below, but banks can always hold your deposits longer if they believe they should.
- For checks drawn on Ally Bank, funds are available the next business day.
- For U.S. Treasury checks payable to you, funds are available the next business day.
- For all other checks payable to you, the first $200 is available the next business day, up to $24,800 should be available on the second business day, and the remaining amount should be available after the fifth business day.
The hold on cashier’s checks may be longer than you’d have to wait at other banks—particularly brick-and-mortar banks. When you deposit an official check in person with a teller, banks typically make up to $5,000 available within one day. However, Ally Bank, like any online bank, doesn’t have tellers whom you can bank with in person.
If you have a history of depositing bad checks (typically in a six-month look-back period), Ally may automatically place all funds on a five-day hold.
Wire transfers are available the next business day if received after 5 p.m. Eastern (or 3 p.m. Eastern for international wires).
Always verify funds availability timelines with a customer service representative if you’re making an important deposit.
About Ally Bank
Ally Bank is a well-established bank with approximately $78 billion in customer deposits. Ally is part of Ally Financial Inc., headquartered in Detroit, Michigan. During the 2008 financial crisis, the U.S. Treasury owned as much as 74 percent of Ally Financial, and the Treasury sold those holdings in 2014. Ally is FDIC-insured, so your accounts receive up to $250,000 in coverage per person.
Ally uses industry-standard security to protect customer information. While breaches are possible with any financial institution, Ally does not have a known history of breaches. Ally requires users to connect through secure browser sessions, and the bank locks accounts with too many unsuccessful login attempts. Customers may also be protected against errors and fraud in their accounts under federal law.
Ally allows customers to link up to 20 external accounts, so it’s easy to move funds between several different banks.
The Bottom Line
Benefits Ally Bank is a solid option for anybody who wants free online banking. Interest rates aren’t always the highest, but they’re competitive, so you can earn a decent return without putting effort into chasing rates. With 24/7 customer service and a well-designed site that explains almost everything, you know what to expect with Ally Bank—or you can get the answer easily.
Drawbacks The main weak point might be the Money Market Account, which pays less than savings, and less than other banks like Discover and Capital One 360. If you need a high money market rate, it may make sense to look elsewhere. Alternatively, you can keep the bulk of your money in Ally’s Savings Account or a liquid CD—and transfer money to the Checking or Money Market Account when you need it.