A high-interest way to save for those who don’t need ATM access.
As the popularity of digital banking continues to rise, more banks have begun to invest in online platforms. Online savings accounts offer a simple way for you to invest your money with often higher APYs than you’ll find at your neighborhood branch.
If you’re in the market for an online savings account, Ally Bank is one of many options.
What are the benefits of a savings account with Ally Bank?
An online savings account with Ally Bank has several competitive perks:
- High 1.20% APY. Ally’s APY is hard to beat, considering its competitors lowly offers of 0.05% APY.
- No fees. Minimize unpleasant surprises on your monthly account statement with no associated maintenance fees.
- Remote check deposit. Deposit money straight into your account by snapping and uploading a photo of your check.
- Daily compounded interest. Interest on your savings is compounded daily, so you’ll earn on all that you save each day.
What's the difference between an interest rate and an APY?Your interest rate is the simple interest paid on an account or investment over the period of a year. If you invest $2,500 into an account that comes with 1% interest, you’ll earn $25 on that investment at the end of a year.
The annual percentage yield is a bit trickier: It’s the effective annual rate of return that takes into account the effect of compounding interest over a year. In short, it’s the interest rate compounded daily or monthly over the course of a year.
What should I look out for?
Ally Bank’s online savings account is a convenient, on-the-go banking option. But keep these potential drawbacks in mind.
- No ATM access. You aren’t able to withdraw cash at ATMs or elsewhere.
- Limited transactions. You’re limited to six transactions monthly before you’re hit with a $10 fee for all subsequent transactions.
- Outgoing wire transfer fee. You’ll pay $20 per outgoing wire transfer with this account.
How do I apply?
Applying with Ally is a fully online process:
1. Go to Ally’s site, select the online savings account and click Open Account.
2. Select whether you’re new to Ally, a current customer or have already started an application. Click Next step.
3. Indicate the account you’re interested in and your opening deposit. Then click Add this product.
4. Proceed through the rest of the steps, entering your personal information, your financial details and finally enrolling in online banking.
What is Ally Bank known for?
Ally Bank is owned by Ally Financial — a bank holding company based in Detroit, Michigan, with full-service operations in auto lending, corporate financing, insurance and online banking. Ally Financial cracks the top 20 largest banks in the US list with more than $163 billion in assets.
What other savings options does Ally Bank offer?
Ally Bank has plenty of high-interest online savings products to offer:
- Money market. Enjoy 0.90% APY, no monthly fees and unlimited deposits and ATM withdrawals with this high-interest savings account.
- CDs. Terms range from three months to five years and offer APYs of 0.30% to 2.25%.
- IRAs. Traditional, Roth and SEP IRAs come with APYs up to 2.25% and options for both fixed and flexible rates.
Ally Bank’s 2013 discriminatory lending scandal
In December 2013, Ally Bank was investigated for alleged discriminatory lending practices. Ally was found to have given its representatives the OK to “mark up” interest rates and even paying dealers for those markups. Those who identify as African American, Hispanic and Asian/Pacific Islander were marked up at an average 20 more basis points than white borrowers on car loans.
The Consumer Financial Protection Bureau arranged a settlement with Ally in 2015 for $80 million in consumer monetary damages, which was reimbursed to Ally customers affected by the lending practices.
Ally Bank’s high-interest online savings account offers a generous 1.20% APY and no maintenance fees, but it lacks the support of a traditional brick-and-mortar bank.
If you’re looking for a hassle-free, convenient way to save and don’t need the amenities of a bank branch, this online savings account could be a good way to save.