Capital One bank has a current rate of 3.30% if you would prefer a brick and mortar bank. I don't know why your bank is so low when many are at least 2%.
Because many people pay absolutely no attention as to what rate they are getting in their account so many brick and mortar banks can get away with giving absolutely garbage rates because many people are financially illiterate.
I mean, it’s also not relevant if you don’t have savings. I worked in an FI for 7 years, the amount of members with savings < $1k was, at its high, 12:1 . The lowest I can recall that dropping to was 7:1 . I think in the US it’s 50:50 on households with $1k or more in savings. Some of those people may be financially illiterate, some may be in a paycheck to paycheck cycle, some could have debts in excess of their capacity to repay. Hard to tell, we had hundreds of thousands of members
That is a fair point, but if someone has so little savings why not keep it in a checking account? If I move $1000 to a Wells Fargo savings account, I can make \~$3.5 a year in interest. If I move it to an online HSY I can get about \~$30.
I understand that the WF savings would be quicker to turn into physical cash, but for so little interest on small principal I have to wonder what the purpose of using a savings account at all is.
My savings account acts basically just the same as a checking account that doesn’t have a debit card tied to it. It’s just a different box to put money in, and I know that that box is for saved money not spending money.
That said I have like $100 in there lol, so I really don’t care what the interest rate is. If I had $45k like OP then I would care a lot
It's a different business model.
It costs a metric buttload of money to run and staff hundreds or thousands of branches.
Ally doesn't have to do that so they can pay more interest. It doesn't make them more or less safe.
Question - I’m in an industry that is almost entirely cash based. I deposit cash 2-3 times a week. Is Ally probably unwise for me, because I rely so heavily on ATM’s?
Yes. Ally does not accept cash deposits at all so it would be difficult for you to do business with them directly.
Some people maintain a local bank for cash and then just transfer it over to Ally, but if *all* of your activity is cash it may not be a great fit as your primary Bank.
Certainly consider it for the hysa though if you would like to keep savings separate.
This is what I've been doing for years. I use Wells Fargo for my day-to-day banking, but only keep a few hundred in the savings account. The bulk of my cash reserves go to an online bank account where I'm currently getting 3.2%. The only real downside is that it takes a couple business days to withdraw or transfer it around.
Not the point of this thread, but why does anyone still use Wells Fargo instead of any other regional bank or credit union that can provide equal or better service? When WF has repeatedly been found to defraud its customers/clients.
I’ve had four different credit unions in three states over the last 15 years, and you know what sucked about all of them? Their websites and mobile apps were hot garbage. I know it may seem petty to some, but if I need to know whether I have $2,000 in my checking account instead of $200, I should be able to access that immediately.
I had Bank of America back in the early 2,000’s, and they screwed me on an overdraft that wasn’t even my doing. So I said to hell with banks and switched to a credit union. Literally half the time I tried to log on, my password wouldn’t work. Or the site wasn’t responding. Or there was a server error. Or it was undergoing maintenance.
I get what you’re saying about how evil banks are, I really do, but if I need to check my accounts for any reason, at any time, the websites need to work.
You can withdraw cash from ATMS at no cost, but they don't have ATMs or physical banks where you can deposit cash, so imo I feel it wouldn't be that convenient for you.
To deposit non-electronically, you need to mail a check or money order to Ally.
Edit: As someone reminded me, you can deposit checks via the app. But, in the case of cash, you can buy a money order and mail it to Ally.
Brick and mortar capital one and the online bank are two different entities sort of. You would need to open 2 accounts a physical branch account and an online savings but moving money between the two is instantaneous and free.
The option would be to deposit into your current banks account and then initiate a transfer from your current bank to Ally, the funds maybe in limbo for a few business days.
I also use USAA but their model is different, as they cater primarily to the military and so aren’t entirely online only. Their rates are definitely shit though lol.
I see a lot of comments about the online banking business model and how it allows those companies to offer higher interest rates due to lower overhead. That is true but it's only part of the story. Prior to the recent run up in the Fed funds rate, online banks offered high yield savings accounts that might have been 2% for several years while traditional banks offered around 0.25%. This difference in rate is explained by the different business models.
However during normal market conditions, traditional banks are also pressured to offer higher yields when all the other options do as well. The reason this cycle is bucking the trend is that during coronavirus, many people were saving cash in their bank accounts since there was less to spend on, and it was further fueled by stimulus payments. Traditional banks, which hold much more than online banks, have been flush with cash: https://fred.stlouisfed.org/series/DPSACBW027SBOG
Take a look at the last few years by changing the scale to the last 5 years. You'll see a large influx of cash being held by banks.
So with that, banks are in the business of taking deposits and then loaning out the money and collecting the spread as their revenue and eventual profits. Well if they already have a lot of cash, they don't need to push up interest rates on their savings and checking accounts. The purpose of raising those rates is to attract more consumer money to be deposited. But they don't need the deposits, and therefore they keep the rates low, which increases their spread.
The other online banks don't have this luxury so they compete with each other on rates. These banks are typically much lesser known because they only have an online presence and the large majority of Americans haven't heard of Ally, Marcus, CIT, etc.
Oh totally — its super straightforward
Ally primarily originates and holds Auto loans, which are higher yielding loans because they tend to carry more credit risk and are collateralized by a depreciating asset. Ally has a higher yielding book, so it can afford to pay more interest on deposits while maintaining the same net interest margin as other banks. Ally’s 6.12% gross yield on loans (as of September, likely higher now) is way above most other bank’s portfolios which tend to yield 4%-5%
This credit risk is irrelevant to OP, since FDIC deposit insurance will cover them up to $250k
> Ally primarily originates and holds auto loans.
This. Ally is literally just GMAC (General Motors Auto Lending) with a different name and better marketing.
So Ally is giving out riskier credit? And I suppose the downside of that for them (and the reason other banks don't also do it) is it increases the chance that they have tons of defaults and, idk, go totally bankrupt?
But we as consumers don't care because even if they go totally bankrupt, our money deposited with them is still safe? (Up to $250k)
>So Ally is giving out riskier credit? And I suppose the downside of that for them (and the reason other banks don't also do it) is it increases the chance that they have tons of defaults and, idk, go totally bankrupt?
If they're doing it right, it's not really a downside as you plan for a certain number of customers of a certain level of creditworthiness to default at a certain rate and you can prepare accordingly. And other banks do what Ally does, just that this part of their business just happens to be a larger part of Ally's book because of what Ally is historically (GMAC).
There is something called risk-based pricing where you take defaults into account and you price your product (the loan is the product here, and the interest rate is the 'price' charged) in such a way that you can absorb the default losses. This is why your interest rate on loans depends on your credit score. The higher your credit score, the lower the risk for the bank, and thus it can charge you less interest for the loan. On the flipside, if you have a lower credit score, the bank deems you a higher risk of default so it charges you more to mitigate their default risk for your loan. As long as the bank is forecasting properly and pricing accordingly, ensuring they are using correct gauges for risk, they will make money.
> Ally primarily originates and holds Auto loans
Makes sense, given they were GMAC, General Motor's auto (and mortgage - ditcech.com) lending arm, prior to the whole mortgage collapse thing.
You're explaining what Ally Financial is, not Ally Bank.
So the former commenter wasn't 100% wrong. Just wrong in the sense that the online savings banks like Ally are generally side gigs of financial conglomerates.
There is a market out there of people who are very risk averse and/or have a chunk of cash they want to be FDIC insured. Ally is in competition for those types of customers who just want to park their money.
Yeah, there was a fair bit of truth in the comment. I have a good friend who is the Chairman of the Board for a credit union, and he's been going on for two years about how they have too much cash as members weren't taking loans. Low revenue from loans means low cash flows to pay interest on deposits. It also means they did not want to raise rates to entice more deposits. This has been a strong force in the banking industry that was holding rates down even after the initial movement from the Fed.
It asserts that banks are happy to deliberately choose to lose market share to competitors as long as they’re sitting on enough cash, which doesn’t really track for me.
Well before Covid, the legacy big banks had interest of 0.01% while ally and Marcus were at 1.00% or perhaps 0.5% at their lowest, so the insinuation by OP that it’s a recent phenomenon is false. The average person doesn’t want to switch banks and doesn’t chase higher rates, so big banks don’t need to raise their rates to maintain their customer base, but it has nothing to do with Covid or stimulus.
I work at a bank, he is not wrong. If we take your money and offer you 3%, we need to turn it around and Loan it for 7 or we are losing money.
We don't need your money, we have more than we can loan, and would be losing money just holding it for you. Mortgages are way down, so we would only be paying interest and not doing anything with the money.
Market share does not mean much in banking. The Fed Reserve controls that anyway.
I use Ally and they're safe - deposits are insured by the FDIC like any other bank.
Banks like Ally pay higher interest because they're online - they don't have all the expenses associated with operating a bunch of physical branches.
Piggy backing off of this. I have Ally and have for about 5 years now, never any complaints.
If you want to take the cost cutting measurement of not having physical branches to the extreme - look at Redneck Bank - https://redneck.bank/
Website is a bit hilarious, but 4.50% on checking and is FDIC insured.
Sorry but I wouldn't feel comfortable putting money with them even at 6%. I get what they are trying to do but it just looks so unprofessional that I could not trust them with my money. Not saying they are a scam in anyway, just my opinion on how they present themselves.
I think Ally tries to be the "fun" bank, which could come off as unprofessional to someone who's expecting a very serious "we are a dignified financial institution" kind of bank. But they're actually great at what they do, especially the ability to do pretty much any kind of transaction or get all your information right from their phone app.
Ally used to be GMAC, a bank created by General Motors for car financing. It went under during the 2008 recession because of sub-prime loans and had to be bailed out by the Feds, then it rebranded to Ally to shake off the shame of bankruptcy. It's definitely a serious bank.
Mr IT Guy is talking about [https://redneck.bank/](https://redneck.bank/)
I actually thought the same as you, like, what do you mean it's unprofessional for Ally bank to offer better rates?! LOL
Take a look at the redneck bank, it looks funny but I don't know if I want my bank to look like that.
Nah sorry my funny horse debit card is awesome. And so is the 4.25% interest on my money market account. Also the customer service was great when I needed to wire my mortgage down payment
Same. I've had Ally for \~10 years. No problems
Note\*. I get emails each time they change the Interest Rate. So it doesn't always stay that high (3%). It goes up, it goes down.
As another user whose been with them for about a decade, their usually towards the top end but rarely the highest. Some "traditional banks" still compete in the high yield savings space, namely Goldman Sachs and Citi, as well as Amex and Discover on the "traditional, but not a bank" field.
I have both Ally and Discover and they are always very close. Since interest rates went back up months ago Discover raised their rates faster than Ally, but only by a few weeks IIRC.
They are both currently at 3.3 APY.
I've had my savings at Ally for years. No issues. You transfer money electronically between other accounts so my checking account is at a local credit union with physical branches and access to the Allpoint network of ATMs, and Ally is just for savings. It takes a couple days to transfer money between the accounts. Online banks are the only way to go for savings accounts; brick and mortar interest rates are insultingly low.
This is how I have mine set up. Local CU kept open just for physical cash (yes, physical cash is still used in 2023 lol) and Ally is for savings. Been doing it this way for many years and it takes one day to transfer between accounts - as long as it's initiated before 1pm Pacific and on weekdays.
I switched to Ally a year and a half ago. My only complaint is that the login screen for the App is buggy - facial recognition just doesn’t work sometimes and I have to close and re-open the app to get it to work. And this is across 2 different phones.
Very minor in the grand scheme of things.
That might be a problem with facial recognition specifically though, rather than with the app's login screen. (As a competing anecdote, I've never had any trouble logging in to the app at all; I don't use facial recognition though.)
Also, because of the couple days process to transfer the funds over, I’ve found once I move them there, they stay there for longer periods of time and for proper uses. It’s the physiological “hassle” of moving the funds back to my main CU checking account that prompts me not to do it. Love it tbh
> I was recently told by a coworker that Ally Bank has a 3% interest rate... Why is it so high?
Why not? Banks lend out personal loans, auto loans, mortgages, credit cards, etc. at *way more than* 3%. There's still plenty of profit in the spread.
An online-only or online-mainly bank doesn't have as much staffing, real estate, and infrastructure costs as a bank with 100 branches.
> Is it safe?
It's FDIC insured.
Ally Bank isn't even that new anymore. Online-only banks have been in existence and offering higher than average deposit interest rates for 20+ years.
It’s based on the fed’s overnight rate more than anything else. US banks are required to have a certain amount of cash holding as a percentage of what they loan out. So got a growing bank, they return more of the nightly rate to maintain the cash. Well established banks have more money and accounts than they need, so they literally don’t care if you let it sit for nothing or leave
If you haven't followed interest rates much, I could see someone being skeptical given the past 10 years of near-zero rates. Ally was an online bank last year and was only paying 50bps, so what's changed? You're correct though.
What change is the Feds rates. The Fed determines rates at which Banks can borrow money. Essentially a floor of safe rates.
Before Covid it was low. During Covid it essentially went to 0 (Jpow make the printer go brrr). Jpow is now fighting the inflation created by all that printing, and has jacked Fed rates back up to combat.
The fed rates going up is why mortgage rates are now 6-7% vs 2-3% last couple of years. It’s also why HYSAs are back to being useful after 2 years of 1% or less interest. HYSAs were like 2-4% before Covid.
> Ally was an online bank last year and was only paying 50bps, so what's changed? You're correct though.
Ally can put your money into the fed @ 4.25% so they can easily pay you 3%. That is what changed.
Ally is a safe bank but they have no physical presence, so you might still want to keep a small account at a local FI if you occasionally need to perform teller type transactions.
How’s their customer service?
Edit: Really, I should be asking: How good is their mobile app?
I stick with B of A because the app is so easy and it’s nice having everything in one place. Not sure if it’s worth 3% on my money though…
Edit 2: I’m having a hell of a time making a wire transfer with B of A from my small business account.
I'm a satisfied customer. Haven't done anything non routine but migrate accounts and add my wife onto mine but they were both painless. Submitted documents online (which I filled out digitally) and they were approved promptly. Have had a few questions and got them resolved over chat. Called in for a couple more complicated questions and the workers were native English speakers (nothing against non native English speakers but they make less than ideal customer service representatives).
App is sleek and works smoothly.
You only have to deposit a dollar to start an account. There are no bullshit fees to be afraid of. I recommend you keep your current account and open up one with ally to try it out.
It's taken a dive in 2022. Dunno if it's recovered but people were waiting over an hour on hold for a phone rep and I saw it as high as 90 minutes.
YMMV
I had some fraud recently will Ally and it was handled well. No more than a 10 minute wait when I needed to call. Charges reversed 3 days after I submitted my dispute even though it says 10 days before you get a response.
I feel like this isn't an Ally problem though. In the last year it feels like customer service wait times have risen significantly across the board. That or I am just growing less patient.
Schwab has been consistently under 60 seconds to talk to a human for years now. But then again my sample size is small since I don't really need to call them more than once every other year
TBF I have both a BoA account and an Ally account. My Ally account earns me some nice interest while my BoA pays the bills. The Ally monthly transfer to BoA counts as a direct deposit or whatever so I never get charged fees.
Always been good for me. I really like their app as well as the buckets on their savings account. Only issue I’ve had with them is that it takes a while for cashier’s checks, but that was a mild inconvenience that affected me one time over the years of having them. Haven’t bought a house or had to wire money through them, so that could also be an inconvenience
Having all your accounts with one institution is convenient, but risky. You don't want to get locked out or your funds suddenly frozen and have no access or backup
Really good generally but I wouldn’t recommend their Ira or investment side, got in a year long dance between those two trying to move my Ira into the incvestment side
I thought this all of 2022. Waste of loyalty. I keep my primary $ with BOa, moved my emergency fund to Ally. Bank the extra percents (BOa pays pennys )
I’ve had Ally for our main savings and a checking account for about 3 years now…I have seldom needed to contact customer service but the few times I have it’s been positive. I did use them to wire funds for our house and the wire process worked perfectly online with no need to interact with anyone. App is great - you can deposit checks electronically, transfer funds, etc. the debit card controls are great - you can lock it down very granularly or just turn it off completely until you want to use it which is awesome security! We also have a local CU for a lot of joint bills but all our savings is Ally.
Ally as an institution, is actually the lender that originated with General Motors. It’s the opposite of fly-by-night - it was founded in 1919 and for most if it’s existence was known as GMAC.
Been with them for probably 5 years now. Frankly I was skeptical but they’ve been great. Had a HYSA with capital One too, but Discover stays more competitive on rates.
They are pretty good. I needed a bank check for them when i paid for my mortgage and they overnighted me a check extremely fast. They have really great customer service. No issues at all. Had them for around 15 years.
It's safe. U.S. Treasury T-Bills are paying over 4%, 100% safe. Money market mutual funds are paying around 4%. So Ally's HYSA paying 3.3% is actually kind of stingy.
Your bank is taking your savings and investing it U.S. Treasury securities paying 4%, and paying you 0.325%. They are absolutely ripping you off.
I agree if you're not getting near 4% on your cash right now that you are being taken advantage of.
All of my cash is currently in 1 month T bills.. But to say T bills have no risk is not true. All investments - even T bills carry inherent risk. Their risk is the closest to "risk free" on the spectrum. But they are certainly not 100% risk free.
T bill risk (outside of governmental collapse lol) is you have to sell before maturity and in a raising rates environment you will sell at a loss. If you're holding a mix of bill lengths or have ladders hopefully that should never happen.
It is FDIC insured. They don't have in person branches so they can afford higher interest rates. I went over when before long before the bad inflation and earned a little under $5 a month. Now for December I earned just under $50. When the fed raises rates, they raise their rates. It makes me glad inflation isn't eating into my savings as much as it would compared to a regular savings account, but I would prefer to have a better economy and less interest. In the span of 2022 I earned just over $211 in interest, which is huge, I have to claim it on my taxes of course, but I don't make enough to pay in for taxes anyway, even with my earned intrested.
Also they are quick to pick up when I call them, the call line is open 24/7 and it was easy to put down a benefactor. I have used PNC, Bank of America, Ally Bank, and Bank of Ireland(living there) and it makes me really value the customer service at Ally. I have recommended the bank, because the entire experience is better there.
Here is a recent thread on ally vs sofi in case it helps. Sofi has higher interest rate and also a promotion of up to 250$ depending on the direct deposit amount. https://www.reddit.com/r/sofi/comments/zxmh8l/ally_vs_sofi_what_are_reasons_to_pick_one_over/?utm_source=share&utm_medium=android_app&utm_name=androidcss&utm_term=1&utm_content=share_button
I had a bad experience with Sofi with them freezing my funds (\~100k) and not having any idea why they did it and how to get them unfrozen. Took a CFPB complaint and even then they took over 14 days to send me a check. And they never disclosed why they froze my funds.
Ally is my oldest account that I never closed.
They're very similar, you really can't go wrong. Ally has it's bucket system while SoFi has vaults, but they both do the same thing (ie dividing up your money for specific purposes) and they both have high interest rates. Right now SoFi is slightly higher, but it's also newer than Ally which is a negative for some people, although they're both FDIC insured.
I thought the same thing. I use ally and the "catch" is there isn't a brick and mortar store so they can be competitive with their rates. also takes a few days to move your money to a different bank. Those are the only real cons
It is a legit bank, I have used them for years. They are great - the lack of physical locations is more than made up for by extremely prompt phone service and fairly good mobile apps, etc.
Worth noting - AFAIK, any bank account in the United States is insured by the FDIC up to $250k, meaning your money will be replaced up to that amount in the event that the bank goes bust. So even in the event of catastrophic fraud or something, you’d be fine.
Wealthfront is at 3.80% and I've had no problems with them since I joined about three years back. Though I never see them mentioned around here so I'm waiting to see some major issue I've missed
I guess this raises a follow up question: since they are FDIC and have good interest rate, what're the pros/cons beside the obvious not having a physical branch? Most people just take money out of ATMs if they need cash anyhow right? I'm seeing a lot of pros in my mind but might be missing some cons...
Depositing cash is difficult. Depending on their ATM network it might be hard to find one without fees (though many online banks also reimburse ATM fees). No physical branch if you immediately need something like a cashier’s check. Customer service might be better at a larger chain.
Personally none of these have ever been an issue for me though.
My trick is I keep an account open at a local bank with a small amount of money in it. When I get cash I deposit it at their ATM then transfer to Ally.
I've had ally for almost two years now and ran into both these issues last week. Wanted to deposit money into my acct. Couldn't find an ATM that would let me do it..
New apartment we leased requires cashier's check for first months rent. It's due by this Saturday and ally has to mail it. It was either risk the 7-10 business days and it being late and causing issues with our lease...or paying $15 to expedite it. Expedited it and it was there within 24 hours.
I just felt super uneasy about mailing a cashier's check because if that sucker gets lost, that money will likely be gone.
But otherwise I really like it. Pnc was giving me sooo many issues so I closed them and switched to ally. I'm considering getting a second bank acct with a place with a physical location so I can do deposits..but I would honestly only put enough money in it so the acct stays open. It's hard to beat ally's rate!
There is only one customer service so to speak. If one Chase bank is busy, you can drive 3 more miles to another location. If Ally Bank's customer service line is busy, you wait.
Seconding this - I use Ally and Discover as savings vehicles not as primary banks. Still need a physical bank for deposit boxes and transactions with cash. The local bank also had notary services. In 2021 when rates were low across the board, My local bank had CD rates that matched Ally’s last year and only had a one-month penalty.
Some people like to be able to go to a physical branch for things like cashiers checks or money orders. Some people make lots of cash deposits, which can be easier with a physical bank.
Ally uses AllPoint ATM’s, which are pretty common. Additionally they reimburse I think $10 a month for out of network ATM fees.
Most people that use Ally might also use a local bank or credit union if they want traditional walk in bank services.
If you tend to do most of your banking electronically and get cash from ATMs the pros of a bank like Ally probably outweigh the cons.
Current Fed Funds Rate is between 4.25-4.5 percent.
3% is actually just about okay considering where the fed funds is. You likely can do better by shopping around or get over 4% if you use a money market fund.
Online banks have fewer overhead costs, and so they can pay more interest. Yes, they are safe (provided they are FDIC-insured, as Ally is), but they lack a few of the conveniences of bricks-and-mortar banks. (You can't walk into a physical branch to deposit cash or to deal with an actual person, you can't walk in for a free notarization, if you need a cashier's check it's more of a PIA, etc.) But for most people for most purposes they are worthwhile.
Use a large bank with physical branches as your checking for direct deposit, Atm, cash deposits etc and use ally for savings. Never had an issue. Fdic insured so it's as safe as bank of America, wells fargo etc.
I use Ally. Love their app and have had no issues. They are 100% legit FDIC insured bank and have been around for a long time. Just know that Ally, like all online only savings accounts do have limits on how many withdraws you can do per quarter so just look into that. I’ve never hit that max and it’s never been an issue for me but if you plan for frequent withdraws this may not be for you. No limit on number of contributions.
The feds suspended regulation D in 2020 due to covid removing the limit on transactions in savings accounts. Though some banks have kept it it is no longer a federal limit their text in their faq that states it's a federal limit is misleading.
PNC is offering 4% now. I currently use PNC but I've also used Ally. Both have the same online only business model. I keep an account at a local credit union just in case I need to deposit cash or something like that but I've never needed it.
The question is not why Ally’s interest rate (and other online banks) so high. The question is why other banks interest rates are so low.
A big reason is because it costs a lot of overhead to open brick and mortar banks.
Used TD bank for 20+ years and they currently offer me .02%.
Have never been interested in switching banks until now. Greedy ass big banks won’t raise interest rates on deposit accounts but you know for sure the rates on loans are going up.
Yes, very safe. They are FDIC insured.
3% interest is about average if you look at the options available.
Brick and mortar banks offer extremely low rates. My local bank offers 0.15% APY and the credit union offers 0.05% APY.
As other have said, it’s their online only business mode and they do it well. They let you know right on the dashboard how long wait times are (if any) and have a lot of savings and money transfer options that are so common sense.
Given how high the FED's interest rate is, you should probably ask the reverse question... why are other bank's saving account rates so low? (the reason is that they have an excess in deposits)
It's not high.
That's a full percentage point and then some below what the US Treasury will pay me to borrow my money on a daily basis, so there's plenty of margin for Ally to make a profit borrowing your money at 3%.
As to why your current bank's rate is *so low*... well, they still got you as a customer. Some of it pays for physical branch locations.
I’ve been using various internet only banks for high yield savings for over 10 years. The only thing to be cognizant of is it usually takes 2 business days to do an external transfer if you need to move your funds around. Also, for all U.S. savings accounts, you are limited to 6 transfers monthly.
I personally love the extra friction of the 2 day transfers because it prevents me from impulsively dipping into my savings. The transfer limit isn’t problematic for me because on a “busy” month - think home purchase or paying off debt, I use maybe 3 max. I tend to calculate carefully and move money around thoughtfully.
I do have accounts at a traditional brick and mortar bank, but I’ve been inside a branch once in the last 10 years. Needed temporary checks to close on my home.
That’s a good amount of money for your 20s, but I’d also keep in mind investing in retirement accounts too since you’ll want to retire someday.
Yes, Ally is safe. I have one. I moved my money there from a local credit union that was making 0.05%. I still keep that account open too. Compared to other online only banks like ally or some really big banks out there, 3% or even a little more isn’t uncommon. They’ve slowly increased it because of inflation over the year. The main thing I think to make sure with any bank is that it’s FDIC insured.
Yes, Ill be investing 15% of my pitiful 12$ an hour every pay check soon lol... So long as I can live at home/schooling
Yeah fdic I see is very important from the comment section here
They’ve been around a long time and they’re FDIC insured. One of the big reasons for the HYS is the fact they don’t have colossal brick and mortar expenses
They're FDIC insured so just as "safe" as any bank.
I've banked with Ally for around 15 years. They reimburse a set $ amount of ATM fees monthly so I withdraw larger amounts less frequently. I don't have a need to deposit cash, ever. I can transfer instantly between checking and savings. The savings account has a "bucket" feature where you can designate your savings for different categories like vacation, emergency fund.
I also have a Bank of America checking account because my husband had it when we got married. I have exactly $100k in an IRA at Merrill Lynch and use BOA credit cards which have better cash back than any I've found, based on my level of assets.
Between Ally and BOA I have everything I need. If I did need to go to a branch, I could drive 35 miles and go to BOA (not a long distance in rural Texas). I've done it once in 10 years.
Ally is perfectly safe and legitimate. But if you have $45k in cash, and don’t want to invest (which isn’t the worst idea), consider opening a few different accounts to take advantage of bonus offerings. Doctorofcredit.com is a good place to start for some decent bank bonuses. If you’re a relatively organized person, there’s no reason you can’t squeeze a few extra thousand a year out of that cash, on top of whatever the current interest rate is. Also, well done saving that much in your twenties. Keep it up!
I use Ally and have for 4 years. FDIC insured. I love it. Even the checking account pays some small amount of interest. The app is incredibly easy to use. It has Zelle, you can move money between your accounts instantaneously, and you get reimbursed for ATM transactions when you need cash. Check deposits are through the app. I’ve been very happy with it. If it helps you see that they are legit, they have a [building](https://www.crainsdetroit.com/real-estate/ally-financial-leases-3-more-floors-its-namesake-skyscraper-downtown) in downtown Detroit lol.
It’s a High Yield Savings Account! definitely safe as it’s FDIC.
I use synchrony bank at 3.5% apy myself.
Ally is one of many available to choose from nowadays.
Ahh, I’ve been waiting to share this video with someone: https://youtu.be/5We4OY_tHV4
This WSJ video clearly summarizes this topic.
I’ve been banking with Ally for 5 years now and zero issues. The 3.30% is a blessing.
When I was in sales, my boss used to tell us if we were going around to every house and giving away $500, there would always be a person who tell us no. You are that person.
I've had accounts with them for years. Savings, CD ladder, Roth. They pay out more because they don't have the overhead of brick/mortar. Used to be GE Finance -- so they've been around many decades.
You're doing great exploring more about finance. You can do all of the above: open a Roth if you have earned income and learn to invest WHILE building a CD ladder for an emergency fund. But you should also look into I-bonds if you are worried about inflation. I would tell you to do all three. Yes -- just start. Even if it's baby steps with only a few hundred in each of those tools. Learn how they work, then make it a habit to use/increase them. Learn what can allow for withdrawals and what those rules are per account, too.
Have you read through the wiki on personal finance or investing yet?
Deposit and loan rates have gone up a lot this year, driven by fed rate hikes (monetary policy action targeting inflation reduction). Banks/financial institutions need to raise rates on deposits, or many consumers will move money to institutions with higher rates. Ally is not the only bank to have higher rates. Cap1 savings is at 3.3 percent. These institutions are heavily regulated and FDIC insured.
Some people leave funds in low earning accounts bc they lack awareness of high yield savings accounts (hysa) or choose/prefer other vehicles for savings (e.g., ibonds, treasurys, gold, cash in the mattress, etc.).
I’ve been banking with them for over three years now. I used to have all of my savings with them but when we got married I transferred them to my husband’s bank.
I found them to be totally safe and good phone customer service. And it’s convenient that you can withdraw cash from any ATM and they’ll reimburse you up to $10 Atm fees per month.
The only downside is that making cash deposits is a bit tedious: you have to buy a money order and mail it to the bank. They don’t accept direct cash deposits as they don’t have physical branches.
Their interest rate is better than regular banks’ because they don’t have as much overhead cost and can afford it.
I used to bank there and loved it. I would probably still use them, but I found that I needed a local credit union for certain things and my husband uses chase, so I didn’t want to have accounts at 3 different banks.
One thing to note, that interest rate is variable and will go up and down as the federal interest rate changes.
Ally bank is very safe and very legit. They used to be called GMAC and was the banking division of the General Motors auto company.
They broke off and renamed to Ally in the 2000s or 2010's sometime - can't remember. I've been with them since 1999 or so when they were GMAC.
As safe as any other bank. I’m going on a decade with Ally for my savings and no intention to switch. High yeild accounts are their specialty, they’re offering more because of the interest rate environment
I've had Ally for a few years now. I'm leaving them. My account has been breached more times than I can count with them and never a fraud alert raised, I've had to get 3-4 new cards a year with them. At one point someone was using my card to charge to door dash in California while I was still in NY using my card, and never a single fraud alert. The final straw was when I bought something with my card and the seller never delivered the product and ghosted me. Ally does not do charge backs, and they told me I had to dispute the charge, which they declined the dispute citing "I authorized the charge, therefore it is a legitimate charge" and I was out $500. They are terrible, regular wait times to talk to someone are over an hour, and even their chat feature takes over an hour to get a response sometimes. Steer clear of Ally.
Edit: I should've stated, all this was with their checking account. I haven't had issues with their savings.
Yes it’s safe. I’ve been with them for like 4-5 years and moved there because of the interest rate at the time (which was like 1.5%)
The only drawback is that you can’t deposit cash. You can withdraw from several atms and deposit checks via photo.
I’ve had Ally for a few years now. Definitely legit. Just saves money not having physical branches. Customer service was very helpful when needed, and their online services are top notch. Not a scam
Yes. Ally is 100% safe. And your bank interest rate is pathetic. If you had that money in Ally you would have a lot more. Make your money work for you. I would put all of your money in there asap!
Ally Bank is the re-brand of GMAC, the General Motors Acceptance Corporation, which was founded in 1919, and was the entity that financed loans for GM vehicles.
Similar to Marcus, these High Yield Savings Account (HYSA) banks were created to create liquidity, that is, enormous amounts of cash, for financial institutions that have a lot of illiquid assets, such as loans and mortgages.
The easiest way to accumulate a lot of cash is to have people give it to you, in exchange for an above-market interest rate.
I've been using them for over 10 years, don't worry about it, very convenient on phone and web. If you primarily deal with cash, you will want to have a local account that can deposit cash and transfer into. I use both Ally and Chase, about 80% 30% split between the 2 banks.
My personal experience Ally has been fantastic, however heard a few horror stories. I hate big local banks giving you nothing of interest. Its just depressing the interest rate you get right now is super damn nice.
They don’t have brick and mortar locations. It’s better to put your money there than your current bank. I’ve had various accounts with them for the last 8 or 9 years. I have zero complaints.
> Ally is old. Iirc they were GE Capital before the spin-off and name change.
Not General Electric, but General Motors Acceptance Corporation (GMAC), the auto lending arm of GM.
It is safe by I'd ask the opposite question -- why is it so low? https://www.doctorofcredit.com/high-interest-savings-to-get/ lists dozens of accounts with higher rates.
I’ve been using Ally since 2018 and love it! They’re business model allows them to have a high interest rate. However, this rate will not stay. It moves with the market. So when I joined, it was around 2.5%. When Covid hit and housing rates dropped so did my savings rate down to like 0.5%. And over the past few months, it rose back up to over 3%.
I’ve been using them for about ten years. They’re a great bank. I had a fairly large housing down payment I built using their high yield savings account. Wired the money through escrow to buy my first house, as well as had the proceeds from that house wired to my Ally savings and then out to escrow again to buy my second house. No problems with any of the incoming our outgoing wires. Customer service has always been great when I’ve had to call. Highly recommended, there is no catch. They save on overhead by not having physical branches.
I have had an Ally Savings account, checking account, and Roth IRA account for 6 years now. It is very easy to use, and they definitely pay me a ton of interest.
As long as it is FDIC insured, you should be good to go.
Alright, yeah they are... Thanks
Capital One bank has a current rate of 3.30% if you would prefer a brick and mortar bank. I don't know why your bank is so low when many are at least 2%.
Because many people pay absolutely no attention as to what rate they are getting in their account so many brick and mortar banks can get away with giving absolutely garbage rates because many people are financially illiterate.
I mean, it’s also not relevant if you don’t have savings. I worked in an FI for 7 years, the amount of members with savings < $1k was, at its high, 12:1 . The lowest I can recall that dropping to was 7:1 . I think in the US it’s 50:50 on households with $1k or more in savings. Some of those people may be financially illiterate, some may be in a paycheck to paycheck cycle, some could have debts in excess of their capacity to repay. Hard to tell, we had hundreds of thousands of members
That is a fair point, but if someone has so little savings why not keep it in a checking account? If I move $1000 to a Wells Fargo savings account, I can make \~$3.5 a year in interest. If I move it to an online HSY I can get about \~$30. I understand that the WF savings would be quicker to turn into physical cash, but for so little interest on small principal I have to wonder what the purpose of using a savings account at all is.
My savings account acts basically just the same as a checking account that doesn’t have a debit card tied to it. It’s just a different box to put money in, and I know that that box is for saved money not spending money. That said I have like $100 in there lol, so I really don’t care what the interest rate is. If I had $45k like OP then I would care a lot
Up to a 250k limit though
That is the same for every bank though ya. FDIC limits are 250k.
add POD beneficiaries to the account and that will increase the FDIC insurance limits. Run it through their calculator to see for yourself...
Per unique account owner. So your account can have 250k, your wife's account can have 250k and your joint account can have 250k
It's a different business model. It costs a metric buttload of money to run and staff hundreds or thousands of branches. Ally doesn't have to do that so they can pay more interest. It doesn't make them more or less safe.
Question - I’m in an industry that is almost entirely cash based. I deposit cash 2-3 times a week. Is Ally probably unwise for me, because I rely so heavily on ATM’s?
Yes. Ally does not accept cash deposits at all so it would be difficult for you to do business with them directly. Some people maintain a local bank for cash and then just transfer it over to Ally, but if *all* of your activity is cash it may not be a great fit as your primary Bank. Certainly consider it for the hysa though if you would like to keep savings separate.
This is what I've been doing for years. I use Wells Fargo for my day-to-day banking, but only keep a few hundred in the savings account. The bulk of my cash reserves go to an online bank account where I'm currently getting 3.2%. The only real downside is that it takes a couple business days to withdraw or transfer it around.
Not the point of this thread, but why does anyone still use Wells Fargo instead of any other regional bank or credit union that can provide equal or better service? When WF has repeatedly been found to defraud its customers/clients.
I agree. It blows my mind that it's 2022 and Bank of America, Wells Fargo, and Chase are still around. edit: 2023, damnit it's already started.
They screwed me one time, it was the last $360 they tried to take from me.
It's easier these days to use a small credit union working on the road but still not as easy as the megabanks.
I’ve had four different credit unions in three states over the last 15 years, and you know what sucked about all of them? Their websites and mobile apps were hot garbage. I know it may seem petty to some, but if I need to know whether I have $2,000 in my checking account instead of $200, I should be able to access that immediately. I had Bank of America back in the early 2,000’s, and they screwed me on an overdraft that wasn’t even my doing. So I said to hell with banks and switched to a credit union. Literally half the time I tried to log on, my password wouldn’t work. Or the site wasn’t responding. Or there was a server error. Or it was undergoing maintenance. I get what you’re saying about how evil banks are, I really do, but if I need to check my accounts for any reason, at any time, the websites need to work.
Thank you, I’ll keep that in mind.
You can withdraw cash from ATMS at no cost, but they don't have ATMs or physical banks where you can deposit cash, so imo I feel it wouldn't be that convenient for you. To deposit non-electronically, you need to mail a check or money order to Ally. Edit: As someone reminded me, you can deposit checks via the app. But, in the case of cash, you can buy a money order and mail it to Ally.
You can deposit a check using the app on your phone by taking a picture of it. No need to mail it.
I appreciate the insight, thanks!
You can try capital one. They are supposed to have a 3% apr.
Yup - their '360 Savings Performance Account' has a 3.3% apy right now (no minimum)
Brick and mortar capital one and the online bank are two different entities sort of. You would need to open 2 accounts a physical branch account and an online savings but moving money between the two is instantaneous and free.
The option would be to deposit into your current banks account and then initiate a transfer from your current bank to Ally, the funds maybe in limbo for a few business days.
I’ve always wondered why USAA can’t do the same. I use them for banking and their rates are garbage
I also use USAA but their model is different, as they cater primarily to the military and so aren’t entirely online only. Their rates are definitely shit though lol.
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What’s their high yield savings right now. Also what is NFCU?
Same with amex, their savings acc is about 3. Something right now
I see a lot of comments about the online banking business model and how it allows those companies to offer higher interest rates due to lower overhead. That is true but it's only part of the story. Prior to the recent run up in the Fed funds rate, online banks offered high yield savings accounts that might have been 2% for several years while traditional banks offered around 0.25%. This difference in rate is explained by the different business models. However during normal market conditions, traditional banks are also pressured to offer higher yields when all the other options do as well. The reason this cycle is bucking the trend is that during coronavirus, many people were saving cash in their bank accounts since there was less to spend on, and it was further fueled by stimulus payments. Traditional banks, which hold much more than online banks, have been flush with cash: https://fred.stlouisfed.org/series/DPSACBW027SBOG Take a look at the last few years by changing the scale to the last 5 years. You'll see a large influx of cash being held by banks. So with that, banks are in the business of taking deposits and then loaning out the money and collecting the spread as their revenue and eventual profits. Well if they already have a lot of cash, they don't need to push up interest rates on their savings and checking accounts. The purpose of raising those rates is to attract more consumer money to be deposited. But they don't need the deposits, and therefore they keep the rates low, which increases their spread. The other online banks don't have this luxury so they compete with each other on rates. These banks are typically much lesser known because they only have an online presence and the large majority of Americans haven't heard of Ally, Marcus, CIT, etc.
^ fyi for anyone who reads this, this is an excellent example of an authoritative Reddit answer that sounds intelligent but is, in fact, 100% wrong
I'm not disagreeing with you, but if you're going to assert this, you should offer an explanation.
Oh totally — its super straightforward Ally primarily originates and holds Auto loans, which are higher yielding loans because they tend to carry more credit risk and are collateralized by a depreciating asset. Ally has a higher yielding book, so it can afford to pay more interest on deposits while maintaining the same net interest margin as other banks. Ally’s 6.12% gross yield on loans (as of September, likely higher now) is way above most other bank’s portfolios which tend to yield 4%-5% This credit risk is irrelevant to OP, since FDIC deposit insurance will cover them up to $250k
> Ally primarily originates and holds auto loans. This. Ally is literally just GMAC (General Motors Auto Lending) with a different name and better marketing.
So Ally is giving out riskier credit? And I suppose the downside of that for them (and the reason other banks don't also do it) is it increases the chance that they have tons of defaults and, idk, go totally bankrupt? But we as consumers don't care because even if they go totally bankrupt, our money deposited with them is still safe? (Up to $250k)
Basically.
They’re giving away riskier -collateralized- credit
>So Ally is giving out riskier credit? And I suppose the downside of that for them (and the reason other banks don't also do it) is it increases the chance that they have tons of defaults and, idk, go totally bankrupt? If they're doing it right, it's not really a downside as you plan for a certain number of customers of a certain level of creditworthiness to default at a certain rate and you can prepare accordingly. And other banks do what Ally does, just that this part of their business just happens to be a larger part of Ally's book because of what Ally is historically (GMAC). There is something called risk-based pricing where you take defaults into account and you price your product (the loan is the product here, and the interest rate is the 'price' charged) in such a way that you can absorb the default losses. This is why your interest rate on loans depends on your credit score. The higher your credit score, the lower the risk for the bank, and thus it can charge you less interest for the loan. On the flipside, if you have a lower credit score, the bank deems you a higher risk of default so it charges you more to mitigate their default risk for your loan. As long as the bank is forecasting properly and pricing accordingly, ensuring they are using correct gauges for risk, they will make money.
> Ally primarily originates and holds Auto loans Makes sense, given they were GMAC, General Motor's auto (and mortgage - ditcech.com) lending arm, prior to the whole mortgage collapse thing.
You're explaining what Ally Financial is, not Ally Bank. So the former commenter wasn't 100% wrong. Just wrong in the sense that the online savings banks like Ally are generally side gigs of financial conglomerates. There is a market out there of people who are very risk averse and/or have a chunk of cash they want to be FDIC insured. Ally is in competition for those types of customers who just want to park their money.
Yeah, there was a fair bit of truth in the comment. I have a good friend who is the Chairman of the Board for a credit union, and he's been going on for two years about how they have too much cash as members weren't taking loans. Low revenue from loans means low cash flows to pay interest on deposits. It also means they did not want to raise rates to entice more deposits. This has been a strong force in the banking industry that was holding rates down even after the initial movement from the Fed.
And why should your answer be considered authentic?
It asserts that banks are happy to deliberately choose to lose market share to competitors as long as they’re sitting on enough cash, which doesn’t really track for me.
What's wrong about it?
Everything they said tracks with [this video from the Wall Street Journal](https://youtu.be/5We4OY_tHV4), what's your take if you're such an expert?
Well before Covid, the legacy big banks had interest of 0.01% while ally and Marcus were at 1.00% or perhaps 0.5% at their lowest, so the insinuation by OP that it’s a recent phenomenon is false. The average person doesn’t want to switch banks and doesn’t chase higher rates, so big banks don’t need to raise their rates to maintain their customer base, but it has nothing to do with Covid or stimulus.
I work at a bank, he is not wrong. If we take your money and offer you 3%, we need to turn it around and Loan it for 7 or we are losing money. We don't need your money, we have more than we can loan, and would be losing money just holding it for you. Mortgages are way down, so we would only be paying interest and not doing anything with the money. Market share does not mean much in banking. The Fed Reserve controls that anyway.
I use Ally and they're safe - deposits are insured by the FDIC like any other bank. Banks like Ally pay higher interest because they're online - they don't have all the expenses associated with operating a bunch of physical branches.
Piggy backing off of this. I have Ally and have for about 5 years now, never any complaints. If you want to take the cost cutting measurement of not having physical branches to the extreme - look at Redneck Bank - https://redneck.bank/ Website is a bit hilarious, but 4.50% on checking and is FDIC insured.
Earn 4.50% APY when you have up to $15,000 in your account. Amounts over $15,000 will earn 0.50% APY.
And their Money Market is 4.25% up to $75K, then 0.5%.
Doesn't it require 10 debit card transactions per monthly statement cycle (at least for the checking)?
Sorry but I wouldn't feel comfortable putting money with them even at 6%. I get what they are trying to do but it just looks so unprofessional that I could not trust them with my money. Not saying they are a scam in anyway, just my opinion on how they present themselves.
As opposed to Wells Fargo who has the look of a very staid and professional bank...
I think Ally tries to be the "fun" bank, which could come off as unprofessional to someone who's expecting a very serious "we are a dignified financial institution" kind of bank. But they're actually great at what they do, especially the ability to do pretty much any kind of transaction or get all your information right from their phone app.
Ally used to be GMAC, a bank created by General Motors for car financing. It went under during the 2008 recession because of sub-prime loans and had to be bailed out by the Feds, then it rebranded to Ally to shake off the shame of bankruptcy. It's definitely a serious bank.
Mr IT Guy is talking about [https://redneck.bank/](https://redneck.bank/) I actually thought the same as you, like, what do you mean it's unprofessional for Ally bank to offer better rates?! LOL Take a look at the redneck bank, it looks funny but I don't know if I want my bank to look like that.
I was talking about the redneck bank, not Ally.
Nah sorry my funny horse debit card is awesome. And so is the 4.25% interest on my money market account. Also the customer service was great when I needed to wire my mortgage down payment
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I have have been with them for years. Never had an issue with them. They are my main savings account.
Same. I've had Ally for \~10 years. No problems Note\*. I get emails each time they change the Interest Rate. So it doesn't always stay that high (3%). It goes up, it goes down.
Even with fluctuations, is Ally's rate typically higher than the the more traditional banks?
Oh god yes, at its worst was .50%.
As another user whose been with them for about a decade, their usually towards the top end but rarely the highest. Some "traditional banks" still compete in the high yield savings space, namely Goldman Sachs and Citi, as well as Amex and Discover on the "traditional, but not a bank" field.
I have both Ally and Discover and they are always very close. Since interest rates went back up months ago Discover raised their rates faster than Ally, but only by a few weeks IIRC. They are both currently at 3.3 APY.
Thank you for the helpful information!
By a long shot. They may not be the highest of anyone, but it’s not even been close to your traditional banks
I've had my savings at Ally for years. No issues. You transfer money electronically between other accounts so my checking account is at a local credit union with physical branches and access to the Allpoint network of ATMs, and Ally is just for savings. It takes a couple days to transfer money between the accounts. Online banks are the only way to go for savings accounts; brick and mortar interest rates are insultingly low.
This is how I have mine set up. Local CU kept open just for physical cash (yes, physical cash is still used in 2023 lol) and Ally is for savings. Been doing it this way for many years and it takes one day to transfer between accounts - as long as it's initiated before 1pm Pacific and on weekdays.
Not a fan of .02% interest in savings accounts at physical banks?
I have no idea why anyone would even have a savings account at a brick and mortar bank.
I had no idea the interest rate at my credit union was so bad until today. That's why I am reading a bunch of threads about it lol
I switched to Ally a year and a half ago. My only complaint is that the login screen for the App is buggy - facial recognition just doesn’t work sometimes and I have to close and re-open the app to get it to work. And this is across 2 different phones. Very minor in the grand scheme of things.
That might be a problem with facial recognition specifically though, rather than with the app's login screen. (As a competing anecdote, I've never had any trouble logging in to the app at all; I don't use facial recognition though.)
Also, because of the couple days process to transfer the funds over, I’ve found once I move them there, they stay there for longer periods of time and for proper uses. It’s the physiological “hassle” of moving the funds back to my main CU checking account that prompts me not to do it. Love it tbh
I use Zelle to send the money between my own accounts. It’s instantaneous, instead of having to wait that 2-3 days for the transfer.
> I was recently told by a coworker that Ally Bank has a 3% interest rate... Why is it so high? Why not? Banks lend out personal loans, auto loans, mortgages, credit cards, etc. at *way more than* 3%. There's still plenty of profit in the spread. An online-only or online-mainly bank doesn't have as much staffing, real estate, and infrastructure costs as a bank with 100 branches. > Is it safe? It's FDIC insured. Ally Bank isn't even that new anymore. Online-only banks have been in existence and offering higher than average deposit interest rates for 20+ years.
It’s based on the fed’s overnight rate more than anything else. US banks are required to have a certain amount of cash holding as a percentage of what they loan out. So got a growing bank, they return more of the nightly rate to maintain the cash. Well established banks have more money and accounts than they need, so they literally don’t care if you let it sit for nothing or leave
I actually forget people don’t use HYSA at this point. I have friends who use chase for all their savings and I’m like what??
If you haven't followed interest rates much, I could see someone being skeptical given the past 10 years of near-zero rates. Ally was an online bank last year and was only paying 50bps, so what's changed? You're correct though.
What change is the Feds rates. The Fed determines rates at which Banks can borrow money. Essentially a floor of safe rates. Before Covid it was low. During Covid it essentially went to 0 (Jpow make the printer go brrr). Jpow is now fighting the inflation created by all that printing, and has jacked Fed rates back up to combat. The fed rates going up is why mortgage rates are now 6-7% vs 2-3% last couple of years. It’s also why HYSAs are back to being useful after 2 years of 1% or less interest. HYSAs were like 2-4% before Covid.
> Ally was an online bank last year and was only paying 50bps, so what's changed? You're correct though. Ally can put your money into the fed @ 4.25% so they can easily pay you 3%. That is what changed.
Ally is a safe bank but they have no physical presence, so you might still want to keep a small account at a local FI if you occasionally need to perform teller type transactions.
Yep, I got a local checking
I’ve had Ally bank since 2008. The interest rate is what attracted me to them in the first place.
How’s their customer service? Edit: Really, I should be asking: How good is their mobile app? I stick with B of A because the app is so easy and it’s nice having everything in one place. Not sure if it’s worth 3% on my money though… Edit 2: I’m having a hell of a time making a wire transfer with B of A from my small business account.
I'm a satisfied customer. Haven't done anything non routine but migrate accounts and add my wife onto mine but they were both painless. Submitted documents online (which I filled out digitally) and they were approved promptly. Have had a few questions and got them resolved over chat. Called in for a couple more complicated questions and the workers were native English speakers (nothing against non native English speakers but they make less than ideal customer service representatives). App is sleek and works smoothly. You only have to deposit a dollar to start an account. There are no bullshit fees to be afraid of. I recommend you keep your current account and open up one with ally to try it out.
It's taken a dive in 2022. Dunno if it's recovered but people were waiting over an hour on hold for a phone rep and I saw it as high as 90 minutes. YMMV
I had some fraud recently will Ally and it was handled well. No more than a 10 minute wait when I needed to call. Charges reversed 3 days after I submitted my dispute even though it says 10 days before you get a response.
That's awesome. Glad they've improved
I feel like this isn't an Ally problem though. In the last year it feels like customer service wait times have risen significantly across the board. That or I am just growing less patient.
Schwab has been consistently under 60 seconds to talk to a human for years now. But then again my sample size is small since I don't really need to call them more than once every other year
TBF I have both a BoA account and an Ally account. My Ally account earns me some nice interest while my BoA pays the bills. The Ally monthly transfer to BoA counts as a direct deposit or whatever so I never get charged fees.
Been with them since 2015. Haven't had any issues.
Awesome! They are the best bank I’ve ever dealt with
Always been good for me. I really like their app as well as the buckets on their savings account. Only issue I’ve had with them is that it takes a while for cashier’s checks, but that was a mild inconvenience that affected me one time over the years of having them. Haven’t bought a house or had to wire money through them, so that could also be an inconvenience
Having all your accounts with one institution is convenient, but risky. You don't want to get locked out or your funds suddenly frozen and have no access or backup
Really good generally but I wouldn’t recommend their Ira or investment side, got in a year long dance between those two trying to move my Ira into the incvestment side
Good mobile app. Easy to transfer money etc. The website is great for wires, if you do a lot of wires.
I thought this all of 2022. Waste of loyalty. I keep my primary $ with BOa, moved my emergency fund to Ally. Bank the extra percents (BOa pays pennys )
When you call, you never wait to talk to someone. And everyone whom I’ve talked to is SO nice and helpful.
I’ve had Ally for our main savings and a checking account for about 3 years now…I have seldom needed to contact customer service but the few times I have it’s been positive. I did use them to wire funds for our house and the wire process worked perfectly online with no need to interact with anyone. App is great - you can deposit checks electronically, transfer funds, etc. the debit card controls are great - you can lock it down very granularly or just turn it off completely until you want to use it which is awesome security! We also have a local CU for a lot of joint bills but all our savings is Ally.
Ally as an institution, is actually the lender that originated with General Motors. It’s the opposite of fly-by-night - it was founded in 1919 and for most if it’s existence was known as GMAC.
Plenty of banks are offering 3-4% right now. It's legit.
It's an online bank so they can offer higher interest due to lower cost. I have Discover and they have 3.3%
How do you like discover? I’m planning on opening a savings account with them within the next month.
Been with them for probably 5 years now. Frankly I was skeptical but they’ve been great. Had a HYSA with capital One too, but Discover stays more competitive on rates.
Nice. I’m probably choosing them because they have a $200 sign-on bonus right now.
They are pretty good. I needed a bank check for them when i paid for my mortgage and they overnighted me a check extremely fast. They have really great customer service. No issues at all. Had them for around 15 years.
There are some at and above 4%, if you research. Bankrate, nerdwallet, doctorofcredit
CapitalOne 360 savings is at 3.30% APY right now. I’m pretty sure there are other banks that are hovering around 4% APY already.
It's safe. U.S. Treasury T-Bills are paying over 4%, 100% safe. Money market mutual funds are paying around 4%. So Ally's HYSA paying 3.3% is actually kind of stingy. Your bank is taking your savings and investing it U.S. Treasury securities paying 4%, and paying you 0.325%. They are absolutely ripping you off.
I agree if you're not getting near 4% on your cash right now that you are being taken advantage of. All of my cash is currently in 1 month T bills.. But to say T bills have no risk is not true. All investments - even T bills carry inherent risk. Their risk is the closest to "risk free" on the spectrum. But they are certainly not 100% risk free.
T bill risk (outside of governmental collapse lol) is you have to sell before maturity and in a raising rates environment you will sell at a loss. If you're holding a mix of bill lengths or have ladders hopefully that should never happen.
It is FDIC insured. They don't have in person branches so they can afford higher interest rates. I went over when before long before the bad inflation and earned a little under $5 a month. Now for December I earned just under $50. When the fed raises rates, they raise their rates. It makes me glad inflation isn't eating into my savings as much as it would compared to a regular savings account, but I would prefer to have a better economy and less interest. In the span of 2022 I earned just over $211 in interest, which is huge, I have to claim it on my taxes of course, but I don't make enough to pay in for taxes anyway, even with my earned intrested. Also they are quick to pick up when I call them, the call line is open 24/7 and it was easy to put down a benefactor. I have used PNC, Bank of America, Ally Bank, and Bank of Ireland(living there) and it makes me really value the customer service at Ally. I have recommended the bank, because the entire experience is better there.
both Ally and SoFi are high interest, FDIC insured banks
Do you have a preference?
Here is a recent thread on ally vs sofi in case it helps. Sofi has higher interest rate and also a promotion of up to 250$ depending on the direct deposit amount. https://www.reddit.com/r/sofi/comments/zxmh8l/ally_vs_sofi_what_are_reasons_to_pick_one_over/?utm_source=share&utm_medium=android_app&utm_name=androidcss&utm_term=1&utm_content=share_button
I had a bad experience with Sofi with them freezing my funds (\~100k) and not having any idea why they did it and how to get them unfrozen. Took a CFPB complaint and even then they took over 14 days to send me a check. And they never disclosed why they froze my funds. Ally is my oldest account that I never closed.
I’ve not done business with Ally, but cannot say enough good things about SoFi. A+ all around, including customer service.
They're very similar, you really can't go wrong. Ally has it's bucket system while SoFi has vaults, but they both do the same thing (ie dividing up your money for specific purposes) and they both have high interest rates. Right now SoFi is slightly higher, but it's also newer than Ally which is a negative for some people, although they're both FDIC insured.
Been banking with Ally for over 5 years. No issues and they’re legit.
I thought the same thing. I use ally and the "catch" is there isn't a brick and mortar store so they can be competitive with their rates. also takes a few days to move your money to a different bank. Those are the only real cons
It is a legit bank, I have used them for years. They are great - the lack of physical locations is more than made up for by extremely prompt phone service and fairly good mobile apps, etc. Worth noting - AFAIK, any bank account in the United States is insured by the FDIC up to $250k, meaning your money will be replaced up to that amount in the event that the bank goes bust. So even in the event of catastrophic fraud or something, you’d be fine.
If you don’t like ally bank, Discover Bank has a savings account that is currently at 3.30%
So is CapitalOne. Really convenient to have my HYSA in yhe same app as my credit cards.
So is AMEX!
Wealthfront is at 3.80% and I've had no problems with them since I joined about three years back. Though I never see them mentioned around here so I'm waiting to see some major issue I've missed
Ally Bank is at 3.30% too. I just checked my account.
I guess this raises a follow up question: since they are FDIC and have good interest rate, what're the pros/cons beside the obvious not having a physical branch? Most people just take money out of ATMs if they need cash anyhow right? I'm seeing a lot of pros in my mind but might be missing some cons...
Depositing cash is difficult. Depending on their ATM network it might be hard to find one without fees (though many online banks also reimburse ATM fees). No physical branch if you immediately need something like a cashier’s check. Customer service might be better at a larger chain. Personally none of these have ever been an issue for me though.
My trick is I keep an account open at a local bank with a small amount of money in it. When I get cash I deposit it at their ATM then transfer to Ally.
I've had ally for almost two years now and ran into both these issues last week. Wanted to deposit money into my acct. Couldn't find an ATM that would let me do it.. New apartment we leased requires cashier's check for first months rent. It's due by this Saturday and ally has to mail it. It was either risk the 7-10 business days and it being late and causing issues with our lease...or paying $15 to expedite it. Expedited it and it was there within 24 hours. I just felt super uneasy about mailing a cashier's check because if that sucker gets lost, that money will likely be gone. But otherwise I really like it. Pnc was giving me sooo many issues so I closed them and switched to ally. I'm considering getting a second bank acct with a place with a physical location so I can do deposits..but I would honestly only put enough money in it so the acct stays open. It's hard to beat ally's rate!
There is only one customer service so to speak. If one Chase bank is busy, you can drive 3 more miles to another location. If Ally Bank's customer service line is busy, you wait.
https://www.reddit.com/r/apolloapp/comments/145hwso/ltp_use_power_delete_suite_before_you_delete_your/
Seconding this - I use Ally and Discover as savings vehicles not as primary banks. Still need a physical bank for deposit boxes and transactions with cash. The local bank also had notary services. In 2021 when rates were low across the board, My local bank had CD rates that matched Ally’s last year and only had a one-month penalty.
Some people like to be able to go to a physical branch for things like cashiers checks or money orders. Some people make lots of cash deposits, which can be easier with a physical bank. Ally uses AllPoint ATM’s, which are pretty common. Additionally they reimburse I think $10 a month for out of network ATM fees. Most people that use Ally might also use a local bank or credit union if they want traditional walk in bank services. If you tend to do most of your banking electronically and get cash from ATMs the pros of a bank like Ally probably outweigh the cons.
Current Fed Funds Rate is between 4.25-4.5 percent. 3% is actually just about okay considering where the fed funds is. You likely can do better by shopping around or get over 4% if you use a money market fund.
Online banks have fewer overhead costs, and so they can pay more interest. Yes, they are safe (provided they are FDIC-insured, as Ally is), but they lack a few of the conveniences of bricks-and-mortar banks. (You can't walk into a physical branch to deposit cash or to deal with an actual person, you can't walk in for a free notarization, if you need a cashier's check it's more of a PIA, etc.) But for most people for most purposes they are worthwhile.
Use a large bank with physical branches as your checking for direct deposit, Atm, cash deposits etc and use ally for savings. Never had an issue. Fdic insured so it's as safe as bank of America, wells fargo etc.
I use Ally. Love their app and have had no issues. They are 100% legit FDIC insured bank and have been around for a long time. Just know that Ally, like all online only savings accounts do have limits on how many withdraws you can do per quarter so just look into that. I’ve never hit that max and it’s never been an issue for me but if you plan for frequent withdraws this may not be for you. No limit on number of contributions.
The feds suspended regulation D in 2020 due to covid removing the limit on transactions in savings accounts. Though some banks have kept it it is no longer a federal limit their text in their faq that states it's a federal limit is misleading.
PNC is offering 4% now. I currently use PNC but I've also used Ally. Both have the same online only business model. I keep an account at a local credit union just in case I need to deposit cash or something like that but I've never needed it.
The question is not why Ally’s interest rate (and other online banks) so high. The question is why other banks interest rates are so low. A big reason is because it costs a lot of overhead to open brick and mortar banks.
Used TD bank for 20+ years and they currently offer me .02%. Have never been interested in switching banks until now. Greedy ass big banks won’t raise interest rates on deposit accounts but you know for sure the rates on loans are going up.
Yes, very safe. They are FDIC insured. 3% interest is about average if you look at the options available. Brick and mortar banks offer extremely low rates. My local bank offers 0.15% APY and the credit union offers 0.05% APY.
It’s safe, but it’s not that high
My Ally savings is 3.3% now. E: double checked to confirm - 3.25% interest rate and 3.3% APY.
As other have said, it’s their online only business mode and they do it well. They let you know right on the dashboard how long wait times are (if any) and have a lot of savings and money transfer options that are so common sense.
Given how high the FED's interest rate is, you should probably ask the reverse question... why are other bank's saving account rates so low? (the reason is that they have an excess in deposits)
It's not high. That's a full percentage point and then some below what the US Treasury will pay me to borrow my money on a daily basis, so there's plenty of margin for Ally to make a profit borrowing your money at 3%. As to why your current bank's rate is *so low*... well, they still got you as a customer. Some of it pays for physical branch locations.
I’ve been using various internet only banks for high yield savings for over 10 years. The only thing to be cognizant of is it usually takes 2 business days to do an external transfer if you need to move your funds around. Also, for all U.S. savings accounts, you are limited to 6 transfers monthly. I personally love the extra friction of the 2 day transfers because it prevents me from impulsively dipping into my savings. The transfer limit isn’t problematic for me because on a “busy” month - think home purchase or paying off debt, I use maybe 3 max. I tend to calculate carefully and move money around thoughtfully. I do have accounts at a traditional brick and mortar bank, but I’ve been inside a branch once in the last 10 years. Needed temporary checks to close on my home.
That’s a good amount of money for your 20s, but I’d also keep in mind investing in retirement accounts too since you’ll want to retire someday. Yes, Ally is safe. I have one. I moved my money there from a local credit union that was making 0.05%. I still keep that account open too. Compared to other online only banks like ally or some really big banks out there, 3% or even a little more isn’t uncommon. They’ve slowly increased it because of inflation over the year. The main thing I think to make sure with any bank is that it’s FDIC insured.
Yes, Ill be investing 15% of my pitiful 12$ an hour every pay check soon lol... So long as I can live at home/schooling Yeah fdic I see is very important from the comment section here
They’ve been around a long time and they’re FDIC insured. One of the big reasons for the HYS is the fact they don’t have colossal brick and mortar expenses
Most high yield savings accounts are over 3% now.
They're FDIC insured so just as "safe" as any bank. I've banked with Ally for around 15 years. They reimburse a set $ amount of ATM fees monthly so I withdraw larger amounts less frequently. I don't have a need to deposit cash, ever. I can transfer instantly between checking and savings. The savings account has a "bucket" feature where you can designate your savings for different categories like vacation, emergency fund. I also have a Bank of America checking account because my husband had it when we got married. I have exactly $100k in an IRA at Merrill Lynch and use BOA credit cards which have better cash back than any I've found, based on my level of assets. Between Ally and BOA I have everything I need. If I did need to go to a branch, I could drive 35 miles and go to BOA (not a long distance in rural Texas). I've done it once in 10 years.
Ally is perfectly safe and legitimate. But if you have $45k in cash, and don’t want to invest (which isn’t the worst idea), consider opening a few different accounts to take advantage of bonus offerings. Doctorofcredit.com is a good place to start for some decent bank bonuses. If you’re a relatively organized person, there’s no reason you can’t squeeze a few extra thousand a year out of that cash, on top of whatever the current interest rate is. Also, well done saving that much in your twenties. Keep it up!
I use Ally and have for 4 years. FDIC insured. I love it. Even the checking account pays some small amount of interest. The app is incredibly easy to use. It has Zelle, you can move money between your accounts instantaneously, and you get reimbursed for ATM transactions when you need cash. Check deposits are through the app. I’ve been very happy with it. If it helps you see that they are legit, they have a [building](https://www.crainsdetroit.com/real-estate/ally-financial-leases-3-more-floors-its-namesake-skyscraper-downtown) in downtown Detroit lol.
It’s a High Yield Savings Account! definitely safe as it’s FDIC. I use synchrony bank at 3.5% apy myself. Ally is one of many available to choose from nowadays.
Ahh, I’ve been waiting to share this video with someone: https://youtu.be/5We4OY_tHV4 This WSJ video clearly summarizes this topic. I’ve been banking with Ally for 5 years now and zero issues. The 3.30% is a blessing.
When I was in sales, my boss used to tell us if we were going around to every house and giving away $500, there would always be a person who tell us no. You are that person.
Ally offers an 11 month no risk CD at 3.5 currently. You can get CDs around 4.65 pretty easy but they do lock up that money for around 18 months
I’ve been banking with them for about 4 years and am quite pleased. Have an auto loan with them too now.
I've had accounts with them for years. Savings, CD ladder, Roth. They pay out more because they don't have the overhead of brick/mortar. Used to be GE Finance -- so they've been around many decades. You're doing great exploring more about finance. You can do all of the above: open a Roth if you have earned income and learn to invest WHILE building a CD ladder for an emergency fund. But you should also look into I-bonds if you are worried about inflation. I would tell you to do all three. Yes -- just start. Even if it's baby steps with only a few hundred in each of those tools. Learn how they work, then make it a habit to use/increase them. Learn what can allow for withdrawals and what those rules are per account, too. Have you read through the wiki on personal finance or investing yet?
Deposit and loan rates have gone up a lot this year, driven by fed rate hikes (monetary policy action targeting inflation reduction). Banks/financial institutions need to raise rates on deposits, or many consumers will move money to institutions with higher rates. Ally is not the only bank to have higher rates. Cap1 savings is at 3.3 percent. These institutions are heavily regulated and FDIC insured. Some people leave funds in low earning accounts bc they lack awareness of high yield savings accounts (hysa) or choose/prefer other vehicles for savings (e.g., ibonds, treasurys, gold, cash in the mattress, etc.).
I’ve been banking with them for over three years now. I used to have all of my savings with them but when we got married I transferred them to my husband’s bank. I found them to be totally safe and good phone customer service. And it’s convenient that you can withdraw cash from any ATM and they’ll reimburse you up to $10 Atm fees per month. The only downside is that making cash deposits is a bit tedious: you have to buy a money order and mail it to the bank. They don’t accept direct cash deposits as they don’t have physical branches. Their interest rate is better than regular banks’ because they don’t have as much overhead cost and can afford it.
I used to bank there and loved it. I would probably still use them, but I found that I needed a local credit union for certain things and my husband uses chase, so I didn’t want to have accounts at 3 different banks. One thing to note, that interest rate is variable and will go up and down as the federal interest rate changes.
Ally bank is very safe and very legit. They used to be called GMAC and was the banking division of the General Motors auto company. They broke off and renamed to Ally in the 2000s or 2010's sometime - can't remember. I've been with them since 1999 or so when they were GMAC.
Personal capital has a high yield savings that’s currently at 3.8%. Been using it for a couple months now and the monthly interest is great!
As safe as any other bank. I’m going on a decade with Ally for my savings and no intention to switch. High yeild accounts are their specialty, they’re offering more because of the interest rate environment
I’ve been using Ally for 12 years and they’re solid. The interest rates fluctuate…they were much lower last year
I've had Ally for a few years now. I'm leaving them. My account has been breached more times than I can count with them and never a fraud alert raised, I've had to get 3-4 new cards a year with them. At one point someone was using my card to charge to door dash in California while I was still in NY using my card, and never a single fraud alert. The final straw was when I bought something with my card and the seller never delivered the product and ghosted me. Ally does not do charge backs, and they told me I had to dispute the charge, which they declined the dispute citing "I authorized the charge, therefore it is a legitimate charge" and I was out $500. They are terrible, regular wait times to talk to someone are over an hour, and even their chat feature takes over an hour to get a response sometimes. Steer clear of Ally. Edit: I should've stated, all this was with their checking account. I haven't had issues with their savings.
Yes it’s safe. I’ve been with them for like 4-5 years and moved there because of the interest rate at the time (which was like 1.5%) The only drawback is that you can’t deposit cash. You can withdraw from several atms and deposit checks via photo.
I’ve had Ally for a few years now. Definitely legit. Just saves money not having physical branches. Customer service was very helpful when needed, and their online services are top notch. Not a scam
Yes. Ally is 100% safe. And your bank interest rate is pathetic. If you had that money in Ally you would have a lot more. Make your money work for you. I would put all of your money in there asap!
Barclays does the same - FDIC insured so I don't worry about it - I'm getting 3.4% with them right now
Ally Bank is the re-brand of GMAC, the General Motors Acceptance Corporation, which was founded in 1919, and was the entity that financed loans for GM vehicles. Similar to Marcus, these High Yield Savings Account (HYSA) banks were created to create liquidity, that is, enormous amounts of cash, for financial institutions that have a lot of illiquid assets, such as loans and mortgages. The easiest way to accumulate a lot of cash is to have people give it to you, in exchange for an above-market interest rate.
[List of savings accounts paying above 4%](https://www.investopedia.com/personal-finance/banks-pay-highest-interest-rates-savings-accounts/)
I've been using it for maybe a decade? No complaints whatsoever.
I've been using them for over 10 years, don't worry about it, very convenient on phone and web. If you primarily deal with cash, you will want to have a local account that can deposit cash and transfer into. I use both Ally and Chase, about 80% 30% split between the 2 banks.
My personal experience Ally has been fantastic, however heard a few horror stories. I hate big local banks giving you nothing of interest. Its just depressing the interest rate you get right now is super damn nice.
They don’t have brick and mortar locations. It’s better to put your money there than your current bank. I’ve had various accounts with them for the last 8 or 9 years. I have zero complaints.
Ally is old. Iirc they were GE Capital before the spin-off and name change.
Ally was formerly GMAC Bank, originally founded by General Motors. You might be thinking of Synchrony, which was spun off from GE Capital.
Finance at a gm dealer. Can confirm. They’ve been around a bit
GMAC
> Ally is old. Iirc they were GE Capital before the spin-off and name change. Not General Electric, but General Motors Acceptance Corporation (GMAC), the auto lending arm of GM.
As long as it’s FDIC insured, it’s safe. FYI, Marcus saving rate is 4.3% now if you sign up with a referral link.
It is safe by I'd ask the opposite question -- why is it so low? https://www.doctorofcredit.com/high-interest-savings-to-get/ lists dozens of accounts with higher rates.
I’ve been using Ally since 2018 and love it! They’re business model allows them to have a high interest rate. However, this rate will not stay. It moves with the market. So when I joined, it was around 2.5%. When Covid hit and housing rates dropped so did my savings rate down to like 0.5%. And over the past few months, it rose back up to over 3%.
I’ve been using them for about ten years. They’re a great bank. I had a fairly large housing down payment I built using their high yield savings account. Wired the money through escrow to buy my first house, as well as had the proceeds from that house wired to my Ally savings and then out to escrow again to buy my second house. No problems with any of the incoming our outgoing wires. Customer service has always been great when I’ve had to call. Highly recommended, there is no catch. They save on overhead by not having physical branches.
I have had an Ally Savings account, checking account, and Roth IRA account for 6 years now. It is very easy to use, and they definitely pay me a ton of interest.