It’s no secret that online banks are disrupting the banking industry by offering higher interest rates on savings accounts. Does this mean traditional savings accounts have gone extinct? Of course not. But if you want your money to work harder for you — and who doesn’t — there’s a better way to earn interest with an online savings account.
An online high-yield savings account works the same way as traditional savings accounts, except that it typically offers a higher interest rate. In some cases, the interest rate is significantly higher than what your current account may be yielding at a brick-and-mortar bank. This may be something to keep in mind if you're saving up for something or you want to build an emergency fund.
In this review, we’ll go over how an Ally Online Savings Account can grow over time, fees you might incur along the way, and how to decide if Ally’s product is a good fit for you.
Best features of the Ally Online Savings Account
The biggest benefit of a high-yield savings account is undeniably the opportunity to earn higher than average interest. Luckily, that’s only the beginning to the amazing benefits you’ll receive with the Ally Online Savings Account.
- High APY: Ally offers an APY (annual percentage yield) that is higher than the national average and compounded daily, which can help your money work harder for you than at most traditional banks. While both types of savings accounts earn interest, the rate of return is almost always higher with the Online Savings Account.
- No minimum balance: There’s no minimum balance to maintain in your Online Savings Account, which makes getting started with savings a little bit easier.
- No minimum deposit requirement: There's also no minimum deposit requirement for your Ally Online Savings Account.
- No monthly maintenance fees: Having no monthly maintenance fees coupled with no minimum balance is a win-win as far as savings accounts go. The money you deposit into your Online Savings Account will truly be saved until you’re ready to withdraw it.
- Direct deposit option: You can save money each time you get paid by directing as much (or as little) of your paycheck as you’d like with Ally’s direct deposit. Setting up this automated way to save could help you grow your account at a faster pace.
- Banking on the go: With the Ally Bank mobile app, you’ll be able to manage your Ally bank account on the go. Using the app, you can transfer money in and out of the account from anywhere in the world on your phone.
These benefits are a sampling of why you might consider opening an Ally Online Savings Account, but there are other reasons why moving your banking services away from traditional brick-and-mortar options might make sense. The biggest reason? You could earn more.
Ally Online Savings Account vs. traditional savings account
Decades ago, you would need to walk into several banks to learn the ins and outs of each before making a final decision. Now you can do so online in just a few minutes.
We did the research for you to see how Ally’s Online Savings Account compares to traditional banks. Here’s a side-by-side comparison of what we found.
|APY||1.10% as of June 16, 2020||0.09% as of April 28, 2020
|Minimum balance||None||Varies by bank|
|Monthly fees||None||Beginning at $5 month; some banks waive fees if certain conditions are met|
|Options for funding the account||Online transfers, direct deposit, wire transfers, eCheck/mobile deposit, mail a check||Same as Ally, plus cash deposits|
|Options for withdrawing from the account||Online transfer, wire transfer, check request, telephone transfer||Online transfer, wire transfer, telephone transfer, cash/ATM withdrawal|
|Withdrawal fees||None if there are less than six transactions in the statement cycle.
$10 if there are more than six transactions in the billing cycle.
|None if there are less than six transactions in the statement cycle.
As low as $5 if there are more than six transactions in the billing cycle.
|Monthly Transaction Limit||Six withdrawals, unlimited deposits||Six withdrawals, unlimited deposits|
|Branch locations||Mobile only||Several nationwide and mobile*|
|ATM Fees||None when using the Allpoint ATM network. Alternatively, get reimbursed up to $10 per month on out-of-network ATMs nationwide.||$3 on average; some charges reimbursable depending on bank|
*Information based on policies held at traditional banks nationwide. Some information may vary by bank from what is presented in the table.
As you can see, the Ally Online Savings Account has many similarities to a traditional savings account — but with a few additional benefits. For example, how many savings accounts have you seen that require no minimum balance and no monthly maintenance fee? Usually, it’s one or the other, crowning Ally a clear winner in these categories.
Key similarities between the Ally Online Savings Account and traditional savings accounts are the number of transactions you’re allowed to make each billing cycle, the ability to make unlimited deposits, and the limitations around being able to make six withdrawal transactions per month before incurring additional maintenance fees.
One drawback to consider for the Ally Online Savings Account is the inability to deposit cash into your account. With cash deposits becoming less popular, this may not be a big deal to you. But if you do routinely need to make cash deposits, you may want to consider opening an account that allows them.
Lastly, if you prefer talking with someone face to face about your banking needs, an online bank may not be the right choice for you, as banks like Ally have no physical locations to visit. That said, Ally does offer customer service assistance 24/7 with real humans through chat, phone, and email, and they pride themselves on short wait times.
Do I get a debit card with the Ally Online Savings Account?
When you open an Ally Online Savings Account, you won’t receive a debit or credit card. To receive one, you’ll need to also open an interest checking account or a money market account.
Is Ally Bank safe?
Banking with Ally Bank is safe, and your Ally Bank Savings Account will be insured by the FDIC (Federal Deposit Insurance Corporation), meaning the same rules apply to your money as if it were at a brick-and-mortar financial institution.
It’s natural to question the safety of a bank that operates entirely online, but in this case, there’s no reason to be uneasy. Ally Bank has several measures in place to protect its customers, including multi-factor authentication, data encryption, and more. If you fear you’re a victim of fraud, the Ally Fraud Hotline is available to assist you at any time.