Ally Bank, once known as GMAC bank, was previously a part of GMAC Financial Services. This bank has had a name and “image” change and has opted to revamp and improve their brand. They’ve moved in the right direction by taking some positive steps and promising a good variety of banking products at very competitive rates, while making sure they provide strong customer service. Today, this online bank offers products such as an online savings account, certificates of deposit, and a money market account. These accounts are all FDIC insured and covered up to $250,000 per depositor by the FDIC.
After reviewing the rates at other banks, I believe that Ally Bank offers a great option for those who are looking for a new place to keep their funds, given the bank’s relatively higher rates compared to the competition. Here’s a look at Ally’s products:
Ally Bank Review (Formerly GMAC Bank)
#1 Online Savings Account
The Ally Bank Online Savings Account has a current yield of .89% (Updated 1/09/12) APY, which seems generous compared to contenders like Bank of America’s savings account (returning a measly .10% APY) offered in Illinois, or even ETrade’s Complete Savings Account at 0.40% APY. The interest here is compounded daily. In addition, there’s no minimum balance, no monthly fees, and you can open an account with $0. Also note that you’re allowed six withdrawals or transfers per statement cycle at no cost, but you’ll be charged a small fee for each transaction over the limit.
If you haven’t started an emergency fund yet or if you have a specific savings goal in mind, then the Online Savings Account can be a good starting point. Your account is insured and protected by the FDIC.
#2 Money Market Account
Some of us need the convenience of a money market account. With the Ally Bank Money Market Account, you can have a .89% variable APY (Updated 1/09/12) and a free check card. Your first fifty checks are also free. As for ATM fees, Ally Bank won’t charge you; even better, it will refund the first four fees you pay in a month for using another bank’s ATM, up to $6 per month. That certainly gives you some leeway and flexibility to use other ATMs if need be. Convenient!
On the down side, there are withdrawal and transfer limits. If you have a Money Market Account, only three of the six withdrawals you can make each statement cycle (usually per month) can be by check or with your check card at a point of sale. Exceeding the limits means that you’ll be hit with a $10 per transaction fee, so it helps to plan ahead for withdrawals and transfers.
Other fees include: returned deposit item for $7.50, non-sufficient funds for $20.00, and stop payments for $15.00. By comparison, Capital One Direct Banking’s money market account charges $25 for a deposited check return, $25.00 for non-sufficient funds, and $25.00 for a stop payment request, so it would appear that banking at Ally Bank is cheaper and more cost effective.
#3 Three Ally Bank CD Options
You have a few more savings choices with Ally Bank’s CDs: there’s the Classic CD, which has the bank’s highest fixed CD rate with a fixed term; as of today, it’s a 1.00% APY (Updated 1/09/12) for a one-year term. In comparison, the Orange CD at ING Direct has a lower APY for a term of 12 months. Note as well, that the 12 month CD was listed as one of MONEY Magazine’s “Best Money Moves” of 2011.
Like Ally Bank’s savings account, you can open the Classic CD with $0 (you can fund the CD account later) and there are no monthly fees. At maturity, the Classic CD will automatically renew. If you want to withdraw the earned interest, you just need to let the bank know about your intentions either before the maturity date or within the next ten days after maturity.
You’ll encounter some fees if you decide to withdraw your money before the CD matures. It will cost you three months of interest for early withdrawal from CDs with terms of 3, 6, 9, or 12 months. The penalty goes up to 6 months of interest for CDs with terms of 18 months or longer.
The No Penalty CD is another type of certificate of deposit that some savers may prefer. It’s a fixed rate CD with no fees for early withdrawal. Right now, the APY is set at .91% for 11 months (Updated 1/09/12). Like the Classic CD, you can open it with $0. It also compounds interest daily and will automatically renew at maturity.
Here’s the beauty of the No Penalty CD: if you so wish, you can ask for an early withdrawal and get back your entire deposit and interest without having to pay any fees or penalties at any point after the first six days of funding your CD.
Finally, there’s the Ally Bank Raise Your Rate CD, which gives you the option to increase your interest rates if you find yourself facing a rising interest rate climate. There are 2 versions of this particular CD — the 2 year and the 4 year CDs. The differences between the two versions:
- The 4 year CD has a higher rate than the 2 year CD (of course).
- The 4 year CD allows for a two time rate increase, while the 2 year CD allows for a one time rate increase.
#4 Ally Bank IRAs
The online savings and CD options from Ally can also be purchased and managed through an IRA. These products are pretty much what we’ve discussed above, but besides having them available through regular taxable accounts, you can also house them in tax advantaged individual retirement accounts (SEP IRA, Roth IRA and Traditional IRA options). Here’s more information about the IRA products:
#5 Ally Bank Interest Checking
For those who’d like to look into an interest bearing checking account, Ally Bank is offering the Ally Interest Checking account. Here’s what you’ll get with this account:
- Earn a 0.50% APY if you maintain a balance up to $15,000. (Updated 1/09/12)
- Earn interest that will jump to .80% APY if your balance is above $15,000. (Updated 1/09/12)
- Pay no ATM fees.
- Get free bill pay and online banking.
- Receive a free debit card, unlimited check writing and free checks!
- Get free electronic fund transfers, cashier’s checks and more.
- Get access to customer service, 24/7 via phone or online chat.
Ally Bank Has Accessible Customer Service Options
This bank has other notable features that should contribute to your satisfactory banking experience with them:
- They’ve got great customer service: they live in the modern ages as they have options for email, online chat, and a 24/7 phone number! If you need to mail in deposits, you can also send them in through snail mail.
- If you want to review your transactions, know that your account history will show activity going back 18 months. Also, you’ll be able to download transactions into popular money management software programs like Quicken.
- You can also set up automatic transfers, which can bring you closer to your savings goals. With Ally Bank, you can set up auto transfers between your online savings and money market accounts, with the transfers being credited immediately.
Although Ally Bank doesn’t offer checking accounts right now, their selection of savings products with good rates makes it a favorable contender in the banking space.
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