Should You Bank at Ally?

Ally is the newest addition to the internet banking trend. ING, HSBC and Emigrant Direct are the three established biggies in the group. So can Ally give them a run for their money? The answer is yes.

Ally Bank seemed to come out of nowhere, but it's actually the new name of the GMAC Bank. Its commercials poke fun at the fact that traditional banks and internet banks charge fees, have introductory interest rates to entice you but then drop later, have minimum balance requirements and restrictive policies, especially for CDs. Ally claims to be different: "We won't deal in half-truths, kindatruths, or truths only buried in fine print." There's no need to worry that this "newcomer" isn't safe. All deposits are FDIC insured up to $250,000 per customer like other banks.

Ally offers three different kinds of savings accounts and a money market account. All of Ally's accounts compound interest daily so you earn money more quickly. They offer traditional CDs at the highest advertised rates at the time this article was published. A one-year CD has an APY of 2.3% and a five-year CD's APY is 3.5%. Ally also offers a no penalty CD. You can withdraw your money any time after the first six days with no fees and you will be given all the interest earned to date in addition to your principal. This is very different than other CDs where you pay either an early withdrawal fee or forfeit the interest earned, or both. It's APY is slightly lower at 2.15% for a 9-month CD (all no penalty CDs have 9-month terms). Both CDs have fixed rates that go into effect when you make your opening deposit.

Ally's online savings account has the highest APY among the major internet banks at 2.0% at the time this article was published. Compare that to ING's 1.5% APY, and HSBC's and Emigrant Direct's 1.55%. You don't have to deposit even one cent in order to open your account. There are no fees and no minimum account balance required in order to earn interest.

Do you need a money market account? Ally's got you covered there too. ING is the only other internet bank to offer a money market account with a debit card. HSBC offers an online payment account for eBill and eCheck-type payments but it does not have a debit card or ATM card. Ally's money market account has an amazing variable rate of 1.85% APY with no minimum balance required at the time this article was published. ING's money market account doesn't even come close unless you have more than $100,000 in your account, and even then it's only 1.65% APY. If you're like most people and have less than $50,000 in your checking account, ING offers a paltry rate of 0.25% APY.

You can link your other bank accounts to your Ally account(s) for electronic funds transfers, but you can go the old fashioned route and use deposit slips and snail mail to make your deposits. Ally even gives you paper checks for your money market account if you'd like (the first 50 are free), in addition to the standard online bill pay and e-check options. Ally offers 24/7 customer service by phone and will return your emails within 24 hours. You can conduct some of your account transactions through email if you need to as well.

If your CDs, savings and checking accounts are earning the weak rates offered by the other internet banks and the brick and mortar banks, Ally is definitely worth looking into. You'll get all the same services and more than you're getting now and more money in interest to boot. Who can say no to that?