Ally Bank Review – Complete Guide
In recent years, Ally Bank has grown rapidly. Today, it’s quickly becoming the preferred online bank among millennials.
In large part, this is due to the bank’s generous interest rate, which is 20x the national average. Ally also offers several other enticing features, like flexible auto financing options and a low-cost investment platform.
We don’t expect Ally’s growth to slow down anytime soon.
Choosing which bank to trust with your money is a major decision. To make that decision easier for you, let’s take a deep dive into how Ally Bank works so you can decide if it’s right for you.
What Services Does Ally Bank Offer?
Ally Bank offers numerous types of accounts including:
- Checking Accounts
- Savings Accounts
- Certificates of Deposit (CDs)
- Auto Financing
- Self-Directed Trading
- Home Loans
- Corporate Finance Options
- Money Market Account (MMA)
Here’s the breakdown of Ally’s main services:
Ally Online Banking
Ally Online Bank—the company’s core function—is primarily used for checking and savings accounts. It currently holds over $116 billion in deposits.
In 2017, Kiplinger declared Ally Bank to be the “Best Internet Bank” and “Best for Millennials.”.
Remember, Ally is an online bank and doesn’t have brick-and-mortar locations. So if you earn cash for a living, you’ll have to deposit it at another bank location somewhere else.
Ally Bank CDs
Ally bank promotes that “saving your money is great. growing it is better.” Through their high-yield certificate of deposit accounts, you can earn a 2.25% apr on a 12 month CD.
The great thing about Ally Bank CDs is that you have numerous options as far as term, you can open a CD for as short as 3 months, earning 0.75% on your investment or open one for up to 5 years earning 2.40%.
Ally’s Auto Finance division currently serves over 18,000 auto dealers and has over 4 million customers (i.e., borrowers) throughout the U.S.
The company initially started out as an auto financer and has nearly 100 years of experience in the auto financing game, which explains the sheer volume of their auto transactions.
According to Ally’s website, the company financed one car every 24 seconds in 2018!
Ally Invest is the company’s investment platform. Investors have two options: self-directed trading and managed portfolios.
This division manages over $4.7 billion in assets and has over 250,000 customers.
Ally Home Team offers competitive mortgage rates to homeowners.
One benefit of working with the Ally Home Team is that all of your home-buying documents are easily accessible on any device.
Ally Corporate Finance
The Ally Corporate Finance division offers corporate loans to middle-market corporations in the U.S. that are not publicly traded.
Ally has processed corporate transactions that range from $15 million to $250 million—and they primarily serve the following industries:
- Technology Finance
- Business Services
- Healthcare Capital
Ally Money Market Account
Ally offers a Money Market Account, advertising for you to “increase your earning power. keep your money within reach.” There is no minimum opening deposit, no monthly maintenance fees, and your money is FDIC insured.
When you put your money in an Ally MMA, you could earn as much as 1.00% APY. Your MMA account will also come with a debit card and you will have access to unlimited ATM withdrawals.
What Is Ally Bank’s Interest Rate?
As of October 2019, Ally’s savings interest rate is 1.9%—compared to 0.01% at Chase Bank and Wells Fargo, for example.
Note: Ally Bank’s Savings Account interest rates are not fixed. Like all savings accounts, they fluctuate with the market.
Who is Ally Bank Owned By?
Ally Bank is the consumer-focused banking division of Ally Financial. Believe it or not, Ally Financial initially started off as the General Motors Acceptance Corporation (GMAC) back in 1919.
At the time, the company was focused on providing auto financing to American consumers. Two decades later, GMAC formed the Motors Insurance Corporation and began offering car insurance.
In 1985, GMAC entered into the home financing arena by acquiring two mortgage companies and an $11 billion mortgage portfolio.
In 2000, the company formed its first direct bank: GMAC Bank.
After a series of complicated debt write-offs, mergers, and government interventions, GMAC rebranded itself as Ally Financial in 2010. It hasn’t looked back since.
Is Ally a Safe Bank?
Yes, Ally Bank is 100% safe. Some people might be skeptical due to Ally being online-only—but rest assured, your funds are safe.
In case you’re still skeptical, Ally—which is headquartered in Detroit—is the 19th-largest bank in the U.S., and they employ more than 8,000 people.
Is Ally Bank FDIC Insured?
Yes, Ally is FDIC insured. Your Ally Bank deposits of up to $250,000 are insured by the FDIC.
Note: FDIC insurance only covers bank deposits—not investment accounts. For more on how the FDIC operates, check this out.
Pros and Cons of Ally Bank
- Solid Apps and Online Portal: Tech-savvy account holders will appreciate Ally’s intuitive and easy-to-use app and website. Their app makes it easy to transfer funds to and from your other accounts, send funds via Zelle, deposit checks, and more.
- Very Secure: Being an online-only bank, account security is a major priority. Ally uses two-factor authentication (2FA) for account access, along with many other security protocols that run behind the scenes without the customer’s knowledge.
- Security Guarantee: Further, Ally’s Online and Mobile Security Guarantee ensures you won’t be responsible for any fraudulent transactions. Just make sure to report the issue within 60 days of the transaction’s statement date.
- Auto Financing Specialists: Ally’s roots trace back to the days of the American car revolution. In the early years, the company was financing cars and providing car insurance—long before they were an online bank. With that in mind, their auto financing services are second-to-none.
- No Brick-and-Mortar Branches: If you’re the type of person that likes to walk into a branch and interact with live people, then Ally is not the ideal bank for you. However, Ally’s savings interest rate is so solid that you should still consider using them. You could, for example, keep your checking account with a major national bank and then seamlessly transfer funds from your checking account to your Ally Savings account online.
- No Cash Deposits: If you earn old-fashioned cash for a living, it’s simply impossible to deposit it into an Ally account. You would have to convert the cash to a check and then deposit the check into your account. Otherwise, you can deposit it into another account and transfer it from there.
- Limited Credit Card Offerings: Ally only has one cash back-focused credit card available. The card is issued by T.D. Bank. Clearly, consumer credit cards are not a major focus for Ally, so if you’re looking for a bank that offers a variety of rewards focused credit cards, you’ll have to look elsewhere. (Pro tip: I keep my savings account with Ally, and credit cards with Amex and Chase.)
So, Is Ally Bank Right For You?
If you like to access your accounts online and want to earn the best savings interest rate in the industry, Ally Bank is without a doubt worth considering.
I personally like to use their savings account for my emergency fund. I love how my funds grow roughly 1.9% every month, regardless of how the stock market performs, and with absolutely no effort or risk on my end.
In my opinion, Ally should be a part of every millennial’s banking portfolio. How big of a part depends on your unique circumstances, of course. But poke around, take a look, and see if you like it. I think you will.