Bank Review: The Pros and Cons of Ally

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Ally Bank made a splash in the online banking world in 2009, but does it continue to deserve a glowing review? Formerly doing business as GMAC Bank, the company rebranded as Ally Bank in 2010 with a promise to provide better service and higher interest rates to customers.

Ally offers several products with competitive rates, including savings and checking products. Because its online presence reduces overhead, the bank is in a position to make rates more attractive than those of some other banks. Still, it pays to explore the pros and cons of Ally Bank to determine if it can sufficiently fulfill your banking needs.

Overview of Ally Bank

The main attraction at Ally Bank is the APY associated with deposit products such as checking accounts, savings accounts, money market accounts, and certificates of deposit (CDs). For up-to-date information, visit the Ally Bank website, as rates change often.

When you apply for an account, the bank will check your credit, even though you may not intend to borrow. It wants to verify your identity and try to predict if you’ll use your overdraft protection plans responsibly. If you don't have good credit or have a rough financial history, this prospect may cause you some anxiety.

Interest Checking

Ally has an interest checking account that allows you to earn money while maintaining liquidity. The interest checking account doesn't have a limit on withdrawals, but other types of accounts do. If you're unfamiliar with interest checking, learn the basics.

You’ll get free checks from Ally Bank, and you can reorder basic checks at no cost. This distinguishes it from other financial institutions that charge customers for check reorders. Also, there are no minimum deposit requirements or monthly fees at Ally Bank. Online bill pay is free, and you’ll get a debit card for ATM withdrawals and purchases.

CD Accounts

Ally gives customers decent rates on CDs accounts and a variety of options. It has a "no penalty" CD that allows you to take money out early without paying fees. Its high yield CD pays more but has traditional CD penalties if you cash out before maturity. Learn more about CD investments, if you need a crash course in the basics.

Other Types of Deposit Accounts

Ally also offers a savings account and a money market account. The main difference is that the money market account includes a debit card. Keep in mind that, by law, you can only make six withdrawals as electronic transfers or purchases per month from these savings accounts.

If your main goal is to earn interest, use a savings account. You'll have less access to cash, but the APY is highest. The money market account pays less than savings, but it's easier to get funds out if you need to do so. Plus, you'll have a debit card that you can use up to six times per month.

Ally Invest

Ally's investment services are provided by Ally Invest, which features a number of self-directed and managed investment products for both the novice and seasoned investor. Invest in stocks, bonds, mutual funds, futures, and more, and take advantage of Ally Invest's research and educational tools and low brokerage fees.

Pros and Cons of Ally

When Ally Bank started operations, its advertising campaign was controversial. Its goal seemed to be criticizing other banks and setting itself apart as a friendlier, different kind of bank. It also used TV ads that disturbed some viewers. Ultimately, this bank makes money the same way that other banks do, although banking with Ally comes with some definite advantages and disadvantages, depending on your banking needs.

Ally keeps fees relatively low and there are no monthly account fees, but certain transactions may trigger fees, for example, returned deposit items ($7), excessive money market account transactions ($10 per transaction), and overdraft items paid or returned ($25 per item; limited to one fee per day), as of November 17, 2018.

You'll find limited account options at Ally Bank, including one type of savings, checking, or money market account and three types of CD accounts. Such basic products may suit your needs. If you want an array of selections in every category, Ally may not be a good choice for you.

Ally is an online-only bank and has no brick-and-mortar branches. This could present a problem for you at Ally or any other principally online bank if you make a lot of cash deposits. On the other hand, there's no charge to use any of the 43,000-plus ATMs in the Allpoint U.S. network, and Ally reimburses up to $10 per statement cycle for fees charged at out-of-network ATMs. In addition, you get free checks, postage-paid mailing envelopes for deposits, the use of Ally Mobile, account management via Alexa, free inbound wire transfers, and access to Zelle.

Ally Bank also provides 24/7 customer service via phone, Facebook Messenger chat, or Twitter. The customer service reps get mixed reviews, but if you like talking to a real person and don't find it necessary to make trips to your bank, you may find Ally Bank attractive.

Ally's Competitors

Ally has a consistently high overall rating across the internet, but it pays for you to understand how a few of the bank's main competitors measure up in several key areas.

Axos Bank: Another highly rated online-only bank, Axos Bank was formerly known as Bank of Internet USA. In addition to top-of-the-line customer service, Axos offers a mobile banking app and a suite of banking products, such as auto loans, mortgage and equity loans, personal loans, CDs, IRAs, business accounts, savings accounts, and several types of checking accounts. You can also use any ATM throughout the U.S. for free, depending on the type of account you have. As of November 18, 2018, you can get up to 1.25 percent APY with Rewards Checking and 1.30 percent APY with the High Yield Savings account.

Neither has balance requirements or charges overdraft or maintenance fees, but some of the bank's checking and savings products do, so check account details carefully.

Capital One 360: Capital One 360 is considered to be a leading online bank, but it still operates some branches and 34 Capital One Cafes as of October 2018. To compensate for the small number of physical locations, you can access a nationwide network of more than 39,000 fee-free Capital One and Allpoint ATMs or use the Capital One Mobile app for most of your banking needs. The bank's financial products include personal and business checking and savings accounts, retirement accounts, credit cards, auto loans, and online investing in stocks, ETFs, and mutual funds.

As of November 18, 2018, no monthly maintenance fees, cash back, or interest is associated with Capital One's checking accounts, and the charge for overdrawing your account is $35. There are four routes to avoiding this fee, but you'll be charged $9 per returned check no matter what. The basic 360 Savings account doesn't require a minimum balance and offers a 1.00 percent APY. The 360 Money Market account gives you a 2.00 percent APY, but you have to maintain a balance of at least $10,000 to get it.

Discover Bank: Discover is a top online bank that's known for its competitive rates, but it has a limited number of products, including a cash-back checking account (1 percent cash back), an online savings account with no minimum balance requirements or monthly maintenance fees, a money market account (1.85 percent APY for balances under $100,000), and two CD accounts as of November 18, 2018. The bank has only one branch, in Greenwood, Deleware, but gives you access to the Discover Mobile app, which allows you to do your banking from anywhere, and more than 60,000 free ATMs in the United States.

If you're not careful with your checking balance, you may be socked with a $30 overdraft fee, although you can have one fee per year waived.

More: Best Savings Account Interest Rates

The Balance offers a comprehensive comparison of the best savings account interest rates. We teamed up with Bankrate to survey approximately 4,800 banks and credit unions nationwide. Depending on how much money you’re looking to deposit, this list will show you some of the best options available today. All of the banks and credit unions listed are insured by the FDIC or NCUA.