Spoiler Alert: I have 3 Ally Savings Accounts, so my relationship with this online bank is pretty strong!
Money wise, my 20s are defined by my reckless spending, my 30s, however, will be defined by how well I’ve saved. Though, I didn’t anticipate that a global pandemic would influence this quite so much!
My interest in Ally was first piqued when my fiance and I got engaged and my fiance and I were looking for a joint savings account to start saving money for the wedding. We ended up going with HSBC online savings account. It’s fine, it does what we need it to do, but it’s not exactly intuitive, and makes transferring money a chore when you don’t have automatic transfers set up.
So when I decided to move my emergency fund from my brick and mortar bank (Citibank) to a high-yield savings account (HYSA), I went back to my earlier research and opened an account with Ally.
The interest rate when I first joined was around 1.70%APY (Annual Percentage Rate). However, because of the recession the interest rate has dropped to 0.80%. You can read more about how and why interest rates change here. But even 0.80% is way higher than my Citibank savings interest rate of 0.01%. (Every online HYSA is going through the same fluctuation in the APY, not just Ally.) The way that online savings accounts work is that they don’t have the normal overhead costs associated with physical locations that most banks have, so when you keep your money (FDIC insured) with an online bank they are able to offer higher interest rates. Plus, if you continue to put money in these accounts, eventually the interest rates will bounce back and you’ll earn more in interest then. You don’t need any money to get started, but you should start adding money to a newly opened account as soon as you’re able within the month of joining because otherwise they will close the account for inactivity, but once the money is in the account it will not be closed.
So the interest rate is good (-ish for the reasons mentioned above), the account is FDIC insured, but what makes it better than HSBC? For starters, the interface is much neater and easier to navigate. The home screen allows you to easily see the total savings between accounts, and the navigation bar has access to bank activity, bank transfers, check deposits, and more.
Since opening the online savings account, I also opened two other savings accounts, which took approximately 2 mins to do. One is for my cat, Jada, as her little emergency fund, and the other I started during the pandemic to save my student loan payments that are currently on pause. It is so easy to open accounts, re-name them, and be able to see where you’re money is going in a way that makes it easier to track goals. Speaking of goals, Ally also compatible with Mint if you track goals through that app.
Ally also offers free money transfers (up to six), which is standard. There are no monthly fees, or any hidden costs. The user agreement is pretty clear about what costs money, for example, a wire transfer is $20, but you won’t need to pay this if you do a bank to bank transfer that takes a couple days (like when I transfer money from my Citi checking to the Ally account). It depends on what you want to use the account for. Also, because it’s an online savings, there is no ATM access.
You will receive a 1099-INT tax form from Ally if you earned over $10 in interest in the year prior, so just keep that in mind when you do your taxes!
Hope that covers everything! I’m a big fan of HYSA in any form as a way to earn interest on your money. There are tons of options for online savings accounts, but I’ve been really pleased with how easily I can use this service. As a disclaimer, I’m not affiliated with Ally, and I’m not a financial planner, so please do research and pick a bank that works best for you.