Consumers have to keep tabs on many accounts and platforms to stay on top of their finances. It’s easy to feel overwhelmed by logging into multiple accounts and staying on top of the money you have distributed across many platforms. Some banks only have checking and savings accounts, and some brokerage firms only let you invest and do nothing else.
Although that’s the norm, Ally Bank is challenging the consumer experience. This online-only bank has brokerage accounts, bank accounts, credit cards, mortgages, auto loans, personal loans, and other essentials. Most people can find everything they need within Ally Bank, but does that mean it’s right for you? This Ally Bank review will cover some of the highlights so you can make a well-informed decision.
What is Ally Bank?
Ally Bank is an online bank that offers the resources a traditional bank provides. Individuals can easily borrow, save, and invest through Ally Bank. You can set up critical accounts under a single platform instead of having to log into several platforms for incomplete experiences.
Is Ally a Legitimate Bank?
Ally Bank is a legitimate bank that is insured by the FDIC. Ally Bank is a member of the FDIC, unlike some of the other online banks. It is common for online banks to partner with an FDIC-insured bank to offer FDIC protection. These are fintech companies rather than online banks. However, Ally Bank is directly insured by the FDIC. Ally Bank has been around since 2009 and serves approximately 11 million customers.
Ally Bank invests in advanced online security to keep your information safe. The company has been a reliable bank for many consumers and continues to deliver top-tier financial products.
How Does Ally Bank Work?
Ally Bank has a lot of great resources and financial products to get you started. These are some of the highlights.
Ally Bank
You can deposit money into your checking and savings account on Ally Bank. Consumers can create multiple accounts to distinguish funds for each financial goal. You can get high yields through Ally Bank’s savings accounts, CDs, and money market accounts.
Ally Digital and Online Banking
Ally Bank is a virtual bank, meaning no physical branches exist. You can withdraw cash from ATMs instead of local branches. You can make fee-free withdrawals at over 40,000 Allpoint ATMs in the United States. Ally Bank has a mobile app that allows you to see your account balances while on the go.
Ally Invest
Investors can get exposure to various securities, such as stocks and bonds. Using robo portfolios and self-directed trading through Ally Bank is also possible. You can even open up traditional and Roth IRAs. Ally does not support cryptocurrencies at this time but does address most individuals’ needs through its investing options.
Ally Home
Get the funds you need to buy a house. Ally Bank has several financial products that can help you get a good home. You can receive a home loan quote and get pre-approved within a few minutes. Ally has competitive rates and terms for its mortgage products. Jumbo loans are available for people who need non-conforming loans for larger purchases. The maximum loan amount for a jumbo loan is $4 million.
Ally + Ladder
Term life insurance allows you to reduce your monthly premiums while getting good protection. It’s a valuable alternative to whole life insurance, which has no expiration date but has much higher premiums.
Ally Bank joins forces with Ladder to offer competitive term life insurance policies. Premiums get more expensive as you get older, but some people only need term life insurance when they start families. It’s a protective measure in case a spouse passes away and the survivor needs to support a family on one income.
You can apply online in a few minutes and change your coverage at any time. Ally and Ladder make term life insurance easy so you can get the protection that you need.
Ally Bank Products and Services
Ally Bank offers several products and services that can enhance your finances. These are some of the top products to keep in mind.
Spending and Savings Accounts
Spending and savings accounts make it easier to manage the money that you make and save. Spending accounts are fee-free, with no monthly maintenance fees or overdraft fees. You can also access over 40,000 fee-free ATM networks and get paid up to two days sooner. This account has built-in tools to help you stay on top of your expenses and avoid accidental overspending.
Ally Bank is upfront about its fees and has no hidden fees. You will only receive fees for expedited delivery (i.e., your debit card), outgoing domestic wires, and if you request detailed account research. The spending account has a 0.25% APY.
The Ally Bank Savings account has a much higher APY. You can earn 4.25% APY on your money regardless of your balance amount. Ally Bank offers personalized recommendations and allows you to organize your money with savings buckets. You can set up recurring transfers and use roundups to grow your savings account automatically. Ally Bank offers 24/7 customer support for its bank accounts and other financial products.
Money Market Accounts
Money market accounts allow you to grow your savings faster with a 4.40% APY. You can deposit checks into your money market account remotely and withdraw funds through Ally Bank’s network of Allpoint ATMs. Interest compounds in this account every day. You won’t have to worry about monthly maintenance fees or minimum balance requirements.
Ally Bank has a free calculator that shows how much you can earn on your principal. The bank compares its APY with PNC Bank and Citibank to demonstrate how much more you can earn with its money market accounts. Ally Bank has three tiers for its money market accounts that are based on your end-of-day balance. Your APY depends on which of these tiers you fall into:
- Less than $5,000
- Between $5,000 and $24,999.99
- $25,000 or more
A higher balance will result in a higher APY, up to 4.40% APY. The money market account offers a variable interest rate, which can change at any time.
The high-yield savings account offers 4.25% APY for any account balance, which may make it more enticing for people with lower balances. However, a balance above $25,000 results in a higher APY with the money market account. You can withdraw funds from a money market account at any time to address expenses.
Certificates of Deposit (CDs)
A certificate of deposit allows you to lock in an interest rate over a specified duration. While high-yield savings accounts and money market accounts have variable rates, these accounts give more stability. Some of Ally Bank’s CDs do not have penalty fees for early withdrawals, but you should check before opening an account. Ally Bank does a good job of outlining its no-penalty CDs from the others.
Individuals can choose CD terms ranging from three months to five years. If you opt for a lengthier term, the 3-month CD only has a 3% APY, but you will find much higher rates in the 4% and 5% APY range. The highest APY is 5.15% on the 18-month CD. Ally Bank CDs do not have monthly maintenance fees, and your money is insured by the FDIC.
If interest rates go up, Ally Bank lets qualifying customers raise the rate on their CDs. Consumers with 2-year terms can raise their rate once if interest rates increase. Customers on the 4-year term can raise their rate twice.
Individual Retirement Accounts (IRAs)
Ally Bank offers traditional IRAs and Roth IRAs. Traditional IRAs are optimal for people who want to reduce their tax burdens right now and pay taxes on withdrawals. Roth IRAs are more suited for people who want to pay taxes now so they do not have to pay taxes on capital gains and dividends that accumulate in the retirement account. Ally Bank also helps consumers roll their retirement plans into a single IRA.
Investors can also choose from robo portfolios, self-directed trading, and personal advances. Robo Portfolios do the work for you and make trades within your portfolio. The robo portfolio has a 0.30% annual advisory fee. Self-directed trading puts you in the driver’s seat and allows you to buy and sell stocks, ETFs, and options. You can also receive personal advice for an annual advisory fee between 0.75% and 0.85%. You must have at least $100,000 in investable assets for personal advice.
Investors can open up individual retirement accounts even if they currently contribute to 401(k) plans. You cannot contribute to a Roth IRA if your income is too high. However, you can use the backdoor method and convert the funds from a traditional IRA into a Roth IRA to work around the income limit. The IRS tends to raise contribution limits for traditional and Roth IRAs each year.
Mortgage Loans and Refinancing
Ally Bank can help you purchase a home or refinance your existing mortgage. Ally Bank does not charge any lender fees and lets you get pre-approved in as little as three minutes. Ally Bank can close on a loan up to 10 days faster than the industry average while providing reliable support throughout the process. You can choose a fixed-rate or a variable-rate mortgage. If you need a jumbo loan for a large home, you can borrow up to $4 million. Fixed-rate mortgages vary from 15 to 30-year terms.
Refinancing an existing mortgage can give your budget more breathing room and help you address other expenses. Housing is the highest expense for most people, and a refinanced mortgage can make it more manageable. Consumers should compare rates, terms, and monthly budgets before committing to a refinance.
Ally Bank currently does not provide home equity loans or lines of credit. You would have to use a cash-out refinance to tap into the equity you have built up in your home. If you need to use your home equity without changing the terms of your current mortgage, you may want to consider another lender.
Ally Bank also does not currently offer FHA, VA, or USDA loans. The lack of an FHA loan is more significant for first-time homebuyers who do not have the best credit scores. Getting an FHA loan is possible even if you have a 500 credit score. The minimum credit score for a conventional mortgage is 620.
Auto Loans and Refinancing
If you want to buy a car or make your monthly auto loan payments more affordable, Ally Bank can help. You can finance and refinance vehicles for business or personal use. Ally Bank offers flexible terms with competitive interest rates.
Ally Bank customers can receive personalized APR and monthly payment options online in minutes without any impact on credit scores. You also won’t have to worry about any application or document fees. Ally Bank offers GAP insurance for eligible loan customers to minimize the cost if a car gets lost, damaged, or stolen.
Consumers can use the Ally Bank Monthly Car Payment Calculator to assess how much they can pay each month. You can enter your finance amount, APR, and term length to calculate your monthly payment. Knowing this information in advance can help you decide if you need to add more months to the back of your auto loan.
Personal Loans
Ally Bank offers personal loans to help you cover emergency expenses and other costs. The online bank prioritizes financing options for medical treatments & procedures along with repairs & renovations. Ally Bank gives personalized financing solutions to give you more flexibility.
Investment Accounts
Investors can buy stocks, ETFs, options, bonds, mutual funds, and other assets. Ally Bank currently does not enable cryptocurrency trading. However, investors can get exposure to the digital asset through funds and stocks that offer indirect exposure to cryptocurrencies.
Investors can increase their risk and potential returns by opening margin accounts. The interest rate varies based on the size of your account. An account that exceeds $1 million has an 8.50% interest rate for its margin. Any account with less than $10,000 in funds gets a 13% margin rate, which is the highest level. Margin rates are variable, so they can change if market conditions shift. Margin rates are usually lower than unsecured credit card interest rates and personal loan rates.
Ally Bank Account Features and Details
These are some of the details you should know before opening an account.
Requirements and Eligibility
Ally Bank will request some basic information before you can open your account. You will have to provide your name, ID, Social Security number, date of birth (you must be 18 years or older), home address, occupation and contact info. These requirements are in line with what you can expect from other banks.
Rates and Fees
Ally Bank has competitive rates and fees and is upfront about any costs you may incur. Ally Bank doesn’t have some of the most common banking fees, such as overdraft fees and monthly maintenance fees. You can get 4.25% APY for a savings account, 4.40% APY for a money market account, and up to 5.15% APY for a CD.
Online Application Process
Ally Bank has a straightforward application process that only takes a few minutes. After providing your basic information, you can proceed to create spending and savings accounts. If you click on one of Ally Bank’s tabs or financial products, you will be invited to open an account if you do not already have one.
Funding your Account
Once your account is open, you can link another bank account to Ally Bank and transfer funds. You can also change your payment method at work to ensure future payments go into your Ally Bank account.
What are the Pros and Cons of Ally Bank?
Ally Bank has strengths and weaknesses. These are the pros and cons to consider before creating an account.
Pros
- High APYs: Get up to 5.15% APY on a CD and a 4.25% APY on a high-yield savings account. Higher yields allow your money to do more work for you. Ally Bank has some of the top APYs in the industry.
- Investment portfolios: Decide whether you want to self-trade or receive assistance from a robo portfolio.
- Fewer fees: Ally Bank does not charge monthly maintenance fees or overdraft fees. Ally Bank charges a small number of fees that are easy to avoid. The company lays them out clearly and does not have any hidden fees.
- Vast ATM network: Access over 40,000 fee-free ATMs through the Allpoint network.
- Mobile app: You can download the Ally Bankmobile app and make mobile check deposits.
- Everything is in one place: You can take out loans, invest in assets, and open multiple bank accounts from one central location. Ally Bank can help you stay on top of your finances and save a lot of time.
- Calculators: Ally Bank has several calculators on its website that help you see how much your money can compound over time. These calculators also let you compare Ally Bank against its competition.
Cons
- No physical branches: While some people don’t mind this limitation, others may prefer to do some of their banking at a physical location. Before using Ally Bank, you should determine if you need physical branches for your banking experience.
- No cash deposits: You will have to use another bank if you want to make cash deposits.
- No home equity loans: Homeowners who want to borrow against their home’s values will have to use a cash-out refinance. That means changing the terms of your current home loan even if you are happy with the rate and monthly payment.
Is Ally Bank Right for You?
Ally Bank groups all of your financial needs under a single umbrella. You can borrow, invest, and save in one app. Ally Bank has competitive rates for its loans and savings accounts. Those rates and other features have attracted approximately 11 million customers. Ally Bank continues to grow and reward its customers. You may benefit from using Ally Bank, but it’s not optimal for people who prefer physical banks or do most of their transactions via cash.
How to Get Started with Ally Bank
It’s easy to open an account with Ally Bank. You can visit the website, browse Ally Bank’s accounts, and decide which one you want to create. The online bank will guide you through a simple form. After completing the form, you will have an account with Ally Bank.
