There’s a new national bank competing in the high yield savings account market. Ally Bank offers several online savings options that market-leading interest rates, including an online savings account that requires no minimum opening deposit or minimum balance, as well as a variety of certificate of deposits.
Who is Ally Bank?
Ally Bank is a subsidiary of the General Motors Acceptance Corporation, which began as the financial arm of General Motors and provided financing to auto dealers and consumers. (In 2006, GM sold a majority share of GMAC, so the two companies are now independent of each other). Last year, GMAC became a bank holding company in order to gain access to federal TARP funds. This year, GMAC Bank changed its name to Ally Bank.
As we all know, GM is having its fair share of trouble these days. Even though GMAC Bank and GM are now different entities, the bank decided to change its name to Ally Bank to, well, distance itself from its now distressed cousin. With a new name and FDIC insurance on all deposit accounts to $250,000, Ally Bank is now making waves in the online savings world by offering some no-fee, high-rate savings accounts.
Ally Bank Online Savings Account
The Ally Bank high yield savings account currently offers 0.84% APY (10/21/2013) and has no minimum opening deposit and no minimum balance and no annual fee. Ally Bank’s online savings account has no hidden fees. Finally, Ally Bank clearly advertises that there is a six withdrawal limit per statement cycle (approximately each month). This may seem like a downside to the account, except for the fact that federal law requires this limit on all savings account. (Chances are your existing savings account just put this fact in fine print).
Ally Bank No Penalty Certificate of Deposit (CD)
The high rate on Ally Bank’s online savings account is one thing, but Ally Bank also offers a no penalty certificate of deposit. Typically, banks charge a penalty for withdrawing funds from a CD early. (This is typically three months’ interest on CDs of up to 12 months and six months’ interest on CDs longer than 12 months). Ally Bank’s no penalty CD, by contrast, lets you withdraw funds from your CD anytime without a penalty. (Granted, you can earn a higher rate if you choose a regular CD over the no-penalty option).
Have you had a chance to save with Ally Bank? How was your experience?