Ally Bank Review: A Fresh Start for an Aged Institution

In an effort to recover from the recent economic downturn, Detroit-based company GMAC has launched a brand new bank holding company, aptly named Ally Bank. If you’ve never heard of Ally Bank, it would come as no surprise. This is a brand new moniker for an old business venture, formerly known as GMAC Bank.

Executives hope that the name change, among other restructuring initiatives, will help to turn around the negative image surrounding the dramatic government bailout of the auto industry. With the protection of the FDIC and an optimistic outlook, Ally Bank is developing its own special banking style.

A New Approach to Banking

GMAC’s Ally Bank has more than just a fancy new name; it has a new approach to banking. What sets Ally Bank apart from the average financial institution? This bank realizes that the times are changing. Understanding that technology has revolutionized all industries, Ally Bank has a unique approach to meet the ever-changing needs of consumers. There are several special attributes that set Ally Bank apart from its traditional competitors in the financial sector.

First and foremost, Ally Bank is a 100% online organization. This means that its doors are always open, 24 hours, 7 days a week, to meet customer needs. Customer service agents are also available by phone 24 hours a day. Ally Bank also prides itself in offering a straightforward approach to business. There are no monthly fees, no minimum deposits, no minimum balances and no confusing disclaimers. Finally, Ally Bank features carefully developed products and services that are user-friendly and completely customizable.

Compare Ally Bank’s Products

Before we look at each product offering, here is a quick summary of the three primary financial products offered by Ally Bank:

Product	Effective Date	Rate (APY)	Opening Balance	Minimum Deposit
1-year CD	6/22/09	2.30%	$0	$0
Online Savings Account	6/22/09	2.00%	$0	$0
No Penalty CD	6/22/09	2.15%	$0	$0
Money Market	6/22/09	1.85%	$0	$0

Ally Bank’s Financial Products

While it does not feature a full range of financial services like a traditional bank, Ally Bank specializes in niche offerings. Currently, Ally offers four financial products: Classic CDs in terms ranging from 3 months to five years, a 9-month no penalty CD, an online savings account, and a money market account. Here’s a quick rundown of each product.

Ally’s Classic CD

Ally Bank’s classic CDs offer some of the best interests rates available. And Ally’s CD rates are extremely competitive regardless of the CD term. Currently, Ally’s CD rates range from 1.40% APY (3 months) to 3.45% APY (5 years). These rates can and do change frequently, so check with Ally to get current rates. Interest at Ally compounds daily. Unlike many other banks, Ally does not require a minimum deposit or opening balance for its CD products.

As with other certificates of deposit, Ally’s Classic CD does levy penalty fees if money is withdrawn from the account before the end of the CD term. For certificate of deposit terms of 3, 6, 9, and 12 months, the fee equals 3 months’ interest. For certificate of deposit terms of 18 months or longer, the fee equals 6 months’ interest. These fees are waived if the depositor passes away or is declared legally incompetent.

If you’d like a CD, but want to avoid even the possibility of an early withdrawal penalty, consider Ally’s no penalty CD.

No Penalty CD

If a classic one-year CD is too much of a commitment during these tumultuous economic times, Ally Bank offers a no-penalty CD to cater to the needs of more conservative investors. There are no hoops to jump through if a customer decides to withdraw funds, and there are no penalty fees. A depositor can withdraw the full balance and accrued interest at any time after the first six days of funding the CD. Just like the classic CD, the no-penalty CD requires no minimum deposit, and no annual fees.

One would expect the interest on a no-penalty CD to be less than the interest on a comparable classic CD. But Ally is currently offering 2.15% APY on its 9-month no penalty CD, which is actually higher than the 1.75% APY is currently offers for its 9-month classic CD.

Online Savings Account

For customers looking for a simple savings account solution, Ally Bank delivers an online savings account with several unique features. Like the other products and services from Ally, an online savings account features no minimum deposit, no monthly fees, and no minimum balance. However, one of the drawbacks of Ally’s online savings account is that customers are limited to a maximum of six withdrawals or transfers per statement cycle.

This limit may prove unmanageable for individuals who manage their savings accounts frequently with withdrawals or transfers, but is a common restriction of savings accounts. By restricting the number of monthly transactions to the account, Ally reduces the cost of managing the account. These lower costs in turn enable Ally to offer very competitive interest rates.

Money Market Account

As a complement to their online savings accounts, Ally Bank also features online money market accounts. These accounts allow customers easy access with check cards and paper checks. The unique thing about Ally Bank’s money market accounts is that there are no ATM fees, and if an outside bank charges fees, up to four transaction fees (or $6) will be refunded per month.

Like the savings accounts, however, one of the drawbacks of Ally Bank’s online money market accounts is that customers are limited to a maximum of six withdrawals or transfers per statement cycle. This limit may prove unmanageable for individuals who rely heavily on their money market account to pay for goods and services.

Top Rates & FDIC Insured

Ally Bank continues to offer some of the highest rates currently available. We track some of the best CD rates in the industry, and Ally Bank is consistently at the top of the list. In addition, deposits with Ally Bank are FDIC-insured to the fullest extent permitted under federal law.

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