Taking the plunge with an Ally

June 25th, 2009 · No Comments

Have you seen those new TV advertisements from Ally Bank?  I love the one where the little girl gets denied the real pony and gives a withering, “You totally suck” stare to the Baldwin-look-alike.  Anyway, after doing a quick check of high-yield savings rates on Bankrate.com, we’ve decided to take the plunge and open up a new savings account at Ally Bank.

YouTube: Ally Pony Ad

Ally Bank currently offers 4 different products: an online savings account, a money market account, a classic CD, and a no penalty CD.  We are going with an online savings account as it has the right mix of features for us.  The big differentiators between it and the money market account is that you are limited to withdrawals via ACH transfer, wire, or cashier’s check.  For that, you currently get an extra 0.15% APY (savings has 2.00% APY vs. money market’s 1.85% APY).  The savings account also has a no minimum balance, no monthly fees, compounds interest daily, and of course is FDIC insured.

It should be noted that these APY rates are variable, and are not guaranteed for any length of time.  But then, as we’ve all noticed, the rates at other banks are also variable.  For example, FNBO Direct just two days ago, dropped their APY from 1.65% to 1.50%, and that’s after falling from 3.25% in December, 2008 — just 6 short months ago.  FNBO’s continued cuts are actually part of the reason we’re opening an Ally savings account.  So long FNBO.  All money we had with you is now on its way to Ally accounts where it will earn a 0.50% higher APY.

It wasn’t very hard at all to sign up for the Ally Bank savings account, though I think it may be limited to US customers only.  You’ll just need a driver’s license or other form of government ID from each account owner, and the typical address, social security info, and other contact info.  For an initial funding deposit, you can opt for ACH transfer or to send them a check, and while I didn’t actually complete this, their form doesn’t seem to complain if you enter a $0.00 initial deposit.   Opening a joint account for my wife and I took all of about 15 minutes.

Once you have your account open, you can easily link it to other checking or savings accounts for ACH transfers.  Ally offers the now quite typical “test deposit” method to verify the linkage, which is where they make two small deposits to the account and ask you to tell them what those amounts were.  This takes a couple days to complete due to the nature of ACH deposits, but goes quite smoothly.   Ally also offers a postal mail agreement method but I’ve not done that.

My only frustration with the account opening process was with picking my “security image”, which is an image they show you once you enter your username in the login process.  The idea is you make sure the image, and matching “security phrase”, come up as what you entered prior to entering your password.  This helps make sure you’re not at a spoofed site and giving your password to some hacker.  Anyway, they have a ton of options to pick from for these images, but make you go through them at a rate of 8 at a time, so it will take you quite awhile to find a familiar image if you want to use something like what you use at other sites.  Worse, after I spent 5+ minutes finding a familiar image and moved on, at the end of the process it had forgotten what I’d picked!   I had to go through it again.

One nice thing I’ve noticed right away is that, like ING Direct, Ally’s website shows you the uncredited, but earned interest associated with your account.  I really missed this at FNBO Direct’s website.

One other set of comments before I finish up here.  Ally Bank is a rebranded GMAC Bank, which went kaput not all that long ago.  There has been a lot of recent publicity regarding Ally paying impossible interest rates in order to attract funds.  In fact, in early June they lowered rates significantly (about 0.50% APY) after the FDIC started to question them.   However, deposits with them are FDIC insured (FDIC Cert: 57803) so we felt safe using their products for money we don’t need for day-to-day living expenses.  In fact, we wanted to get in on the good rates before they decided they didn’t need to attract deposits and dropped rates to something more statistically normal.  It remains to be seen whether Ally’s statements about having “an asset generation platform that enables us to put deposits to work profitably” will keep interest rates higher for the long term. In the mean time, we’re enjoying the bump up in APY.

Tags: Savings

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