Pros: Slightly higher rates, unlimited REAL checks, all ATM's free
Cons: No connection to brokerages, only makes auto loans/
I recently received a snail-mail postcard ad for Ally Bank indicating that Kiplingers and Money Magazine ranked it first among online banks. While I was happy with my ING Direct Account, I decided to open up a small account with Ally and see how it compared.
"Best" is Relative
Bank interest rates are very low everywhere, and Ally is no exception. As of this review date (November 14, 2010) Ally's rates are slightly higher than ING Direct and Virtual Bank's, but when talking about 1.5% annually or less, it doesn't give much incentive to change.
I decided to try the 1.28% no penalty withdrawal CD. This allows customers to withdraw their funds any time after 6 days without paying a penalty. The website showed a comparison to a similar Bank of America CD that only paid 0.35% interest. It also had a calculator that would allow potential customers to put in their opening balance and see exactly how little they would be earning.
Their checking and savings rates were 1.19%, marginally higher than ING Direct's and Virtual Bank's 1.10% savings rates.
The Checking Difference
Ally Bank's checking account appeared to have several distinct advantages over ING Direct's.
Account holders can use real checks that they can carry with them to use in the admittedly rare circumstances where checks are the only option. This isn't possible with ING Direct's Electric Orange account.
Account holders get refunds of ATM charges when they withdraw money from bricks and mortar ATM's (they can also get cash back at retailers.) The fees are returned at the end of the month. ING Direct, on the other hand, gives customers a network (the Allpoint network) of 35,000 ATM's across the country where ATM charges won't be levied. Most of the ones near my home are in Walgreen's. If other ATM's are used, fees will be levied.
Ally Bank is formerly GMAC Financial, and it offers auto financing and leasing while ING Direct offers mortgages. Auto financing and leasing can be handled and managed online. No rates were quoted, and I imagine that most of the time people would get their Ally auto loans through car dealers. (Consumer advocates often say that, unless there are huge promotions, it's good to have financing lined up elsewhere before shopping for a car.)
Two Advantages I See With ING Instead of Ally
Personally, I like the link to the Sharebuilder account, because it makes ING more of a one-stop financial services company, and transfers between ING and Sharebuilder are free and immediate.
And ING has more promotions. A current promotion, for example, gives customers a 1% rebate on every purchase made with the ING Debit Mastercard, even if a pin number is used, for purchases under $50 each.
They recently had a sweepstakes for everyone who set up a transfer to savings once a month.
And they still have referral bonuses (see lower right corner of website.)
The website is easy to navigate, and setting up the account was fairly easy. The "trial" transfers to the checking account were quick, but the transfer from my bricks and mortar checking account was slow.
I called up Customer Service once. The good news--their customer service reps are American. Mine was even from my home state. The bad news--she was as chatty as can be, asking me about the weather and trying so hard to be helpful (and drum up business) that finally I told her, "I'm at work right now, and I just don't have time for all this." Click.
Their website even has an "online chat" option with Customer Service which is apparently available 24 hours a day.
I tried the 11 month CD, but at the moment I don't feel very motivated to give Ally more of my business.
Interest rates are in the basement all over. Keeping more than emergency funds in a bank right now is a losing proposition to start with--and earning a few dollars a year more at one bank than another isn't significant.
My credit union checking account has a number of advantages over online banks (cash back rebates on my debit Visa all the time, for example.)
I prefer to keep my emergency funds at ING because of the Sharebuilder link.
There are some advantages to Ally, but banking prospects are so dismal overall it's hard to get excited about it.