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Ally Bank Review: Savings Account and No Penalty CD Rates

Published 6/5/09 (Modified 2/19/14)
By MoneyBlueBook

Review Of Ally Bank.com's High Yield Money Markets, Savings, and CD Offers

After a rather bumpy ride over the last few years, the financial institution formerly known as GMAC Bank is now Ally Bank. In mid-May 2009, the former financial lending and banking arm of General Motors took the first of what it hopes to be a series of reinvigorating steps towards distancing itself from the much criticized and tainted image of the now bankrupt auto maker.

Since then, many of you may haven noticed their recent aggressive purple-themed advertising blitz on TV spots and online ads. With the launch of Ally Bank, the company is undertaking a massive promotional effort to differentiate itself from the collectively damaged reputations of other struggling online banks in the hopes of positioning itself as a commercial advocate of honesty, transparency, and accountability. Though the former bank has been struggling mightily in the midst of the worst economic recession and subprime mortgage crisis in decades, now that it's flush with bailout funds courtesy of the federal government's Troubled Asset Relief Program (TARP), the new Ally Bank is now sufficiently stabilized to concentrate on growing its depositor base and rebuilding its image.

Currently, Ally Bank's interest rate offers are extraordinarily competitive and have been consistently dominating the high end of the bank rate spectrum. If you are willing to accept the view and belief (as you perhaps ought to) that the government's FDIC insurance protections are more than adequate to guarantee the safety and security of your banking assets in the case of any unforeseen scenario, Ally Bank's high interest account rates alone ought to be worth some measure of consideration. Whether Ally Bank's quest to transform itself will be successful remains to be seen. However, in terms of the top rates alone, Ally ranks among the very best online banks, as you won't find too many non-teaser rate offers that can match the consistency and aggressiveness of Ally Bank's high interest deals. In terms of product lineup diversity, the bank also touts a few special banking products not readily found elsewhere - most notably, the Ally Bank No Penalty CD. Other offers include:

  1. Online Savings Account - The high yield online savings account from Ally Bank earns a very high interest rate - much higher than other banks.
  2. Money Market Account - With no account minimums and no monthly fees, the Ally Bank money market account offers versatile check writing and free ATM fee reimbursement privileges.
  3. Classic CD - The classic fixed interest certificate of deposit from Ally Bank offers a variety of high yielding CD rates for different term limits, all with no minimum deposit requirements. Interest is compounded daily for maximum earnings.
  4. No Penalty CD - The highly coveted No Penalty CD from Ally Bank allows you to withdraw your money and put it anywhere, without the hassles or shortfalls of an early withdrawal penalty. This special CD offer has no fees of any kind and offers high fixed interest rates with no minimum deposit stipulations.

Ally Bank's High Interest Rates - An Illusory Scam Or A Legitimate Offer?

Let's focus on Ally Bank's greatest and most dominant selling feature - its consistently favorable high yield savings account and CD rates. Despite the depressed state of interest rates across the board, Ally's current rates have always remained one of the highest. Its perpetual financial issues have forced Ally to continuously offer very competitive interest rate yields to attract new account depositors. Interestingly, it's these same perpetually high rates that have been recently raising the ire of competing banks, who via the American Banking Association (ABA) lobbying group have complained to the FDIC that the extraordinarily high deposit rates offered by Ally Bank are unfair due to its status as a recipient of subsidized federal taxpayer funds. Ally Bank has responded to the conflict by accusing the other banks of wanting to stifle competition to the detriment of consumers.

It may be a rather draconian way of looking at it, but I feel Ally Bank's loss is our potential gain as prospective banking customers. Ally Bank's continued desperation to acquire new deposits and stay sufficiently capitalized, and its willingness to continuously shell out the highest rates to accomplish this objective - is our potential windfall as interest rate seekers. For the foreseeable future, I don't believe Ally Bank's rates will plummet any time soon. So long as it continues to be closely monitored by federal government regulators and continues to stay aggressive in its ambitious plan to re-invent its brand, Ally Bank will continue to be a top tier destination for aggressive rate chasers. Let's just hope the bank can ultimately turn things around and not meet the same failed fates as IndyMac Bank and Washington Mutual.

Ally Bank's Quest To Build A Better Bank - With No Minimum Deposits, No Fees, No Minimum Balances, and Improved Customer Service

So what's your personal take on Ally Bank's recent name change from GMAC Financial to Ally? Great decision to rename itself and shed the tainted reputation of its former self - or merely putting lipstick on a pig as some people have put it? Personally, as a former long standing GMAC Bank customer, I'm extremely pleased that Ally Bank's decision to overhaul itself included a major name change. While a name change in of itself isn't capable of changing the corporate culture or altering the pre-existing way of doing things, at the very least it's a significant gesture that the bank is trying to go in a different direction.

Hoping to improve its relationship with customers and usher in honesty and openness, the new Ally Bank has rewritten its explanations of financial terms in very simple language, curtailed much of its former usage of disclaimers, and pretty much done away with old school tactics such as implementing introductory teaser rates, monthly fees, and minimum deposit requirements. With these changes, the bank has also tweaked its best product features to make them more attractive. Currently, you'll find that Ally Bank sits at the top or near the top of all ranked reviews of the best money markets, the best high yield savings accounts, and the best CD rates for everything from 6 month to 12 month certificates of deposit. The savings account and CD rates that Ally Bank touts is frequently many times over the national average - topping even the offerings of the best online banks.

Ally Bank has also drastically overhauled its customer service system - installing and heavily promoting its laudable 24 hour, 7 days a week customer service accessibility. In fact, this improved feature is pretty much plastered everywhere on the new Ally Bank website. To test out Ally Bank's new customer service improvements, I purposely called a few times at weird hours of the night and a few times during office hours. In response to my cadre of banking questions, I received pretty targeted and courteous answers (something I don't always get from more established banks like Citibank). Of course, despite the company's financial difficulties in the past, the former GMAC Bank's customer service reputation has always been generally well regarded in most editorial reviews. Here a quick run through of Ally Bank's best new features:

  1. Promise of the Best Rates: Ally Bank has indicated that it is committed to consistently offering the best savings products featuring the best rates. Historically, the former GMAC Bank has delivered, and at present is still delivering on this promise.
  2. No Fake Teaser Rates: Ally Bank states that it will no longer be offering introductory "bait and switch" teaser rates that start very high but later crash. Let's hope Ally can indeed keep those rates perpetually high.
  3. No Minimums: There are no more minimum deposits or minimum balances required at Ally Bank. Feel free to open a new account with a whopping $0.00
  4. No Sneaky Disclaimers: More transparency on rates and terms along with less usage of confusing legalese and jargon.
  5. No Penalty CDs With No Strings Attached: One of Ally Bank's best new features is the no withdrawal penalty certificate of deposit. Customers can withdraw funds prior to the maturity date without paying a fee and transfer the funds to any account at any bank without penalty charge.
  6. Sleeping Money Alerts: In an effort to encourage customers to continuously seek out higher rates, Ally Bank will send out notices to customers when funds have been idle and could be earning a higher rate of return.
  7. 24/7 Customer Service: Ally Bank now offers around the clock 24 hour, 7 days a week access to a live call center agent for customer assistance help. Just dial (1-877-247-ALLY)

Full FDIC Insurance Limit Protection With Ally Bank Up To $250,000

If you are like many of the high interest rate seekers out there drawn to the new Ally Bank because of its exceptionally high rates, you ought to be mindful of the online bank's viability issues and ability to stay operational. Despite the name change, Ally Bank is still the same struggling GMAC Bank, at least until its aggressive marketing allows it to snag more customer deposits and become better capitalized. Until then, the possibility of an Ally Bank failure is always a real and serious concern.

But fortunately, like most reputable banks out there, Ally Bank accounts are fully insured and guaranteed by the United States government's FDIC insurance - confirmed as FDIC certificate 57803. Based on recent changes with FDIC regulations, bank account deposits at FDIC insured banks are now insured up to $250,000 through December 31, 2013. With FDIC insurance, your Ally Bank savings and CD accounts are completely shielded from loss and backed by the full faith and credit of the federal government to be safe in the event of any unforeseen banking collapse. So long as you stay within the $250,000 FDIC limits, regardless of what happens to Ally Bank, there really is no need to be nervous - your assets are fully protected. If you are unsure about putting your money into the hands of a newly renamed bank with a past, there are plenty of other highly rated banks to choose from - albeit touting rates that aren't as lucrative or as high as that offered by Ally Bank.

Extra Information and Resource

  • Ally Bank ABA/Routing Number for direct deposits and ACH transfers: 124003116
  • Ally Bank Customer Phone Number: 1-877-247-2559 for 24/7 assistance
  • Ally Bank E-mail: customercare@ally.com

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29 Responses to “Ally Bank Review: Savings Account and No Penalty CD Rates” 

  1. Dane says:

    GMAC Bank, Ally, WaMu, IndyMac...they're all the same TARP'ed up banks that's sucking up taxpayer dollars and federal bailout cash - and for what? Why not spend all of this money on an economic stimulus package that actually works such as lower taxes for EVERYONE or a second stimulus check issuance for consumers to jump start their lives. Fix and replace this unemployment crisis Obama! Tired of all of these banks getting the free money and us getting stiffed. All they spend it on is higher banking account savings rates for customers so they can make more money for themselves. It's not fair!

  2. marko says:

    I've had a gmac online savings account for some time. I never had to deal with customer service so I don't know too much about it but they've never done me any wrong. Their interest rates are pretty high but I doubt they can keep it like that forever. The FDIC is cracking down on the rates since these banks are federal bailout money recipients and will ultimately have to answer to the Fed. Ally Bank won't be able to keep rates high forever.

    The name change sounds a bit over the top in my opinion. Ally? Ally Bank? We used to be affiliated with the subprime mortgage-loan-stiffed GM car maker - at the center of the credit crisis...and now we're your friend, buddy, and ally? Come on...they can do better than that. Geez why not just rename GMAC into Buddy Bank. We are your buddy!

  3. BigG says:

    As an interest rate as well-Ally Bank aka GMAC has always been a diamond in the rough in terms of interest rate yields. Somehow they've managed to always keep rates high. But the party isn't going to last forever and rates will eventually have to come back down to earth as they are all being forced to.

    Marko is correct when he says the FDIC is going to force the rates down. These banks and credit unions receiving bank bailout money shouldn't be allowed to offer higher than normal market rates, even if it's to attract more capital and new deposit funds. It would be like Citigroup or Bank of America using their bailout money to offer higher wages or compensation bonuses for their CEO's and executives. It would not seem right in this current climate.

  4. BankShopper says:

    As a long time Ally/GMAC customer, I can only say that they have delivered great products at very good rates for savers for a long time. So TARP has very little to do with it since the rates were great before we even heard about words like TARP!
    All I can say is that if Banks can charge 29% on credit card loans and 8 to 10% on regular loans, surely they can pay savers 2% on savings account. I just don't understand why the other Banks can't try to emulate them rather than complain about Ally. I guess it will take more congressional hearings to make them change their ways like the credit card ones that just took place.

  5. CashAholic says:

    Excellent information. I will utilize it when I have money to invest. I do wish I could get more than 2% on savings though. It seems a pittance for the time and paperwork involved.

  6. Jason says:

    Looks like the party's coming to an end with the bank rates. Ally Bank has lowered the interest deals on the savings accounts and CD rates. High yield rates my ass. Guess the FDIC and government pressure finally got to the bank formerly known as GMAC. Ally Bank will probably wind up like all of the other banks out there...hawking average rates but calling them high yielders.

  7. Pilm says:

    Why is it the federal gov't can manipulate interest rates but they don't do a thing about wasteful spending at these companies getting bailout funds? The priority should be to reward those willing to invest money in these suspect banks while preventing waste and forcing banks to stiffen lending requirements. Of course the fed's want lax lending requirements so we can re-bubble the economy, and they can't rail against wasteful spending at banks since they are leaders in being wasteful.

  8. GMACAllyCustomer says:

    I have been with Ally (GMAC) for 3 years. I had no problem with GMAC before.

    Recently I spend 2 months in Ally and still can not open a new account, this experience is very frustrated. The customer representatives have inconsistent answers. One day they call you with one answer, and please don't feel surprised for the call from them in the following days with another answer; I fax the documents to them, and they can not find/locate the fax. I am tired with several rounds of this kind of inconsistence.

    My question is:
    If representatives can NOT provide standard guidance/answer, what's the meaning of customer service of the bank?

    Although they have 7-24 call service, it won't help if they can NOT solve your problem. (In fact, it wastes your time!)

    I am searching for another bank with relative high rates. Enough is enough.

  9. Neil Katz says:

    I opened a 9 month no penalty CD yesterday. Everything was done on the web, although I will be getting a signature card that I have to return. I did call the customer service a couple of times for clarification of a couple of questions - they picked up right away and were very responsive.

    The No Penalty feature is the real reason that I went to Ally, as I will need the money in less than 9 months and could not find a competitive rate for the amount that I deposited. When I did find a rate that was close, the minimum deposit was higher that the amount that I wanted to invest.

    As long as the FDIC guarantees the deposit, I have no problem staying with Ally.

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