2.5% Online Savings Accounts At Ally Bank (The Rebirth Of Gmac)
Even though GMAC spun off from GM years ago, they recently changed their name to "Ally" in a re-branding, stain-of-association-removing effort. Their whole game seems to be a USAA for civilians, advertising "No minimum deposits. No fees. No min balance. No sneaky discalimers." Ally Bank is also offering very juicy APYs, like 2.25% for an online savings account, more than double the national average...
One unique product they have is a no penalty for early withdrawal 9-month CD at 2.5%. Bargaineering gives them a thumbs up. And they must be doing something right, because the American Bankers Association - the same guys who protested the CARD act - sent them a letter (PDF) saying "pretty please don't offer consumers such high interest rates it's not fair to actually have competition." (Ally Bank's rebuttal (PDF) also makes for a fun read).
Ally [Official Site]
Ally Bank Review [Bargaineering]
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One thing to be careful of - if you were a GMAC customer before the change over - Check your account carefully - my pre-conversion savings account was converted to a lower interest rate money market account. Customer service fixed it promptly with no BS.
I've been banking with GMAC/Ally for about four months (since before the conversion to Ally), and everything has been great. I switched over in the first place because the interest rates at ING Direct had become so pitiful. And I do not regret the decision - the interest rates are good (in relation to other banks), the customer service is great, and the new website is very user-friendly.
@KelbornCmd: I'm in the same boat you were in four months ago. I started at ING with 4%+ interest, and now it is around the 1.25% mark. It is still way better than my .0025% at Wachovia, though.
I find it funny when articles come out declaring how little Americans save, when really, what is the point if it isn't going to do anything in your savings account?
I am seriously considering switching to Ally.
It seems odd that they'd get a letter about 2.25%... I'm currently with Dollar Savings Direct, which is 2%, so while it's higher, it's not way higher. Still, I might check this one out - it's not very hard to transfer everything over, and it looks like Mint supports it already, so I won't feel all lost without it in my summary. ;)
Be careful with these high savings account rates.
I signed up for a 2.6% online savings account with HSBC Direct in January(A decision I DO NOT regret, HSBC is amazing), but ever since then they've been steadily lowering the interest rate so that now it's only 1.6%, which is still pretty good considering, but not what I expected to happen.
Im thinking it might be a good idea to just hop around to different banks to get their initially-high rates.
Oh yeah and MMAs suck.
I'm just glad I've got USAA.
The title is misleading. The online savings account is only 2.25% APY. The 9 Month CD is 2.6% APY.
Well I guess I will look into it maybe it would be a good way to bank.
Comparing a bank that seems to be using a marketing campaign that is very similar to Wamu's to USAA is just so very very wrong.
The issue with falling interest rates was due to "market conditions", but mostly from the feds lowering the prime interest rate. EVERY bank has suffered from both effects, some more than others. I agree it sucks, I'm a fellow HSBC online savings customer, but there's really nothing you can do other than jump ship to the next guy offering a better rate.
I think I'll give GMAC a shot. If they go belly up, they're sure to get a bailout anyway.
Wow, that Bargaineering review is total crap. It says the bank is in great financial shape without mentioning any of its capital ratios or the fact that it's been bailed out more than once. Even today, GMAC sold $4.5 billion more in bonds to finance its ongoing operations. As we all know, FDIC insurance, while seemingly "safe" these days, is not a bottomless glass from which to drink if banks continue to go under. Most of us here on Consumerist won't break that $250K savings barrier in this one bank, but you are putting your savings in jeopardy. (Summary: The big Consumerist "personal responsibility" crowd here should recognize the eventual costs of asking the government to back your bad bets.)
This actually reminds me a LOT of WaMu's incredible rates they were advertising just two or three months before they were shuttered; I want to say something like 5%+ CD's when other banks were between 2% and 3%. This one really seems too good to be true, to me.
@winshape: Yeah, my HSBC Direct account is now only earning 1.55%. It's a bit of a come-down, but it's better than my BB&T account, which earned me $2 last month on $6000. Pitiful - I need to move that money out of there...
@GuJiaXian: What's the current savings interest rates being offered by USAA? What's their 9-month CD rate?
@hellinmyeyes: What happened with WaMu? If someone did open an account with them at those rates, they would have gotten their money back from the FDIC insurance, right?
Just watch out if you get a savings account with them. The "fee" page on that points out that it's going to cost you $20 each transfer to get your money back from them (to another external bank account)!
Deposits are free. ;)
@NeverLetMeDown: You mean "is not supposed to let you", not "won't let you". The ABA and some others have recently complained to the FDIC about Ally banks incredibly high rates, but the FDIC has taken no action.
@hellinmyeyes: Offering rates way above the national average for savings rates in order to attract deposits is actually a sign of impending doom as you state.
Here is the info from CNN:
[money.cnn.com]
@winshape: In general, Chase took over the CDs as issued by Wamu. When they come up for renewal, Chase will renew per Chase's published rates. So, for most people who invested in 3 or 6 month CD's, they're now earning the same abysmal interest rates as everyone else.
Smartypig.com offers 3.05% on savings account. I'll take a pass on the new GMAC, kthxby.
I've been seeing their ads everywhere- blogs, NPR, podcasts... Not sure if I trust anything associated with GM though.
Careful, banking with GMAC may cause "oily spotting" in your underpants. Oh wait, that's Alli! NM!
@cpaforrent: Gotcha, but at least Chase honored the original rates pre-renewal. Overall it seems like they came out ahead.
I probably wouldn't want to risk my life savings to that happening again though.
@hellinmyeyes: As the author of the total crap, I'm not concerned about capital ratios or about bailouts because my funds are FDIC insured. The government has insured my deposits up to $250,000 and that's enough insurance for me.
And if you re-read my article, I never said they were in great financial shape. I merely gave Bankrate's Safe and Sound rating, also noting that it was very dated, and reiterated the FDIC insurance limits.
@winshape: I hear you. I kept hesitating about switching banks, but finally went ahead and bit the bullet. It's a painless process, and it definitely pays to do it.
@Bargaineering.com: The FDIC is just as guaranteed as Social Security, Medicare, and Medicaid...which is to say not at all.
I like the people who have no faith in the FDIC. If the economy got to the point where the FDIC couldn't pay back the $250,000, that money would probably be worthless any way. So, keep earning that 0.125% interest in your savings account. I'll keep doing the rational thing and throwing my money in whatever FDIC-insured deposit account yields the highest rate and not give a crap about anything else.
Isn't this the bank that helps you lose weight but causes anal leakage and chronic sharting?
@KelbornCmd: Both my ING and HSBC have become increasingly pathetic - 1.25 and 1.55 respectively - but they're still better than my WaMu/Chase savings which only bothers to issue me a penny of interest every third month. (Of course, I only keep the minimum in the WaMu/Chase to keep my accounts free - $300 now, raising (I think) once the merger is complete.)
@winshape:
Technically true but not practically so. The impact of cutting back on FDIC insurance would be immediate and borderline catastropic, while all of those other programs have (a) much longer-term issues, and (b) could be trimmed.
I would caution that rates are always subject to change and it is not uncommon to get lured in to a great rate only to have it axed a couple months later. This happened to me once after opening an account with an online savings account at a great rate. A few months later the rate was unceremoniously cut to about 1/3 of the original rate. After that happened I started looking for a "good" savings rate from a savings account that was consistently near the top rather than whatever was the highest for a short period of time. This gives you a little confidence that you can expect to have one of the better rates for the long haul. I would highly recommend igobanking.com. They seldom offer the highest rate possible, but always offer one that is near the top. No minimums and the interest is compounded daily and paid monthly.
@RonaldLavitz: Smartypig compounds the interest annually. Ally compounds daily.
Maybe I'm misunderstanding things, but it seems like, in the long run, Ally will pay more?
too bad 2.5 isn't going to even keep up with inflation now
Mint.com recommended this bank to me in the "How to save" tab on my account. But if its GMAC, then.....I would stay away.
@NeverLetMeDown: I agree, And I ditto everyone sentiments about WAMU. When they really needed to raise cash, they were offering 5.05% for their online savings.
This kind of deal projects weakness rather than strength. You know what they say about deals that seem to good to be true...
@fredbiscotti: Where did you see that SmartyPig compounds annually? I went there to check them out since it seems like a good rate. Their FAQ says:
10. How is interest paid?
Interest is configured using a daily accrual method with quarterly postings to a customer's account.
I just tried signing up with Ally for an online savings account and was told I didn't pass the credit check. Requires a credit score of 625 or better and that they did the check with Transunion.
I've been making use of the free annual credit reports, so I guess I'd better find out what the hell happened, and quick!
Don't worry about FDIC ever running out of money. They have the ability to access the Federal Reserve and they can print more: as much as they need. See? No problem.
@KelbornCmd: I agree--I switched over to Ally nee GMAC when I had one too many customer service battles with HSBC. I am so far quite happy, except that Ally reminds me of that diet pill that makes you pooh.
@Jacob Stump: 2.5% is a pathetically low rate. When you have a reward checking account that offers 6%, you can worry about reductions
@morlo: Don't be a tool, 2.5% is not "pathetically low"
It was 6 times the national average in January.
So where, praytell, do you claim to get 6% interest on a checking account? Wachovia's "Way to Save" program? Yeah, that'll be nice when you add up all your .10$ deposits and then pay an annual fee and lose it all.
Don't make incredulous statements without backing them up. Links or shens.
@oneliketadow: This is because the FDIC only has authority to take action against banks that are not classified as well capitalized.
Ally Bank is well capitalized by regulator metrics and can therefore offer whatever rates it wants.
I don't know, seems to make sense to me. Get consumers to deposit large amounts, offering high interest rates. Loan that money out to small businesses and consumers at slightly higher rates, you pay the interest on the original deposit, it's online so you have minimal overhead to pay for, and you're left with some profit... what about it doesn't make sense?
Credit unions... Try 'em, you might like 'em. Mine gives 4.5% on their checking accounts. Sure, it's only up to $25,000, but you can open as many $25,000 accounts as you want...
The other banks have a valid point. In general, if your bank's in trouble, the FDIC won't let you offer really high rates in an effort to pull in deposits and shore up your base, because that tends to only dig you in deeper, and increase the amount that the FDIC will have to make up if your bank fails.