Big Bank Alternatives: Ally Interest Checking Account Review

Ally Bank Logo 2With the megabanks like Bank of America and Chase gradually increasing requirements ratcheting up the fees, what is a good alternative checking account? I just closed down my Chase account of several years last month, but have kept my Bank of America for now. I usually tell people to go with a local credit union for no fees, and an online savings account linked up for higher interest on savings. Online checking accounts started getting popular with Capital One 360 Checking, but currently I find the best all-in value proposition at the Ally Bank interest checking account.

If you imagine all the requirements of your “dream” checking account, Ally Bank’s offering does a really good job covering them. Here’s a rundown:

No minimum balance, no fees, no direct deposit requirement

There is no minimum balance to open, no balance maintenance requirements, and no direct deposit requirement. There is no hassle at all to avoid monthly fees. You can fund the initial deposit online via ACH, by mail, or by wire.

No ATM Fees Across the US

Ally Bank has the best ATM fee rebate program I’ve seen. When it comes to ATM fees, you have to worry about (1) your bank charging a fee, and then (2) a fee from the bank owning the ATM you’re using. Ally Bank never charges a fee on their side. They also rebate any external bank’s ATM fees, so you can use any ATM you like in the world. You are not limited to any specific network. There are no usage caps or monthly limits to the fees.

Fees are automatically refunded at the end of each monthly statement cycle.  As of August 2011, I found out they no longer give fee rebates on international ATMs.

Higher Interest Rates + Free Overdraft Transfers

Currently, Interest Checking has a tiered interest rate of 0.10% APY for balances less than $15,000, and 0.60% APY for balances of at least $15,000.

In addition, with their free Overdraft Transfer Service, they will automatically transfer available funds from your Ally online savings or Money Market account to cover any overdrafts for free. Alternatively, you can schedule balance alerts to transfer X amount over if you checking amount reaches a certain threshold. This means you can keep a relatively low balance in checking if you wish and put more into savings since it pays 0.85% APY as of 11/12/13. Remember, you can only do 6 withdrawals from savings each money due to banking regulations.

Old-Fashioned Paper Checks

Ally Bank still supports paper checks. You get free checkbooks (50 to start, order more online) and unlimited check writing. They’ll send you postage prepaid envelopes to mail in deposits. They only thing you could ask for is the ability to scan in smaller checks via computer or smartphone. Hopefully this is coming. Update: It’s here!

Other Free Stuff + 24/7 Customer Service

Let’s see, you get free online BillPay, free debit card. They are FDIC-Insured to the same limits as other banks. You can easily set up online links other other banks and ACH transfer money in and out, with the usually 2-3 business day hold. They have 24/7 customer service, either by phone or live chat. (Even the megabanks don’t have that.)

It’s not perfect, but if you go through these features one by one, you’ll see why I opened an Ally interest checking to compliment my existing Ally savings account and the 5-year CDs that I’ve talked about before. If you have further questions, I can try to help in the comments, or you can simply ask them directly using their convenient 24/7 online chat.

Comments

  1. vijaianand says:

    Good review.

    I don’t see lot of difference to ING Direct – Electric checking and savings account. Their rates are better than ally and service is good except they don’t have 24/7 customer service. Their ATM is using Allpoint network which is available in almost all places and don’t charge any fee. I like the international ATM charge waiving from ally but it won’t convince me to open an account though.

    Vijai

  2. Money Beagle says:

    I use Ally Demand Notes for a higher yield money market type account (it’s non-FDIC insured) and ING Direct for protected savings. I’ve thought about moving the ING account to Ally so that I have everything there in terms of my long term stuff. My day to day checking is still at my local branch and changing that isn’t happening anytime soon.

  3. How do you deposit a paper check into your Ally savings bank checking account?

  4. “They also rebate any external bank’s ATM fees, so you can use any ATM you like in the world.”

    Really? In the world? No international ATM fee? Do they charge a foreign transaction fee? I travel to europe on a relatively regular basis… that would be awesome. Most banks charge 3% + you pay the atm fee…

    On the credit side, I believe capital one is the only card not to charge a foreign transaction fee.

  5. christine says:

    So it sounds like Ally is the best for Checking, ATM’s and CD’s. What do you find the best for a savings? Do you do most of your transfers between BOA to Ally? Do you use other sites like ING Direct, Emmigrant Direct, Discover Bank, etc.?

  6. christine says:

    GregK,

    I did alot of research for a no foreign transaction fee credit card about a 1.5 yrs ago, and Yes the capital one is the only cc I’ve found to offer that. Good info to share with others!

  7. @vijaianand

    ING Direct Electric Orange’s current advertised rate is 0.25% APY for balances under $50,000 and 1.10% APY for balances between $50,000 and $100,000.

  8. Update:

    Just chatted with an extremely friendly and helpful customer service rep (I’m definitely a fan of chat — I work at a bank, so calling another bank’s customer service is a non-starter haha). Ally does in fact refund atm fees worldwide.

    There is a mastercard foreign transaction fee of 1% at both ATMs and for POS transactions, which is not refunded. No direct fee from Ally.

    Overall, a huge advantage over the usual 3% plus an additional atm fee. Very cool! I’m signing up (I’ll be sure to use the link in this post).

  9. Sanders McCown says:

    USAA folks have been able to scan in deposits for quiet some time now. Well their is now an alternative for us non military folk and that would be Everbank, if want to be able to scan in deposits like USAA folks Everbank makes it very convenient with the scan to deposit feature. They also reimburse atm fees.

  10. Alexandria says:

    My credit union pretty much does all of the above. Plus I can scan deposits from my computer & I can walk to a local branch.

    I don’t get free ATMs “everywhere,” but most everywhere. Something I don’t use much and can’t foresee needing.

    I admit the interest on my checking is 0%. But when I do the math, hardly seems worth sacrificing the convenience/local factor to earn $15 or so a year in interest. (I usually keep $0 in my checking and just use it as a conduit to investment and higher interest savings accounts. But $3000/month average balance is something like $1 per month interest – which I could swing with float. Eh).

    Admittedly, sounds better than any bank. But I have a hard time convincing people that credit unions are really that competitive. So I just have to point out that some credit unions have been offering this stuff much longer than Ally. ;)

  11. Alliant CU also has scan deposits. Hopefully GMAC and other banks add this very useful feature.

  12. @christine, GregK
    Schwab CC (if you have it) also does not charge a currency conversion fee.

    And, Schwab Investor Checking debit card allows you to withdraw money from any ATM in the world and they will reimburse you the ATM fee (same as Ally).

    On a side note, I definitely would be interested in moving a majority of my money from Schwab to Ally since Schwab’s rates are .25% for checking and .4% for savings – Ally has a nice little bump up. Other than that, I’m really happy where I’m at because Schwab has pretty much all of those same benefits (and you have a brokerage account with low cost trades and free trades of Schwab ETFs and Mutual Funds)

  13. This is essentially the same feature set as Fidelity MCA, which I’ve been using for a while. Fidelity MCA is also a full brokerage account which is useful.

  14. Ally is considered a big bank alternative? I thought they were a “big” bank.

    I’m debating between Ally and a local CU to open a new checking account. If someone can clear this up, I will soon deposit at Ally.

  15. This is timely news – I had no idea their debit card was so useful while abroad! I’m planning a trip to Greece and was just looking into currency exchange. Thanks!

  16. Alliant credit union is at a rate of 1.10% and that’s for even a few bucks in the account, you can scan checks as well. So anyway you look at it, it’s a higher rate, but you have to use certain ATMs not any ATM.

  17. I don’t need the checking account, but the free world-wide ATMs attracted me because I have a Europe trip coming up. For this limited purpose, Ally’s Money Market account is a great fit — unlimited reimbursed ATMs and 1.05% APY for any balance. As mentioned previously, they don’t charge a foreign currency transaction fee, other than the network’s usual 1 percent.

  18. @vijaianand – I have Electric Orange too and although the Allpoint coverage is okay, the ATM coverage is definitely not “everywhere”.

    @Evan – You mail them a check in a prepaid envelope that they provide to you upon request. I admit that this is why I keep a local bank account to deposit the occasional paper check.

    @GregK – Thanks for the additional research on foreign ATMs.

    There are definitely many other competitive banks. I’ve reviewed many of them in the past. Here’s a review of Everbank’s scanned deposits:

    http://www.mymoneyblog.com/everbank-online-check-deposit-review-freenet-checking-and-yield-pledge-money-market-accounts.html

    But I just don’t see a bank that is all-out better, unless scanned checks are a dealbreaker. Alliant requires a direct deposit or equivalent. USAA is only open to certain military/gov’t affiliated persons now. Fidelity mySmart pays only 0.10% APY for FDIC depsosit on even large balances, and their non-FDIC money markets are no better. Rewards checking account have lots of hoops and my rate keeps dropping :(

  19. enonymous says:

    if you fly a fair amount, and if you are in a higher tax bracket, then bankdirect is a compelling alternative

    10% of your deposit is earned in AA miles (10% of balance/month)
    if you like to fly in a class other than coach, each miles is worth around $0.04

    That’s a yield of 4%. And it is tax free (much to IRS’ irritation).

    1% after taxes is potentially about 0.6% or even lower. that yield is just too low to even bother…

  20. LargeTalons says:

    Schwab Interest Checking has pretty much exactly these features, but as noted by James, has a lower APY. The account was great when I was overseas since I could get money at any ATM with no fee at all, and you also get the direct bank to bank currency conversion rate for that day.

  21. LargeTalons says:

    @enonymous: According to the AA website, you can currently buy 40,000 miles for $1,000. That makes a mile worth $0.025 (slightly more if you are buying less miles). That works out to a 3% APY, which still isn’t bad at all for online checking, especially because it’s tax free. Thanks for the tip, interesting idea.

  22. I have savings and CD with Ally. Had a chat with a rep about checking account, too bad they will do hard pull on credit report. Even though the account has good features, I am not willing to ding my credit at this point of time with a hard enquiry. Hopefully this info is helpful for someone.

  23. I wonder how BankDirect can get away with not 1099′ing those miles they give away. I mean, a bank can’t even give away a toaster these days it seems without putting it on a 1099-INT these days. Perhaps they don’t write off the miles as an business expense?

  24. I understand that ING can give you a read-only login and password that you can safely give to mint.com and similar sites.

    That’s a unique and useful feature that I don’t think any other banks have.

  25. enonymous says:

    miles have long been a contentious 1099 issue for the IRS

    citibank sees it one way, bank direct another

    and frequent flier mileage bonuses from credit cards are never 1099′d

    as long as it stays as is, the effective yield on the bankdirect account is better for higher tax bracket individuals

  26. Following your links, it seems like their interest checking account gets you 1.05% APY and their online savings account also gets you 1.05% APY. Am I reading that correctly? What’s the advantage of not putting it all into the checking account? Thanks for any corrections or insights!

  27. Jared Ross says:

    Does Ally support business accounts? I’m needed to switch the bank where we host our business accounts, any suggestions?

  28. Aditya Mishra says:

    Schwab one debit card will refund all ATM fees even international.

  29. I would never do business with Ally bank, its the bank that GMAC set up so it could qualify for TARP funds. It over pays for deposits which hurts your local financial institution and puts taxpayers on the hook for when they financially fail. Please seek out a locally owned finanical institution to do business with. ALLY Bank is owned by Uncle Sam and I refuse to do business with them.

  30. I am intrigued by the AA miles Checking at BankDirect. So if I keep $20k just sitting in the account, I get 2000 miles a month or 20k miles a year? Almost enough for a free ticket a year.

  31. i recently got dinged by chase ($1 for checking account?) and have since opened a checking account with perkstreet. i haven’t used it since i just opened it last week but i had a great experience with their customer service reps. also, i think their rewards are better than an interest earning checking account (for my balance, anyway). they do charge a $4.50 if there’s no activity on your account in a month. http://www.perkstreet.com/

  32. supersandy says:

    Great article like all MMB articles. :-)
    Carl, to answer your question, if you put 20k for a year in Ally, you get 200$ or more. The general value of a mile is 1cent so it comes to the same thing.
    The one other cool benefit of ING orange electric checking is that it allows you to “mail”checks from your computer. This service is free and saves a stop to the post office.

    As far as I know, most credit unions charge for checks. And by far, if you have direct deposit, checks is the only feature most other big banks don’t provide free. So local financial institutions are great, but these ally and INGorange are definitely comparable!

  33. @Kenneth – Ally Checking is 1.05% APY only for balances $15k+. So if you have that much, then yes it’s very convenient to have it all in checking. But if you have less, it’s handy to be able to keep most of it in Savings also at 1.05% APY.

  34. Things I do at my local bank: Besides small paper check deposits, once in a while I need a cashier’s check (for example, to buy a car). And occasionally I cash in (actually deposit) a US Savings bond. Any ideas for these things if I my local bank starts charging fees and I have to close the account?

  35. I really wish Ally would come out with an app for the Iphone or android operating systems. Being an online bank I would think they would do something like this.

  36. Ally is still a fairly new bank so they are eager for clients right now. The bad part is that there are no branches, anywhere. The features though as you have put it are worth taking advantage of.

  37. Aditya Mishra says:

    I cannot understand why so many bloggers keep pushing Ally Bank ignoring Alliant credit union with better options in every of your criteria. It sounds fishy to me.

  38. christine says:

    No one is ignoring it. Credit Unions aren’t open to all, Ally is so it gets more coverage.

    Alliant membership is an exclusive benefit available to individuals who meet one of the following eligibility requirements:

    Any employee or member of a Qualifying Organization
    Any person who lives or works in a qualifying Chicagoland Community
    Any member of the Orphan Foundation of America
    Any person related by blood or law to an existing Alliant member
    Domestic partners of unmarried members

    Personally, Alliant looks great, but I don’t meet the qualifications.

  39. Aditya Mishra says:

    What is the problem in joining OFA by paying $10 one time?

  40. Alliant CU is a fine option, but not “better options in every of your criteria”. See below. Mentioned them before when their rates were much higher relative to others. (Rates have since changed across the board)

    http://www.mymoneyblog.com/2010-savings-account-cd-rate-updates.html

    But let’s see. Alliant CU you have to pay $10 to join upfront unless you qualify. Then you need to keep $5 in a separate savings account at all times to remain a member.

    - Montlhy requirement? Yes. You need a direct deposit or other online transfer every month. Just like most mega banks. Extra hassle. Also, you can’t have paper statements. Ally has no dd requirement, and gives you paper if you want.

    - ATM fees? Only within their network. It’s a okay-sized network, but not like Ally with any ATM in any restaurant/bank/mall that you run across when buying lunch. International ATM fee refunds? Unknown to me.

    - Interest Rate – Alliant is higher at 1.10% APY vs. 0.5%/1.05% of Ally. Savings of Ally is at 1.05%.

    - Alliant charges $3 every day you use their Overdraft Transfer service from their savings accounts. Ally charges nothing.

    - Both have free checks and free checkwriting. Alliant does not have 24/7 human telephone response.

    Sorry, you can judge for yourself but Ally wins to me. Ally CD rates are better if you factor in the short withdrawal penalties as well.

  41. redlenses says:

    Did you look at these?

    CapitalOne Interest Plus Savings: 1.10% ($1000+), Checking 1.01%

  42. Another option for those that were looking for “no foreign transaction” fees:

    https://www.penfed.org/productsAndRates/creditCards/promiseCard.asp

  43. Ally just reduced their APY to 0.9%

  44. Ally now has the ability to scan in checks for making deposits, and at no charge. Currently they are slowly rolling it out and my 2 month old checking account was picked for this service last week. I did my first deposit earlier this week and it went off like clockwork! It adds an extra day to the process compared to walking the check into the local US Bank I currently have accounts at, but that’s not a problem for me.

    This was the last thing I needed to close my account locally and do all my transactions online! Which is good since US Bank’s free checking will have strings attached after May 15th.

  45. Thanks for the notice, JamesB! I’d be excited to try out this feature.

  46. Hello fellow bankers,

    I am a 22 year old college junior. I have great credit. I recently totaled my car. I got lucky with my insurance co., they gave me back 10k in the value of the car.

    I have had a BoA checking account for some years now. I’m trying to leave them because they are not productive for me. I usually do all my banking online or through the ATMs. I recently opened an ally checking account with 0.5% APY. My parents have chase bank. They want me to switch to chase. I would put the $10k into my ally bank and then transfer some of it to my brokerage account with TDameritrade. Any suggestions?

  47. Hi Jonathan, writing to let you know that I have opened an Ally checking account via the referral link here after reading your excellent reviews about them. I have been benefiting from your excellent articles and this was a small way to return the favor. By the way, your Scottrade referral also worked out pretty good back in ’09. Keep up the good work!

  48. So I closed my ING Online savings account because of the Capital One merger and opened an Ally Savings account in its place and I have to say I am very pleased. They have great rates, the website its user friendly and there are no fees, just what I wanted. I may even close my Schwab Interest Checking and switch to the Ally Interest Checking because Ally’s rate is slightly better.

  49. The Ally marriage of Checking and Savings is a great package. And the convenience of easily opening up multiple savings accounts was great. If you are a Quicken user, please be advised that Ally and Quicken do ‘not’ have the Direct Connect feature. They connect together with Web Express. What this means is that you can ‘not’ use Quicken to pay your bills. You must use the Ally Bill Pay site, and then Ally will ‘download’ the transactions into your Quicken register. If you like to ‘control’ everything with Quicken, an Ally Checking account does not support this feature. If you have a different experience I would like to know about it. Thanks.

  50. PNC definitely charges me ATM fees… Maybe I should do this…

  51. I am so sick of ING Direct, they lured me in with the 1.0% interest checking when I first signed up over a year ago, but you need a minimum balance for that, so I really only get 0.25% (a few cents each month) as a minimalist who only has just a, and puts everything in checking. That, plus no debit card rewards program as with my old Chase checking, plus the recent taking over a month to refund a fraudulent charge, I am definitely looking for a move.

    I fully intended to go switch to Ally until one of the commenters said it was partially owned by Uncle Sam…. ugh. Where should I go? I need no fees, no minimums, interest checking. The debit card rewards isn’t a need, but definitely a want.

  52. I have a chase checking account, a perkstreet checking account, and one ally interest checking and two ally savings accounts. I pretty much live paycheck to paycheck but I do set aside money every month for my savings. This is how I make my money work for me. #1 as soon as I can get to a Chase branch I am closing my account. #2 I earn pretty decent rewards (like money to use on amazon YAY) so I use my perkstreet checking to pay monthly bills. My paycheck is direct deposited on the 1st to my Ally Checking and then on the 2nd a set amount transfered into both savings. I then transfer the amount I need for bills into my Perkstreet and I swipe away. I earn money for every set dollar amount I spend (and they do have Bonus Perks – taking a survey receive $10.00, spend money at this place vs another and get double the cash back etc.) . After I earn a set amount in that account I use the “Perk” , to buy something I want or need on amazon or where ever. With my ally checking I look at the offers they have (like $5 back when you spend $25 at BestBuy). Like right now I determine Christmas presents to buy, if any of the perks work for what I need and I make purchases based on that. Basically when it is said and done I have made $20 to $30 in a month in Perkstreet Rewards and received $60 to $70 cash back (which I have deposited into a savings) from my AllyBank Rewards. I made $80.00+ and didn’t spend any extra money (granted it took a little more time and research). I think this is well worth it. Especially if you are not in a higher income.

  53. Brad Ford says:

    How does Ally interface with Quicken? It is important to me because it makes managing cashflow.

  54. I use Schwab and they offer the same features, check deposit on iphone, atm fee reimbursements, integrated with one login for checking, savings, brokerage and ira accounts, so easy to add/pull money from brokerage. etrade offers exactly the same things as well, additionally with instant refund of atm fee rather than having to wait till end of month. Both integrate with quicken and I love it.

Trackbacks

  1. [...] Interest Checking account to complement my existing 5-year CDs and online savings account. Click here for a rundown of features that show why I made the switch. I’ve managed to try out many of their “perks”, [...]

  2. [...] have updated my Ally Checking review and 3-month Follow-up [...]

  3. [...] savings. This allows me to keep a minimal balance in checking and more in savings/CDs. Check out my Ally Bank Checking account review for an in-depth [...]

  4. [...] adds another feature to my Ally Bank Checking account review, which I found comparing the features to be one of the best online checking account alternatives [...]

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