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Ally Bank Increases Interest Rate

This article was written by in Banking. 4 comments.


When I started formally tracking high-yield savings rates, with a shared online spreadsheet, it was common to see banks offering interest rates above 5.0% APY. That was in January 2008, and the economy is in a different situation now. According to the government, there has been no measurable inflation, and now interest rates for lending are held low to stimulate the economy. Savers suffer in these conditions.

Bankers were livid this past spring when Ally Bank, a re-branding of GMAC Bank which had been tainted by the bailout of General Motors, rose like a phoenix and maintained the same interest rate it had been offering in its previous incarnation. The director of the FDIC got involved to prevent Ally from using its bailed-out position to create an unfair competitive advantage over other banks.

The bank must now be confident that it is no longer on the FDIC’s bad side. Click here for the latest interest rate from Ally Bank. It’s a small increase, resulting in only 50 cents more a year on an initial $1,000 balance. It seems to be a signal, though weak, that Ally wants to be considered a stronger bank than others, but I don’t think it’s a signal that we should expect to see more banks raising interest rates.

I do have an account with Ally Bank and you can read my review of the Ally Bank savings account here.

Today’s interest rate increase should not be enough to convince someone to move all of their money into this one bank, but if you have the inclination, Ally is a good choice for a diversified portfolio of savings accounts because at this time, I would expect they will continue offering one of the highest interest rates for highly liquid accounts and despite FDIC’s funding woes, your money should be safe.

See the review of the best online savings accountsupdated November 13, 2009.

Updated December 14, 2012 and originally published August 28, 2009. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 2 comments… read them below or add one }

avatar Candice

My credit union, which I can drive to in 15 minutes, offers 1.70% on savings accounts.

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avatar Sarah

I closed out one online account and moved it to Ally this weekend. It was the combination of interest rate, and simplifying my saving budget that decided me. I have been a customer of Ally for a few months, and don’t expect that I’ll have any regrets doing business with them.

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