A few years ago, General Motors was having trouble remaining in business, and its subsidiary that provided customers financing for automotive purchases, GMAC, converted to a bank holding company to take advantage of the Troubled Asset Relief Program (TARP), receiving $5 billion from taxpayers through the government. By this time, GMAC Bank, a division of GMAC, already offered retail banking, including savings accounts, certificates of deposit, and money market accounts.
In an attempt to distance itself from the faltering GM brand, GMAC Bank re-branded itself as Ally Bank, focused on offering a high-yield interest product, and began actively seeking new customers and depositors. Later, the bank’s parent company, GMAC, also re-branded itself to become known as Ally Financial. Today, Ally Bank offers some of the most competitive banking products, and was in talks to purchase ING Direct.
Click here to apply for an account.
Opening an account with Ally Bank
Last year, I decided to become an Ally Bank depositor. Before doing so, I wanted to be confident that my money would be safe amidst General Motors’ impending bankruptcy. Funds deposited with Ally Bank are insured by the FDIC up to the recently raised limits. I won’t come close to exceeding $250,000 in this account. The Treasury had recently provided an additional $7.5 billion to GMAC, so Ally Bank’s immediate parent company was well capitalized at that time.
Here are my experiences from the bank account opening process. As I visited the website to begin my application, Ally Bank warned me that I would need my driver’s license (or an alternate state or military identification number) in addition to my social security number to proceed.
Like some other banks, Ally performs a credit check to verify identity, but they may also reject your application if you are viewed to be a credit risk. The possibility of rejection based on credit history is unusual for banks, but considering this bank is owned by a financing company that later became a bank holding company and this type of structure might increase in popularity, requiring credit checks for bank accounts may be part a new reality.
It look less than two seconds once I submitted my application for Ally Bank to inform me my application was approved. Once inside this virtual gate, I was able to choose whether I wanted to receive paper or electronic statements. I always choose electronic to cut down on paper waste, and I wish more services would offer this option from the beginning.
Here’s another great feature. Like ING Direct’s sub accounts, I could create as many separate savings accounts, with their own account names and numbers, as I wanted. At this point in the initial set-up, I could also add money market accounts and certificates of deposit.
I set up two separate savings accounts, both to be funded electronically from my ING Direct Electric Orange checking account. Like configuring linked accounts at any other bank, I will be required to verify two small deposits to ensure I am the owner of the linked account. Options for a one-time initial deposit or a recurring automatic savings plan are available.
Ally Bank then required me to create my security settings for viewing my account information and activity online. The bank has combined most of the security features that have become commonplace over the past few years. I created a user name and a strong password, including mixed case letters and numbers. I selected some secret code words, an image I can expect to see each time I log in, and three security questions and answers. Ally also provides the option for registering the computer you mainly use for accessing the website to avoid repeated security questions at each online session.
If Ally Bank does not recognize the computer you are using to log into your account, they will send you an email with a single-use password to further confirm your identity. I have not seen this feature implemented anywhere else.
Using the Ally Bank savings account
Once logged in, I was impressed with the clean look of the interface.
Ally Bank supports Intuit Quicken and Microsoft Money through Web Connect, which means you can log into the bank’s website and download your activity. At this time, you cannot automatically download your Ally accounts’ activity through Quicken directly (“Direct Connect”). If you like Excel for reconciling your account, Ally offers a flat comma-separated values spreadsheet for download.
Transfers among your Ally accounts and to and from your linked bank accounts are free, but keep in mind that savings accounts and money market accounts are limited to six withdrawals per period by the government.
Ally Bank charges no account maintenance fees and there is no minimum balance. If you exceed the six withdrawals mentioned above, Ally will charge a $10 fee. Cashier’s checks and wires carry an additional cost. A returned deposit item, if a check you send bounces or if you don’t have funds in an external account to cover a transfer, will cost $7.50.
The bank is also drawing attention to their 24-hour customer service availability and the plain language used throughout their website. I have not yet worked with Ally’s customer service, but I will be sure to report any future frustrations.
Conclusion
Opening my account with Ally Bank was painless and quick, and I like how the website operates so far. After my initial deposit is transferred, I will have a better idea of how quickly funds are available and can be transferred back to external accounts. I will return with more information at that time.
The main question I have moving forward is how long Ally Bank will be able to maintain their position as one of the highest among high-yield savings accounts. Bank have long used high interest rates to lure new customers only to drop the rates when they become confident in their position as leader, like ING Direct, or when the bank changes ownership, like Washington Mutual.
The American Bankers Association (ABA) sent a letter on May 27, 2009 to the FDIC requesting that Ally Bank be forced to lower their deposit interest rates, citing the bank’s unfair competitive advantage. It is unfortunate that the ABA would take this stance with savers forced to settle for interest rates that will not reach the rate of inflation going forward. The ABA has since removed the letter from the organization’s website.
Like I said above, I am not concerned with risk to the liquidity of my deposit despite Ally Bank’s association with GMAC and General Motors. If the worst happens to General Motors, Ally Bank should remain relatively unaffected.
If you are interested, apply for an Ally Bank savings account here and let me know about your experience by commenting below.
Updated October 19, 2011 and originally published May 29, 2009. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @flexo on Twitter and visit our Facebook page for more updates.
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My husband and I have had an Ally savings account for 3 years – mainly to hold money to fund CDs. We set up several a couple of years ago because of the high interest rates. The set up, transfers of money in, and setting up the CDs went fine. A little cumbersome (like their web site that they didn’t change for years) but fine. We started closing them as they came due, and transferring the money out – primarily because their rates weren’t all that much better than ING’s savings and CDs, and their online site has handled thousands of transactions for us without a single mistake.
The process of closing is ponderous – instead of being able to change the terms online (“close at maturity”) you have to “chat” with a rep each time. Up until March 2, 2012 the process did actually work, Ally closed the CDs and we were able to transfer the money out to our checking account. On Feb 28 I “chatted” with a rep and told them to close the March 2 CD at maturity – customer rep “Christine” said she had set it up. On March 2 I checked online, and Ally had rolled over the CD to another 2 year CD. I “chatted” again and demanded it be closed immediately with no penalty, I also sent an email about the mixup to their customer service people. My experience with the latter is that they usually do answer with a specific comment eventually, but they can’t do much. The CD got closed on March 3, and I have requested a transfer of the funds to our checking account at our “regular” bank.
Today I went on line to see how things were going and the entire Ally website is down with no explanation and a message to call some number if questions. We will wait until normal business hours next week to see if our money still exists – luckily we only have about $1500 with them. If the money goes west then I guess we will chalk it up to experience, but we wouldn’t ever consider moving more money into Ally, or using their services for other things like car loans or bill paying based on the huge number of negative comments about their service. If we ever do buy a GM car (which I doubt given the poor product), we will not use Ally (aka GMAC) finance, but buy it with a loan that we negotiate elsewhere.
4/10/2012
I signed up for two accounts with Ally but I’m regretting it now after reading their reviews. Lying to your customers is unacceptable to me. As is calling customer service and getting different answers to the same problem each and every time you call! That would drive me nuts. I think I’ll end switching to Charles Schwab bank. I’d be willing to take a big hit on interest if it means great customer service. The benefits seems similar and everything I read about their customer service seems to indicate “I can” rather than “I can’t” or “we can’t”. Just stay away from their mortgages as it seems they outsource this to a company with bad business practices. But I don’t know, maybe it is standard nowadays to quote a rate on a mortgage and bump it up before closing. This happened to my parents by a big reputable bank.
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