Ally Bank's savings account is competitive if you want a high interest rate and low fees, but it works best for people who are comfortable banking entirely online

Ally Bank is an online-only bank, which means there are no physical branches. You manage your account through their website or mobile app, deposit checks by photograph, and withdraw money through ATMs or transfers to other banks. The savings account itself has no monthly maintenance fee, no minimum balance requirement, and pays interest that is typically higher than what traditional banks offer. The tradeoff is that you cannot walk into a location to deposit cash or speak to someone in person.

Whether Ally is right for you depends on three things: whether you can live without in-person banking, whether you want to keep your savings separate from checking, and whether you are comparing the interest rate to other online banks rather than to your current bank. If you need a physical branch, Ally is not the answer. If you want a single account that does everything, Ally's savings account is designed to work alongside a checking account, not replace one.

Key Takeaways

  • Ally's savings account charges no monthly fee and has no minimum balance, so you can open it with any amount and keep it open without activity.
  • The interest rate changes based on Federal Reserve decisions and market conditions, so the rate you see today may be lower or higher in six months.
  • You cannot deposit cash at Ally because there are no branches; you can only deposit checks by phone camera or transfer money from another bank.
  • Ally's savings account is FDIC insured up to $250,000, the same protection you get at any bank, so your money is safe if Ally fails.
  • The account works best if you already have checking elsewhere or plan to open Ally checking too, because Ally savings alone cannot replace a full banking relationship.

How the interest rate works and what it means for your money

Ally publishes its savings account interest rate on its website, and that rate applies to all balances in the account. The rate is not locked in; it changes whenever Ally decides to change it, usually in response to Federal Reserve rate changes. When the Fed raises rates, Ally typically raises its rate within days or weeks. When the Fed cuts rates, Ally cuts its rate too, though sometimes with a delay.

The interest compounds daily and deposits into your account monthly. That means if you have $10,000 in the account, you earn interest on that $10,000 every single day, and at the end of each month, the interest is added to your balance. The next month, you earn interest on the original $10,000 plus the interest from the previous month. Over a year, this compounds into more money than you would earn if interest were calculated once at the end of the year.

To know whether Ally's rate is actually good, compare it to other online savings accounts on the same day you are checking. Banks like Marcus, Wealthfront, and Vanguard also offer online savings accounts, and their rates move in the same direction as Ally's. The difference between them is usually small—sometimes less than 0.1 percent—so if Ally is within 0.2 percent of the highest rate you find, the difference in actual dollars over a year is small enough that other factors (like customer service or app design) matter more.

Fees and what they cost you

Ally's savings account has no monthly maintenance fee, no minimum balance fee, and no fee for transfers out of the account. You can move money to another bank as many times as you want without paying Ally anything. There is no fee for depositing checks by phone camera. There is no fee for setting up automatic transfers or for closing the account.

The only fees Ally charges on a savings account are overdraft fees if you somehow overdraw the account, which is difficult to do because savings accounts do not have debit cards and you cannot write checks against them. If you transfer out more money than you have, Ally will decline the transfer rather than charge you a fee. This is different from checking accounts, where overdraft fees are common.

Ally does charge fees on other products—checking accounts, money market accounts, and CDs—but the savings account itself is straightforward: no hidden fees, no surprise charges, and no fees that appear after a promotional period ends.

How to deposit and withdraw money

Because Ally has no branches, you cannot deposit cash or walk in to withdraw money. You have four ways to move money in and out: transfer from another bank account you own, deposit a check by taking a photo with the Ally app, withdraw by transferring to another bank account you own, or withdraw cash at an ATM using an Ally debit card (though Ally savings accounts do not come with debit cards—you would need to open a checking account for that).

Transferring from another bank usually takes one to three business days, depending on the other bank. Depositing a check by photo is faster; Ally typically credits the check within one business day. Withdrawing to another bank also takes one to three business days. If you need cash immediately, you would have to transfer to a checking account at another bank first, then withdraw from an ATM there.

This matters if you regularly deposit cash or need to access your money quickly. If you mostly move money electronically and do not need immediate access to cash, Ally's deposit and withdrawal options are fine. If you get paid in cash or need to withdraw cash on the same day, you would need a second account at a bank with branches or ATMs.

FDIC insurance and what happens if Ally fails

Ally Bank is FDIC insured, which means the Federal Deposit Insurance Corporation guarantees your deposits up to $250,000 per account category. If Ally goes out of business, the FDIC will pay you back up to $250,000 in your savings account. This is the same protection you get at any bank, online or in-person.

The $250,000 limit applies per account category, not per account. If you have a savings account and a checking account at Ally, each is insured separately up to $250,000. If you have two savings accounts at Ally, they are combined and insured together up to $250,000 total. If you have more than $250,000 to deposit, you would need to split it across multiple banks or multiple account categories to keep all of it insured.

Ally has been operating since 2009 and is owned by a publicly traded company, so the risk of failure is low. But the FDIC insurance exists precisely because bank failure is possible, and it protects you if it happens.

Comparing Ally to traditional banks and other online banks

A traditional bank—one with physical branches—typically pays much lower interest on savings accounts, often 0.01 percent or less. Ally's rate is usually 10 to 20 times higher. The tradeoff is that you cannot deposit cash or visit a branch. If you rarely use branches and want to maximize interest, Ally wins.

Other online banks like Marcus, Wealthfront, and Vanguard offer similar rates and similar features. The differences are small: slightly different interest rates, different app designs, different customer service quality. If you are choosing between Ally and another online bank, the decision usually comes down to which app you prefer or which rate is highest on the day you open the account. Over time, the rates will move together, so the choice matters less than it seems.

If you want to keep all your banking in one place—checking, savings, and maybe a money market account—Ally offers all three. If you want to use a traditional bank for checking and Ally for savings, that works too. The account is flexible enough to fit into different banking setups.

When Ally savings makes sense and when it does not

Ally's savings account works best for people who: have money they want to set aside and not touch, do not need to deposit cash, are comfortable using an app to manage money, and want to earn more interest than a traditional bank pays. If you have $5,000 or $50,000 sitting in a traditional bank savings account earning almost nothing, moving it to Ally could earn you hundreds of dollars more per year with no risk and no effort beyond opening an account.

Ally's savings account does not work well for people who: need to deposit cash regularly, want to speak to someone in person, need immediate access to cash, or want a single account that handles both checking and savings. If you get paid in cash, you would need a second account. If you want to visit a branch, Ally cannot help. If you need to withdraw money the same day, Ally's transfer times might be too slow.

Frequently Asked Questions

Can I use Ally savings without opening a checking account?

Yes. You can open only a savings account and transfer money in and out from another bank. However, you cannot deposit cash or withdraw cash directly from Ally, so you would need another account somewhere for those purposes. Many people use Ally savings as a separate place to keep money they do not want to touch.

What happens to my interest rate if the Federal Reserve raises or lowers rates?

Ally will change its rate, usually within days or weeks of a Fed change. The new rate applies to all money in your account going forward. You do not have to do anything; the change happens automatically. Your existing balance keeps earning interest at the new rate.

Is my money safe at Ally if the bank fails?

Yes. Ally is FDIC insured up to $250,000, so if Ally fails, the FDIC will pay you back. This is the same protection you get at any bank. Ally has been operating since 2009 and is owned by a stable company, so the risk of failure is low.

Can I deposit cash at Ally?

No. Ally has no branches and no ATMs that accept cash deposits. You can deposit checks by taking a photo with the app, or transfer money from another bank account. If you need to deposit cash, you would need to use a different bank or deposit it at another bank first, then transfer it to Ally.

How long does it take to transfer money out of Ally?

Transfers to another bank usually take one to three business days, depending on the receiving bank. Transfers from another bank to Ally also take one to three business days. If you need cash immediately, you would need to transfer to a checking account elsewhere first, then withdraw from an ATM there.