Why I use Ally Bank

I don’t always preach the importance of choosing the right bank for a savings account, but when I do, it’s Ally Bank.

Take that with a grain of salt, because everyone’s financial situation and preference is different. You should always have an emergency fund to live off of for several months seamlessly.

Below are some of the primary decision factors that helped me decide which bank was right for me.

Interest Rate

I needed a bank where I didn’t feel like my wealth was depreciating. For those of you that aren’t aware, the annual rate of inflation is usually 1.5-2.5%. This means each year, every dollar in your name loses purchasing power by this percentage. Most savings accounts I’ve owned prior to Ally Bank generally didn’t have an interest yield beyond 0.1%. This meant keeping money in a savings account would actually devalue my wealth each year (0.1% profit but ~2.0% devuation is no bueno!).

This defeats the purpose of a savings account. Yes, your $1,000 savings balance doesn’t go down with time and is virtually 0 risk compared to alternative investment options. But guess what, that $1,000 is worth about $980 next year in real value.

This is where Ally Bank really shined. When I first signed up for my first savings account at Ally, the interest rate was 2.0% and higher, with no minimum balance requirements and no fees. That’s INSANE! Ally was a clear winner with this attribute, so I went with it.

Budgeting

I’m big on budgeting. I like to estimate and set, in advance, what my budgets will be for various buckets (especially discretionary ones) such as Food, Travel, Cars, Emergency Fund, Gifts, etc. On an excel sheet, this is easy. In the real world, not so much – unless you own a business and use one of those fancy budgeting services.

In the real world, wouldn’t it be nice to just set aside money for each of those buckets separately, so you can quickly glance at what each of those numbers are without having to open a spreadsheet? The problem is, many banks gave me a hard time if I wanted to open more than 1 or 2 savings accounts. They wanted a good reason and it was a lengthy, annoying process.

Ally bank, on the other hand, lets you open multiple accounts seamlessly. Not only that, but you can give them nicknames so one can quickly get an idea of what each dollar amount is allocated to.

As of early 2020, they actually just launched a new feature for creating actual buckets. So let’s say I had an account for each of the categories listed above – Food, Travel, Cars, Emergency Fund, Gifts. With the new buckets feature, I can actually create buckets within “Cars”, to further distinguish various allocations under Cars. For example, I can create a bucket for Insurance, Maintenance, Modifications, etc!

Accessibility

As an investor and a millennial, I need a quick and painless means of accessing my money when I need it. Transferring money in and out of Ally Bank is seamless, and can take 3-5 business days as with most other banks. This is not problematic. Moreover, their app is very seamless and with fingerprint login set up, I am just a tap away from seeing a breakdown of all of my savings accounts instantly.

Recommendation

For me, Ally bank was a clear winner. Again, it depends on your specific situation for you to determine which bank(s) are best aligned with your scenario.

Overall, I would highly recommend anyone who is either budget-savy or is seeking a reasonable interest rate to at least try Ally Bank. What have you got to lose? It’s a win-win!