Ally Bank offers a high yield savings account called the Ally Bank Savings Account, which pays interest rates significantly higher than traditional savings accounts at most brick-and-mortar banks

Ally's savings account has no monthly maintenance fees, no minimum balance requirement, and no cap on how much you can deposit. The interest rate changes based on Federal Reserve decisions and market conditions, so the rate you see today will not be the rate you earn six months from now. As of early 2024, Ally's rate was competitive with other online banks, though you should check the current rate on Ally's website before opening an account, since rates shift frequently.

The account is FDIC-insured up to $250,000, which means your money is protected if Ally fails. You can withdraw money at any time without penalty, though federal rules limit you to six withdrawals per month from a savings account (this rule applies to all banks, not just Ally). Deposits are insured separately from checking accounts, so if you have both, each is covered up to $250,000.

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 paying to maintain it.
  • The interest rate is variable and changes when the Federal Reserve adjusts rates, so compare Ally's current rate to other online banks before you decide.
  • Your money is FDIC-insured up to $250,000, protecting your deposits if the bank fails.
  • You can withdraw money anytime without penalty, but federal rules limit you to six withdrawals per month from any savings account.
  • Ally has no physical branches, so all banking happens online or through their mobile app.

How Ally's interest rate compares to other banks

Online banks like Ally, Marcus by Goldman Sachs, and American Express typically offer higher rates than traditional banks because they have lower overhead costs. A traditional bank with physical branches often pays 0.01% to 0.05% annual percentage yield (APY), while online banks have paid 4% to 5% APY in recent years. Ally's rate usually falls in the middle to upper range of online banks, but not always the highest.

The rate you earn depends on when you open the account and what the Federal Reserve is doing. If the Fed raises rates, Ally usually raises its savings rate within days or weeks. If the Fed cuts rates, Ally's rate drops too. You should check Ally's website and compare it to at least two other online banks—Marcus, American Express, or Wealthfront—before deciding. The difference between 4.5% and 5% APY sounds small, but on $10,000 it means $50 per year instead of $45.

What you cannot do with Ally's savings account

Ally's savings account is designed for storing money and earning interest, not for everyday spending. You cannot get a debit card for the savings account, so you cannot swipe it at a store or withdraw cash at an ATM. You also cannot write checks from it. If you need to move money out, you transfer it to another bank account (which takes one to three business days) or to an Ally checking account (which is usually when ready).

The six-withdrawal limit per month is a federal rule, not an Ally rule, but Ally enforces it like all banks do. If you exceed six withdrawals in a month, Ally may charge a fee or convert your account to a checking account. This limit applies to transfers and withdrawals combined, so if you move money out six times, you have hit the limit for that month.

How to open an Ally savings account

You open an account entirely online through Ally's website or mobile app. You will need a Social Security number, a valid government ID, and a current address. The process takes about 10 minutes. Ally will ask you to link a bank account so you can deposit money into the savings account—you can use any bank, not just Ally.

Your first deposit can be as small as $1. Once the account is open, you can set up automatic transfers from another bank, deposit checks by taking a photo with the app, or transfer money from an Ally checking account if you have one. Interest starts accruing the day your money hits the account.

Ally's savings account versus their money market account

Ally also offers a Money Market Account, which works similarly to the savings account but usually pays a slightly higher rate. The money market account also has no monthly fee and no minimum balance. The main difference is that a money market account comes with a debit card and checks, so you can spend directly from it—though Ally still limits you to six withdrawals per month.

If you want a place to park money and earn interest without touching it, the savings account is simpler. If you might need to write a check or use a debit card occasionally, the money market account gives you that option. Both accounts earn interest on the same terms and have the same FDIC protection.

What happens to your interest if rates fall

When the Federal Reserve cuts interest rates, Ally's savings rate will drop. This is not a penalty—it is how all banks work. Your money stays in the account and keeps earning interest, just at a lower rate. You can move your money to another bank anytime without penalty, but you will face the same rate drop everywhere because all banks respond to Fed decisions.

If you lock in a rate now and rates fall later, you have made a good decision. If you wait and rates fall before you open an account, you will earn less. There is no way to predict what the Fed will do, so the best time to open a high yield savings account is when you have money you do not need to spend soon.

Frequently Asked Questions

Can I withdraw money from Ally's savings account anytime?

Yes, you can withdraw anytime without penalty. However, federal rules limit you to six withdrawals per month from any savings account at any bank. If you exceed six, Ally may charge a fee or change your account type. Transfers between your own Ally accounts usually do not count toward this limit.

Is my money safe in Ally's savings account?

Yes. Ally is FDIC-insured, which means deposits up to $250,000 are protected by the federal government if the bank fails. Your savings account is insured separately from a checking account, so you have $250,000 coverage in each.

How often does Ally change its savings rate?

Ally can change its rate anytime, though it usually moves within days or weeks of a Federal Reserve decision. You will see the new rate on Ally's website, and it applies to new deposits and existing balances going forward. You do not have to do anything—the rate change happens automatically.

Can I use Ally's savings account to pay bills?

No. The savings account has no debit card and no check-writing ability. You can transfer money to an Ally checking account or another bank to pay bills, but the transfer takes one to three business days. If you need bill-paying features, Ally's Money Market Account includes a debit card.

What if I need to close my Ally savings account?

You can close it anytime online or by calling Ally. There is no early-closure penalty. Ally will ask where you want remaining funds sent—to another bank account or an Ally checking account. The transfer usually takes one to three business days.