But the point is that yesterday was National Online Banking Day, a day set up by Ally Bank in 2015 to help raise awareness about the value of online banks. Of course, Ally is preaching to the choir as far as I’m concerned.
For years now I’ve extolled the virtues of online banks. The accounts are easy to set up, easy to maintain, convenient, have higher interest rates and, most importantly, are free. Besides, many people almost exclusively use mobile banking features and ATMs, so it doesn’t make a difference whether their bank has a physical location.
For all those reasons, I’ve long urged people to join Capital One 360. I’ve been a member for several years now, keeping all of our savings there. I love the fact that we can have so many subaccounts. It lets me save for separate goals like saved savings, our next car, a new washer and dryer , etc.
But I’m afraid I have to reverse my stance. Not about online banks, mind you. But certainly about which online bank to use. Because on Monday I became an Ally customer.
Historically, I’ve touted the fact that Capital One 360 has a much higher savings rate than regular banks. According to the FDIC, traditional banks pay as little as 0.01% with the average rate still only being 0.08%. Meanwhile, Capital One 360 has a 1% rate! Hard to argue with that, right?
As I noted in my review of Radius Bank, I could be getting 1.5% with Radius. This made me seriously consider switching my savings accounts over there. But things got a little hectic, and I never got around to it.
So when I was reading about National Online Banking Day, I decided to check out Ally’s interest rate. I was astonished to find out it’s an impressive 1.9%. That’s regardless of how much money is in the account.
Clearly, I’ve been missing out, but apparently I’m not the only one. Ally estimates that there is currently $3 trillion sitting in low-interest savings account at traditional banks, meaning that those consumers are losing out on approximately $50 billion of interest each year. Let me just say that again: Fifty. BILLION. Dollars.
I needed no further prompting — really, I didn’t need any after I found out the rate is almost double Capital One 360’s— so I went to Ally Bank and opened two accounts: one for our emergency fund and one for savings. The whole process took about 15 minutes. It would have been even quicker, but I had to call customer support to find out why the system wouldn’t accept my “secret question.” (Turns out you’re not supposed to use punctuation. Just a word to the wise.)
It was a painless process, and I’ll now be getting 90% more in interest than I have been at Capital One 360.* Did I mention that when I called Ally Bank I had zero hold time and a very friendly, very helpful customer service representative?
To be clear, we’re keeping our checking accounts at Chase. I do prefer having the monthly money easily, quickly and completely accessible. But as for the rest of our funds, I’ll be switching the accounts over to Ally within the next few days.
Do you use Ally? If not, does the interest rate make you want to switch?
* I will point out that Capital One 360 still offers a great way to get an easy bonus: $25 just for depositing $250 into an account. You can get another $25 if you open up a checking account and make three debit card transactions within 45 days. That’s a pretty easy $50.