Posted by Chuck on August 5, 2019
High-Yield APY Accounts

Published on August 5th, 2019 | by Chuck

74

Ally Lowers Savings Rate To 1.90% APY (Begins Tomorrow)

Update 11/13/19: Rate reduced to 1.70%.

Update: Rate reduced to 1.8% APY

Ally is sending out an email that their online savings account rate will be lowered to 1.90% beginning tomorrow, August 6th.

Starting 08/06/2019, your Online Savings Account will earn 1.90% Annual Percentage Yield (APY) on all balance tiers.

Your APY is more than 20x the national average — so you can rest assured that your money is working hard in your savings.

In June they lowered from 2.20% to 2.10%, and now down to 1.90%. Many banks are lowering their rates recently due to the recent fed rate drop. We’ll probably see more on this coming days, I’m  just posting Ally separately since it’s a big step to drop under 2%, and because many of us use their savings account.

Far as we know, the Ally no-penalty CD rate will remain at 2.30%. We’ll see.

Hat tip to reader Avi



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Danny
Danny

Ouch, just got the email. I’m going to need to consider where to move my funds when things settle down

AlertTip
AlertTip

WealthFront dropped from 2.57% to 2.32%. Betterment dropped to 2.44%.

Julie
Julie

Still higher than my local bank

Dr PayItBack

Ally, leading the pack as always. Wait, wrong direction!

Clifton
Clifton

I’ve been with Ally for years but this is the second big cut for them and they were already lower than most lately. This is the final straw for me with them.

Jonathan
Jonathan

Wish Ally would try to be competitive. I have like 20 accounts there, so it might take me a bit to move them all, but if they’re going to continue being “the bottom of the top”, I might need to reconsider them being my primary bank

Jeff
Jeff

Why do you have 20 accounts?

Jonathan
Jonathan

TL;DR: to maximize interest on money I’ve already spent, but is within credit card grace periods for payment.

Every credit card I have has a dedicated savings account for payment. I put money into the savings account as I spend it, but it doesn’t come out of the account until the due date. Because the 6-withdrawal limit is per account (not per person), having a dedicated account basically eliminates that limit.

In some cases, credit card companies don’t allow auto pay from savings account (such as Chase). In that case, I have a checking and a savings account for that account. The checking account is linked to the savings account for overdraft protection, and I intentionally keep the checking account empty. The auto pay is linked to the checking account, which causes an overdraft, which is protected by the savings account, which has the funds.

Max
Max

I’ve sometimes considered a similar approach. Kind of gave up on it when SoFi came out with 2.25% but now that everything is dropping I might think again. But none of the more barebones accounts with high rates still like Popular or Vio clearly state how many separate numbered accounts you can open.

Jonathan
Jonathan

Does SoFi have a routing number you can use for auto-payments? I’d definitely switch if I could, but most of the cash accounts I’ve seen either only let you deposit with routing numbers, or don’t allow direct deposit / debit at all.

Max
Max

It’s not like Wealthfront if that’s what you’re thinking. It’s basically a real checking account with savings account interest. No monthly transaction limit. Routing and account numbers, bill pay, and direct deposits accepted. I haven’t actually paid a credit card from the biller side yet, but they issue checks with the same numbers as online so it would have to work (or else how could you mail a check for payment?). Although something I really appreciate is if their bill pay mails a check it’s from a different account so you’re not exposed to check washing.

MB
MB

SoFi has a routing number.
I’ve been using it for the past couple of months to pay for my credit card bills and I’m very happy with them.

JV
JV

Sofi is just like a checking account. I switched from Ally to Sofi since i dont have to segregate funds to get a higher rate from Sofi. I can just keep 1 account and earn a high rate.

Jeff
Jeff

Makes sense. Thanks for the explanation. I never thought about such a setup, but I guess you can maximize the interest you collect through savings accounts this way. Isn’t it a problem to keep track of all these savings and checking accounts though, as some of them come up with monthly fees (unless you do x, y, z)?

Jonathan
Jonathan

Ally has no fees on savings accounts. Not hard to keep track of. When the statement comes for my credit card, I just make sure the savings account has at least that amount. I actually just check all my accounts have at least the current balance twice a month, when I get paid, and it’s not a problem.

Bob
Bob

Why have so many credit 💳 S?

Steve

Did you see which website you’re posting on?

Mike
Mike

Do you use Ally as your main checking? Was considering them but with the interest rate drop was thinking of using with Schwab or chase as my primary hubs then using something else for savings.

CuriousGeorge
CuriousGeorge

You could consider buying Vanguard MM fund (VMMXX) through Chase YouInvest brokerage account as a substitute for a savings account. It is not FDIC insured, but the brokerage account has SIPC insurance. VMMXX yield is usually 0.2-0.25% higher than Ally. Coupled with Chase checking account should allow all banking to be done at a single place while still earning high yield.

Aks
Aks

good idea.
But what is net interest after taking expense ration into consideration?

Charlie
Charlie

The VMMXX stated yield already includes the effect of the expense ratio.

Bob
Bob

good 💡

Shirley
Shirley

Coincidentally before seeing this, just transferred most of my money from Ally to the Salem 5 eSavings account I just opened. They are still at 2.51% though they’ll probably be lowering soon also.

Aks
Aks

Its a Hard pull

Max
Max

I suppose even in the world of low overhead online banks there’s even less overhead at the savings account only banks. Acquiring TradeKing costs money.

Chris B
Chris B

Feeling happy (and lucky) with my decision to open the Northern Bank with the 2.5 APY, which is staying at this rate till the end of the year.

Gary Steiger

I am using PNC Bank. 2.3/2.5%.

Mikey
Mikey

Opened Popular Direct 2.55% just last week. Come on over.

Max
Max

Are you able to open multiple accounts there?

Ian
Ian

Is that a hard pull?

AL_PF
AL_PF

Back to the wasteland of sub-2% standard savings accounts…

Trevor
Trevor

I hope they hear the “swoosh”

The sound of a lot of deposits leaving their bank.

Celia
Celia

Glad I opened the 2.25 12 month guaranteed at my local bank (wintrust) last week. Will move funds into there.

Ron
Ron

Is Marcus still going to be at 2.15? Or will they soon follow people think?

K.M.
K.M.

Hello. Recently there was the 1% extra promotion, so even if the rate drops if you’re enrolled then it’s not that bad.

shak
shak

Yes, that 1% Marcus promotion (capped at $50K new money) yields 6.15% APY for the three months your money is tied up. My balance is now tied up until 10/28/2019.
IF (Big IF), Ally offers their “1% Payback Time Bonus” (capped at $100K new money) again this year, during the same time period as last year, then that effective yield would be 5.9% APY, for another three months. The Ally bonus last year required the deposit(s) to be initiated by 10/31/2018 and be fully available by 11/05/2018. That will give me/you only one or two days in late October 2019 to make the transfer(s) from Marcus to Ally. Approximately 6% APY for 6 consecutive months.
Isn’t there another bank that has a similar annual promotion? Seems to me I saw a write-up earlier this year. Was it CapOne?
Below is a link to last year’s DOC Ally ‘1% Payback Time’ write up:
https://www.doctorofcredit.com/ally-bank-deposit-bonus-of-up-to-1000-existing-customers-included/

Creek
Creek

Marcus has consistently stayed at 0.05% above Ally since they launched, so I wouldn’t be surprised to see them at 1.95% pretty soon.

Max
Max

They have a 2.35% CD with no penalty to withdraw after a week. But if you open up multiple CDs with smaller balances you can just break one at a time as needed if you need to at all.

Tom
Tom

Ally has 2.3% no penalty but for >$25K. To close/ avoid rolling over you have to make a call to Marcus. Very annoying the way they “verify” you just to transfer money from a CD to your saving account at Marcus. I will never open a CD at Marcus again.

DP719
DP719

Was thinking of opening a Marcus no penalty CD so thanks for the DP.

JT
JT

Thanks for the heads up. Just transferred a chuck of savings into a 2.5% Ally CD before that rate drops.

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