Savings accounts!

**disneysteve** · 10-05-2022, 08:53 AM

You’re not missing anything except higher interest. Ally is at 2.25%. The Vanguard money market is at 2.7% I think (not FDIC insured). Physical banks and credit unions are awful places to keep your money.

**rennigade** · 10-05-2022, 09:57 AM

We've used Barclays for years. It's currently 2.25%. We keep as little as possible in our wells fargo checking. If we need to write a hefty check, we transfer money out of savings to checking.

**MonkeyMama** · 10-05-2022, 10:11 AM

I like Ally because they have always had a consistently higher rate (than average).
The two things I'd check is:
1 - if the account is FDIC insured
2 - how the rate fluctuates over time. If it's a bait and switch rate. I think bank rate? shows historical interest rates for banks. I know I've seen that when evaluating, but have not moved banks in maybe 15 years. Ally has been that consistent.

Also, check your local banks and credit unions. We have found incredible deals, like 3.5% & 7% interest bank accounts that we currently have. Obviously the 7% is for a lower limit, but has been perfect for our kids. The 3.5% rate is just because a family member was a member of this credit union. We were able to join at this rate. (They are actually irritated because *they* don't get that rate. For new accounts only, by referral). It sounded more bait-and-switchy at the time but it's been this rate for several years. I think I found all these accounts on bankrate.com

**MonkeyMama** · 10-05-2022, 10:18 AM

Originally posted by ua_guy View Post

What am I missing? Why is there such a huge disparity?

Most financial institutions pay very little in interest. I don't know what Ally's deal is. I understand they were trying to attract new depositors at some point, but I guess the model has worked so well for them. Usually the higher rates are just to draw in more customers and don't generally last longer term. That said, interest rates (in general) are higher right now than they've probably been most of my adult life. 2% probably isn't too crazy for a bank to offer.

Edit: Interest rates are back to 2008 levels. I looked it up out of curiosity. Feels like forever ago.

**MonkeyMama** · 10-05-2022, 11:57 AM

P.S. We got into Ally back when it was GMAC bank. GMAC was financially struggling and eventually re-branded. I did get comments at the time that others wouldn't touch (GMAC) with a ten foot pole. But it's hard to be too concerned when you do have FDIC. For whatever reason, I was never that concerned about it. A higher 'too good to be true' rate I'd probably consider more of a red flag, but they probably offered an extra 0.25% over other online banks, to entice new deposits. Something like that. We jumped from some other online bank that I don't remember the name of.

**disneysteve** · 10-05-2022, 01:00 PM

Originally posted by MonkeyMama View Post

Most financial institutions pay very little in interest. I don't know what Ally's deal is.

Most BRICK AND MORTAR financial institutions pay very little. Most online banks pay well. Ally, Capital One, Barclay, Marcus, etc.

Right now, Bank of America is paying 0.01% so Ally's rate is 225 times higher! I have no idea why anyone keeps their money in those accounts.

Part of it is lower overhead for the online banks but that can't be enough to fully explain the disparity. It's really more about their business model.

**Jluke** · 10-05-2022, 01:47 PM

Same experience with my credit union- low interest rates on savings/money market now and in the recent past.

last few years I didn’t really care about earning interest.

this summer when rates increased, I finally opened the CapOne performance account and it is now 2.15%. I still have the savings and money market but gotta play the stupid CapOne account games.

Moved most money out of the credit union to CapOne and will be shoveling more money in that direction for future paychecks.

**scfr** · 10-05-2022, 03:37 PM

I'm a rate chaser and long-time online bank customer who also maintains an account with a brick & mortar bank for check writing, getting cash, and as a "money hub."
I will open and close accounts when the interest rate spread becomes an enticing enough motivation.
My current favorite online bank is Bask Bank (2.75%).

The biggest downside with online banks is the inability to get cash or write checks, and especially lag time or amount limits when transferring funds. Pay special attention to limits on transfers if you are a new account holder. Some advance planning for large outlays (estimated taxes, property tax) or purchases (car, house, etc) is required.

If you are not familiar with it, you may want to take a look at the Deposit Accounts web site.

**MonkeyMama** · 10-05-2022, 04:37 PM

Originally posted by scfr View Post

If you are not familiar with it, you may want to take a look at the Deposit Accounts web site.

Oh yeah, that is the one that shows the interest rate history.

**kork13** · 10-05-2022, 07:30 PM

For a time (before getting married) I did the rate-jumping thing... But eventually I landed at Ally for savings, then in the last few years moved over our checking to them as well. It's just simple, consistently competitive interest rates, and I like some of the minor features they offer (ex: huge fan of their 'buckets' to notionally subdivide cash held within a single, easy-to-manage account). I've never had a brick & mortar bank, and I never foresee the need to have one.

**QuarterMillionMan** · 10-06-2022, 04:13 AM

Not to be a Debbie Downer but Ally and other online banks are limited in services. Need foreign currency from Ally, no dice. Never mind foreign currency what about cold hard cash and I need let's say $1500 or $5000 in cash, no dice again. Ally might have ATM services but the daily limit is $300 or maybe $500, not sure. Often I need thousands not hundreds. What about cashier's cheques or money orders, I guess I could go to 7-Eleven or USPS. My solution to all these limitations would be Ally should offer these services via FedEx, need $5000 in cash overnight it to my address. Need a cashier's check or money order FedEx it to my address, etc. For example Wells Fargo's website today I can order $2000 (^ $1000 free shipping, $8 shipping under $1000) in Mexican pesos and tomorrow it will be delivered to my address.

**kork13** · 10-06-2022, 05:23 AM

Originally posted by QuarterMillionMan View Post

Not to be a Debbie Downer but Ally and other online banks are limited in services. Need foreign currency from Ally, no dice. Never mind foreign currency what about cold hard cash and I need let's say $1500 or $5000 in cash, no dice again. Ally might have ATM services but the daily limit is $300 or maybe $500, not sure. Often I need thousands not hundreds. What about cashier's cheques or money orders, I guess I could go to 7-Eleven or USPS. My solution to all these limitations would be Ally should offer these services via FedEx, need $5000 in cash overnight it to my address. Need a cashier's check or money order FedEx it to my address, etc. For example Wells Fargo's website today I can order $2000 (^ $1000 free shipping, $8 shipping under $1000) in Mexican pesos and tomorrow it will be delivered to my address.

Why bother with ordering & traveling with large quantities of currency in advance when you can get it from any ATM in-country with any ATM fees refunded?

**ua_guy** · 10-06-2022, 06:43 AM

Originally posted by kork13 View Post

Why bother with ordering & traveling with large quantities of currency in advance when you can get it from any ATM in-country with any ATM fees refunded?

I'm sure someone will call me out if I'm wrong, but that's not how I remember ATM withdraws in foreign countries working

Isn't there usually a foreign transaction fee, and a less-than-great exchange rate, even if the standard "out of network" ATM fee is refunded?

**riverwed070707** · 10-06-2022, 06:46 AM

I have my personal accounts with CapitalOne. Their 360 performance savings is at 2.25% as well. I've been happy with it

Savings accounts!