Gather Little by Little

One of the best habits to do when making a budget spreadsheet is to create a monthly preauthorized deposit into a savings account. This cash can be used: to finance a purchase, for a vacation or as a basis for an emergency fund. So once you have determined the amount to be saved, you have to shop for the best high yield online savings account.

High Yield Rate: 1.39%

The very first thing we look at when thinking of a high yield online savings account is the annual rate. Ally Bank is offering a decent 1.39% (FDIC secured) interest rate.

Smaller Rate than SmartyPig but More Flexibility

I will make a few comparisons between the SmartyPig account and the Ally Bank product as they both offer some of the highest interest rates on the market right now (especially when you consider minimum deposit amounts and no fee accounts). When we compare rates, we have 2.01% for SmartyPig vs 1.39% at Ally Bank. While this seems like quite a difference, I would say that the latter gains additional points with its flexibility.

As you will see in the fees’ section, Ally Bank doesn’t require a minimum amount or monthly deposit. Therefore, it is easier to manage your money if you don’t have any specific goals or if you only want to invest a starting amount and leave it there as an emergency fund.

What About The Fees?

Ally Bank High Yield Savings Account Fees	Charge ($)
Each transaction exceeding six per statement cycle	$10
Returned Deposit Item	$7.50
Official/Cashier’s check	$0
Statement copies online	$0
Outgoing Wires (domestic & international)	$20
Expedited Delivery for items: overnight checks, etc.	$15

As you can see, the first 6 first transactions are free. However, it is quite expensive to use this kind of account as a regular savings account with a $10 charge per transaction exceeding the first 6. However, a high yield online savings account should show 1 to 2 transaction per month (a monthly or bi-weekly deposit ;-) ).

I also like the fact that you can write good old, paper checks from the online savings account without any additional fees.

There is no minimum balance and no monthly fees related to the online account. When compared to the SmartyPig high yield savings account, you can open the Ally Bank account without a systematic investment. In fact, you can open the account online with a 0$ balance.

The High Yield Rate Is Not A Promotion, It’s A Philosophy

Besides the flexibility offered by Ally Bank, I also like the fact that they really want to offer a high yield online savings bank account with the lowest fees possible and the highest interest rate.

Therefore, the 1.39 annual percentage rate on their savings account is not a promotion but their regular rate. Then, you know that your savings account won’t go from one of the highest interest paid to almost nothing like some banks do once their promotion is over. Ally Bank definitely wants to position its online account as a steady high paying interest account.

Along with this philosophy, Ally Bank is also compounding your interest on a daily basis as compared to other banks that do so monthly, quarterly or annually. The fact that the interest helps your money work harder for you and grow faster.

As with most well known online savings account, the Ally Bank high yield savings account is secured by the FDIC up to $250,000.

Before making a decision, look at this chart; the Ally Bank account is a real strong choice

For your information, I have compiled the highest paying saving accounts among all in this chart. SmartyPig looks like the most attractive due to a 2.01 APY% (and additional bonus if you take the gift certificate from specific stores) but the Ally Bank savings account is definitely the choice with the best combination of flexibility – low fees – high interest rate.

[fintools savings]