I opened a high-yield savings account with Ally, and loved the high interest and low fees so much I quickly opened another
- Ally Bank offers consistently above-average interest rates on its saving accounts, along with no minimum balance and no recurring fees.
- You can open more than one savings account at Ally, which is great for planning for goals and long-term savings needs. I opened two: one for my emergency fund, and another for my property taxes.
- I even told my sister to open one, and she called me the next month, thrilled to see the interest deposited in her account.
- See Business Insider's picks for the best high-yield savings accounts »
For most of my savings and investments, I'm a big fan of keeping things simple. Fewer accounts means less to monitor, less to worry about, and less to check up on during financial reviews. The one place where I add extra accounts on purpose is savings.
I have a few different savings accounts for different goals, like an emergency fund and saving for property taxes and insurance. I decided the best place for my multiple accounts was Ally, the online bank known for its high-yield savings. Here's why.
Ally's savings accounts are high-interest and no-fee
The big brick and mortar banks with locations around the US are popular for the ability to walk into a bank and speak with someone in person, but that doesn't mean they are the best places to keep your money. Traditional banks are notorious for high fees, low interest rates, and poor customer service.
The first benefit you may notice at Ally Bank is that its accounts don't charge any recurring fees and there are no minimum balances or activity requirements to avoid fees. You'll only run into fees for less-common activities like returned deposited items, overdrafts, and outgoing wire transfers.
Ally's interest rates always tend to rank among the best in the US. While its rates have trended downward over the last year or so, that's the case with nearly all banks during a declining interest rate period. Blame the Federal Reserve and Washington politicians for rate declines right now - not the bank.
The FDIC says the current average savings account interest rate is 0.09% nationwide. The current rate at Ally, 1.60% as of January 3, is nearly 18 times the national average. On a $1,000 balance, you would earn less than a dollar in a year at 0.09%. At 1.60%, you would bring in $16.12. That's not enough to get rich, but it's a lot more than you get with a typical account.
I liked my first account so much I opened a second
I like Ally Bank savings accounts so much that one isn't enough for me. I have two of them! Each is used for a unique purpose and a different part of my financial plan.
My first Ally high-yield savings account is for emergency fund savings. Experts suggest you should keep at least three to six months of expenses as a minimum savings cushion, and I keep a big chunk of mine at Ally. With FDIC insurance, a good interest rate, and no fees, my cash can sit there with no worries, just in case I ever need to cover an unexpected home or auto repair or to make up for an unexpected loss of income.
My second Ally savings account is dedicated just to housing costs. I don't use an escrow account with my mortgage, so I have to pay property taxes and insurance on my own. That adds up to about $13,000 per year for my California home.
I move $250 every Friday from my checking to my Ally savings account to cover these costs. This adds up to the roughly $13,000 I need for the three big payments - two for property taxes and one for insurance. I can just grab the cash from savings instead of worrying about getting enough together in my checking account to pay $4,000 to $5,000 all at once. And I earn interest along the way.
The wrong bank can be a costly mistake
My sister kept her savings at one of the biggest banks in the US through college and medical school, but after a chat with me, she decided to open her own Ally savings account, too. She called me the next month excited to see about $20 in interest deposited into her account. That was about 20 times more than she got before.
Over the course of a year, that was the difference in about $240 in interest versus less than $15. That's enough for a plane ticket, a budget weekend getaway, a few very nice meals, or just more savings in case you ever need them. There's nothing wrong with keeping a little more cash on hand than you think you need.
With financial accounts, the status quo is always the easiest choice. But just letting things sit in the bank account you set up with your parents when you were a kid is likely not the best option for your money.
It's worth taking a little more time to make sure your money is in the right place and create accounts that line up with your needs. I'm so glad I have these two accounts up and running.
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