Why ally bank

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yadbugee
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Why ally bank

Post by yadbugee » Mon Feb 04, 2019 12:21 pm

Why is ally bank so popular on this forum. I have around 200k in Discover and amex ..agreed with less interest rates...but have the a.c since last few years. Trying to understand is there a strong reason why ally is more preffered over disover or amex and shoulni switch

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RickBoglehead
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Re: Why ally bank

Post by RickBoglehead » Mon Feb 04, 2019 12:26 pm

Extensive discussion this past weekend.
viewtopic.php?t=271683&start=50
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.

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dunkmachine
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Re: Why ally bank

Post by dunkmachine » Mon Feb 04, 2019 12:27 pm

I use Ally because:

1. App is wonderful. Can't speak on the quality of other banks, but Ally is so easy to use. Mobile deposits are very easy.
2. Easy to move money in and out of 11-month no penalty CD when rates make it worth it.
3. Competitive rates. Maybe not the best but consistently near the top.

rage_phish
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Re: Why ally bank

Post by rage_phish » Mon Feb 04, 2019 12:36 pm

I use synchrony, but have heard nothing but great things about ally

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fortfun
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Re: Why ally bank

Post by fortfun » Mon Feb 04, 2019 12:45 pm

Basically just an all around awesome place to do business.

Excellent savings rates.
Excellent CD rates.
Excellent checking/banking tools.
Solid customer service.
Great app/website.
No fees.
No scams.
Set up as many separate accounts as you need (vacation, kids savings, etc.)
Reimburse ATM ($15 month, I think).

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Oak&Elm
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Re: Why ally bank

Post by Oak&Elm » Mon Feb 04, 2019 12:48 pm

I recently closed my Ally savings account only because I had 3 online banks plus 1 BM which is unnecessary. No issues whatsoever with Ally, the other two PurePoint and Live Oak Bank offered everything I needed and had better rates on savings and CD's.
Last edited by Oak&Elm on Mon Feb 04, 2019 12:51 pm, edited 2 times in total.

anonenigma
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Re: Why ally bank

Post by anonenigma » Mon Feb 04, 2019 12:50 pm

I use both Ally and AMEX bank. No complaints except that AMEX is not competitive on 12 month CDs - 0.55% compared to 2.75% at Ally.

Topic Author
yadbugee
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Re: Why ally bank

Post by yadbugee » Mon Feb 04, 2019 1:09 pm

Thank you folks, mostly good customer service experience . I am happy with discover and amex. both had very quick access to service reps and happy with their service. But will still look for a ally if there is any big reason to switch

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yadbugee
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Re: Why ally bank

Post by yadbugee » Mon Feb 04, 2019 1:11 pm

anonenigma wrote:
Mon Feb 04, 2019 12:50 pm
I use both Ally and AMEX bank. No complaints except that AMEX is not competitive on 12 month CDs - 0.55% compared to 2.75% at Ally.
Thank you, for now i am using saving facilities, but yes soon i will switch to a CD mode and will definitely look at ally bank as an option.

JJP88
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Re: Why ally bank

Post by JJP88 » Mon Feb 04, 2019 1:45 pm

Opened Ally accounts because Personal Finance on Reddit, and have had no qualms since the accounts have been opened in March.

-Easy to use App and Website
-Easy to open multiple accounts with the ability to name them (Emergency Fund, Car Fund, House Downpayment and Closing)
-Security: Only place I have seen that lets me actually make my own security question. Good luck to hackers trying to find that obscure information. Why I can do this at every institution is beyond me
-Customer service reps have alwaya been friendly in my experience.

helloeveryone
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Re: Why ally bank

Post by helloeveryone » Mon Feb 04, 2019 4:53 pm

yadbugee wrote:
Mon Feb 04, 2019 12:21 pm
Why is ally bank so popular on this forum. I have around 200k in Discover and amex ..agreed with less interest rates...but have the a.c since last few years. Trying to understand is there a strong reason why ally is more preffered over disover or amex and shoulni switch
I added ally after reading about it on this forum.
Easy to use, it's for emergency fund, I also use their CD's and it's so easy to move $ to/from savings into their competitive CD's. Also easy to move $ in/out from my brick and mortar bank. (should have made the switch WAY earlier but I just didn't know about online savings and their better rates)

Lastrun
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Re: Why ally bank

Post by Lastrun » Mon Feb 04, 2019 8:02 pm

I posted this on another thread a while back

Of all of the major options Ally offered the most complete package for MY personal needs, including (in no order):

1. Decent website
2. Good 24/7 customer service. Some of the banks mentioned above do not have 24/7 service.
3. Competitive rates. Although sluggish to raise, their rates are consistently in the top 1%, which is good enough for me. This is perhaps the biggest gripe for many with Ally, but as others have said, I don't need to rate chase.
4. Full product line ranging from ordinary checking to 5 year CDs. I don't use all of these, but it is nice to have them in one place. Many only offer a high yield savings and limited CDs, no checking.
5. Decent ACH times
6. Ability to designate a beneficiary on the accounts. This is the main problem with CapitalOne 360 and why I left there. NOTE: This has changed since I posted last but I still think you cannot designate a trust as a beneficiary.
7. Low CD withdraw penalties. Last time I checked Marcus's was 270 days on a 1 year CD.

4803
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Re: Why ally bank

Post by 4803 » Mon Feb 04, 2019 9:49 pm

I use both Discover and Ally. They are both very good. Ally is across the board better - easier to open CD accounts with the same co-owner, faster in moving funds, and the interest is almost always a tad better.

Best wishes,

:) 4803.

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whodidntante
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Re: Why ally bank

Post by whodidntante » Mon Feb 04, 2019 9:52 pm

I don't get the Ally love either. Possibly it's because money is sticky meaning it tends to stay where it is. Or maybe gooey is a better word. Was Ally ever best in class? Maybe at a time when ordering a pizza online was still novel?

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travelogue
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Re: Why ally bank

Post by travelogue » Mon Feb 04, 2019 9:57 pm

whodidntante wrote:
Mon Feb 04, 2019 9:52 pm
I don't get the Ally love either. Possibly it's because money is sticky meaning it tends to stay where it is. Or maybe gooey is a better word. Was Ally ever best in class? Maybe at a time when ordering a pizza online was still novel?
So what’s better?

(FWIW I’m with Schwab for daily checking and moving from CO360 to Ally for bank savings.)

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Darth Xanadu
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Re: Why ally bank

Post by Darth Xanadu » Mon Feb 04, 2019 10:01 pm

whodidntante wrote:
Mon Feb 04, 2019 9:52 pm
Possibly it's because money is sticky meaning it tends to stay where it is. Or maybe gooey is a better word.
I think this is very true. Most people, myself included, find something they are comfortable with and inertia (stasis?) prevents them from changing, unless there is a significant reason to do so.
"A courageous teacher, failure is."

Horsefly
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Re: Why ally bank

Post by Horsefly » Mon Feb 04, 2019 10:07 pm

whodidntante wrote:
Mon Feb 04, 2019 9:52 pm
I don't get the Ally love either. Possibly it's because money is sticky meaning it tends to stay where it is. Or maybe gooey is a better word. Was Ally ever best in class? Maybe at a time when ordering a pizza online was still novel?
What? :shock: Not sure what that means...

I moved from Wells Fargo to Ally. Night and day. Ally is way better in every way I can think of.

I don't have experience with all the other on-line banks, so it would be unfair for me to compare.

Which makes me think: Maybe Ally already has more Bogleheads as customers relative to other on-line banks. It doesn't mean the love for Ally is mis-guided, just that it is more prevalent.

patientnvstr
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Re: Why ally bank

Post by patientnvstr » Mon Feb 04, 2019 10:09 pm

I love Ally, but I really hate how there's no way to control the date that scheduled transfers withdraw funds on, only the date they deliver on. It's really hard to time a transfer to coincide with a paycheck deposit, for example, since holidays can mess up the withdrawal date. I don't know why they simply don't let you choose the withdrawal date.

pdavi21
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Re: Why ally bank

Post by pdavi21 » Mon Feb 04, 2019 10:13 pm

AFAIK you can't deposit cash in Ally. Just go with a higher rate with a record like Goldman Sachs.
"We spend a great deal of time studying history, which, let's face it, is mostly the history of stupidity." -Stephen Hawking

drk
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Re: Why ally bank

Post by drk » Mon Feb 04, 2019 10:27 pm

pdavi21 wrote:
Mon Feb 04, 2019 10:13 pm
AFAIK you can't deposit cash in Ally. Just go with a higher rate with a record like Goldman Sachs.
Two things:

1. Ally has a longer record than Marcus by Goldman Sachs, and it (formerly GMAC) isn't that far behind Goldman itself (1919 vs 1869).
2. Do you have Goldman Sachs branches nearby to deposit cash, or were these statements unconnected?

Disclosure: I have an empty Marcus savings account and have never been an Ally customer.

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Kevin M
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Re: Why ally bank

Post by Kevin M » Mon Feb 04, 2019 10:42 pm

Love Ally as a hub bank, for reasons that probably have mostly been mentioned already. Don't keep much money there though, usually, since better rates elsewhere. Sometimes there are exceptions, like when they offered a 1% bonus, up to $1,000, for adding new money and keeping it there about about two months; that was an annualized rate of over 6% for what was essentially a 2-month CD.

Mostly keeping cash in Vanguard Treasury money market now, which is earning taxable-equivalent yield (TEY) for me of 2.61%. Just this month starting to switch over paying the bigger bills from my Vanguard Advantage account, which basically means using Federal MM fund as the checking account (TEY = 2.54%) and Treasury MM fund as the savings account. Beats Ally checking at 0.1% and Ally savings at 2.2%.

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Prudence
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Re: Why ally bank

Post by Prudence » Mon Feb 04, 2019 10:51 pm

Love Ally. Today I set up a new external bank to link to my Ally account and it was done and ready to submit a transfer in five minutes. Nirvana.

vbdoug
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Re: Why ally bank

Post by vbdoug » Tue Feb 05, 2019 2:33 am

I am a bigger fan of PurePoint but just recently opened an account at Ally. I cannot comment on their customer service because I have not used it. I read in this forum that people favor Ally because it has a great track record and that is the reason that they have received some of my investment.

Bacchus01
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Re: Why ally bank

Post by Bacchus01 » Tue Feb 05, 2019 6:03 am

When I opened with GMAC about 10 years ago, their rates were not just a little better but a lot better.

I also used to like their bill pay because they would not clear funds until the check cleared. Now that 95% of their bill pay is electronic, it takes the funds out exactly on the payment date whether it has cleared or not. That few extra days of float always seemed like a nice thing. No more.

We don’t use the ATM. I do like their check deposit app the best. Customer service, although rarely necessary, has always been great.

I’m starting to question my need for it though as any extra savings we have tends to now sit in Vanguard Prime.

Horsefly
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Re: Why ally bank

Post by Horsefly » Tue Feb 05, 2019 10:18 am

Bacchus01 wrote:
Tue Feb 05, 2019 6:03 am
When I opened with GMAC about 10 years ago, their rates were not just a little better but a lot better.

I also used to like their bill pay because they would not clear funds until the check cleared. Now that 95% of their bill pay is electronic, it takes the funds out exactly on the payment date whether it has cleared or not. That few extra days of float always seemed like a nice thing. No more.

We don’t use the ATM. I do like their check deposit app the best. Customer service, although rarely necessary, has always been great.

I’m starting to question my need for it though as any extra savings we have tends to now sit in Vanguard Prime.
Actually, having moved from Wells Fargo to Ally last year, I can state for sure that Ally still gives you more float than at least Wells Fargo. If I had WF send a payment to a small business that required a paper check, they took the money out of my account a full week before the payment was scheduled. Ally doesn't take it until the check is cashed on the other end. WF also took the money out 3-4 days early even if it was via ACH. Ally doesn't seem to take as long to deliver, so it's an extra day or two of float.

I've used Fidelity's CMA bill pay service, but I don't remember how much float you get there. So my only data point is with Wells Fargo, and - like most things at Wells Fargo - it was pretty bad.

DaftInvestor
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Re: Why ally bank

Post by DaftInvestor » Tue Feb 05, 2019 10:29 am

I have accounts at Synchrony, Ally, and Marcus/GS-Bank (signed up at different times for different bonuses(. Of the three:
- Ally always has had (and continues to have) the lowest HY-Savings Rate. But not by much.
- Ally is the only one of the three that I believe has checking (I don't personally use with any of the 3).
- Marcus is in the dark-ages with their CD dispositions - you have to call them during the grace period. With the other two you can program in the dispositions online - well before the CD matures.
- Synchrony is the dark ages with ACH transfers - still takes multiple days - other two complete in 24 hours.
Last edited by DaftInvestor on Tue Feb 05, 2019 11:40 am, edited 1 time in total.

atdharris
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Re: Why ally bank

Post by atdharris » Tue Feb 05, 2019 10:43 am

I use both Amex and Ally. One may have a higher rate one week and the other the next. I hold my travel savings at Ally and Amex has my cash reserves. I have no complaints with either. Ally has a good app if that's your thing, and Amex has terrific customer service, but does not have an app for their savings accounts. But again, I don't use Ally extensively, so I can't comment on their customer service. However, I can do transfers within a business day.

Bacchus01
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Re: Why ally bank

Post by Bacchus01 » Tue Feb 05, 2019 4:38 pm

Horsefly wrote:
Tue Feb 05, 2019 10:18 am
Bacchus01 wrote:
Tue Feb 05, 2019 6:03 am
When I opened with GMAC about 10 years ago, their rates were not just a little better but a lot better.

I also used to like their bill pay because they would not clear funds until the check cleared. Now that 95% of their bill pay is electronic, it takes the funds out exactly on the payment date whether it has cleared or not. That few extra days of float always seemed like a nice thing. No more.

We don’t use the ATM. I do like their check deposit app the best. Customer service, although rarely necessary, has always been great.

I’m starting to question my need for it though as any extra savings we have tends to now sit in Vanguard Prime.
Actually, having moved from Wells Fargo to Ally last year, I can state for sure that Ally still gives you more float than at least Wells Fargo. If I had WF send a payment to a small business that required a paper check, they took the money out of my account a full week before the payment was scheduled. Ally doesn't take it until the check is cashed on the other end. WF also took the money out 3-4 days early even if it was via ACH. Ally doesn't seem to take as long to deliver, so it's an extra day or two of float.

I've used Fidelity's CMA bill pay service, but I don't remember how much float you get there. So my only data point is with Wells Fargo, and - like most things at Wells Fargo - it was pretty bad.
That is not correct, at least for me. Ally takes the money out on the payment date for a physical check that it cuts. It doesn't not take it out when it's cleared.

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Re: Why ally bank

Post by Horsefly » Tue Feb 05, 2019 5:36 pm

Bacchus01 wrote:
Tue Feb 05, 2019 4:38 pm
That is not correct, at least for me. Ally takes the money out on the payment date for a physical check that it cuts. It doesn't not take it out when it's cleared.
I have no idea why it would be different for the two of us. I just checked one that I remembered, and confirmed it didn't get taken out of my checking account until the day I scheduled the payment to be received. I had assumed the guy (my gardener) cashed it that day. I know the payment showed "processing" for the week before that, but nothing showed up on my checking account transactions until the day the payment was delivered.

Bacchus01
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Re: Why ally bank

Post by Bacchus01 » Tue Feb 05, 2019 6:58 pm

Horsefly wrote:
Tue Feb 05, 2019 5:36 pm
Bacchus01 wrote:
Tue Feb 05, 2019 4:38 pm
That is not correct, at least for me. Ally takes the money out on the payment date for a physical check that it cuts. It doesn't not take it out when it's cleared.
I have no idea why it would be different for the two of us. I just checked one that I remembered, and confirmed it didn't get taken out of my checking account until the day I scheduled the payment to be received. I had assumed the guy (my gardener) cashed it that day. I know the payment showed "processing" for the week before that, but nothing showed up on my checking account transactions until the day the payment was delivered.
It’s not different. They took it out the day it was received as you told them to. The receiver likely did not cash and clear it that day. They couldn’t have. It takes at least 1 bus day to clear a physical check.

Horsefly
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Re: Why ally bank

Post by Horsefly » Tue Feb 05, 2019 7:03 pm

Bacchus01 wrote:
Tue Feb 05, 2019 6:58 pm
Horsefly wrote:
Tue Feb 05, 2019 5:36 pm
Bacchus01 wrote:
Tue Feb 05, 2019 4:38 pm
That is not correct, at least for me. Ally takes the money out on the payment date for a physical check that it cuts. It doesn't not take it out when it's cleared.
I have no idea why it would be different for the two of us. I just checked one that I remembered, and confirmed it didn't get taken out of my checking account until the day I scheduled the payment to be received. I had assumed the guy (my gardener) cashed it that day. I know the payment showed "processing" for the week before that, but nothing showed up on my checking account transactions until the day the payment was delivered.
It’s not different. They took it out the day it was received as you told them to. The receiver likely did not cash and clear it that day. They couldn’t have. It takes at least 1 bus day to clear a physical check.
Well, so it's somewhere between the two. My point is that WF took it out a full seven days before it was due, i.e. before they had even put the check in the US Post. Ally doesn't do that, but apparently takes it out on the day it is delivered. So you want one extra day of float. I'm pretty happy having the extra seven days. If I got eight, that would be nice too.

BogleMelon
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Re: Why ally bank

Post by BogleMelon » Tue Nov 19, 2019 4:35 pm

After reading through this thread viewtopic.php?f=2&t=295026, I split my cash savings between Marcus and Fidelity MM fund instead of having them all in Ally. Was that a good move?!
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

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Kevin M
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Re: Why ally bank

Post by Kevin M » Tue Nov 19, 2019 5:13 pm

BogleMelon wrote:
Tue Nov 19, 2019 4:35 pm
After reading through this thread viewtopic.php?f=2&t=295026, I split my cash savings between Marcus and Fidelity MM fund instead of having them all in Ally. Was that a good move?!
Why Fidelity MM fund? Compound yield on SPRXX is only 1.54%. Ally savings is 1.70% APY, and no-penalty CD for $25K minimum is 1.90% APY.

Are you getting some kind of bonus rate at Marcus? I see their savings rate at 1.70% APY, so same as Ally. I would use Ally NP CD at 1.90% rather than this.

Kevin
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BogleMelon
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Re: Why ally bank

Post by BogleMelon » Tue Nov 19, 2019 8:30 pm

Kevin M wrote:
Tue Nov 19, 2019 5:13 pm
BogleMelon wrote:
Tue Nov 19, 2019 4:35 pm
After reading through this thread viewtopic.php?f=2&t=295026, I split my cash savings between Marcus and Fidelity MM fund instead of having them all in Ally. Was that a good move?!
Why Fidelity MM fund? Compound yield on SPRXX is only 1.54%. Ally savings is 1.70% APY, and no-penalty CD for $25K minimum is 1.90% APY.

Are you getting some kind of bonus rate at Marcus? I see their savings rate at 1.70% APY, so same as Ally. I would use Ally NP CD at 1.90% rather than this.

Kevin
I use Fidelity MM fund SPAXX because it is only the core fund. The amount is not that big, around $23K in Fidelity and another $25K at Marcus. Any amount over than ~$50K and earmarked for mid-term goals, I invest it in a conservative 30%-70% portfolio at the same account at Fido. I am at 12% tax bracket (MFJ), 6% income state (NJ).
Is what I am doing making sense?
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

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Re: Why ally bank

Post by abuss368 » Tue Nov 19, 2019 8:32 pm

I have never used Ally but have heard good things over the years. We have simply used Vanguard Prime Money Market fund for excess cash.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

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Kevin M
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Re: Why ally bank

Post by Kevin M » Tue Nov 19, 2019 9:09 pm

BogleMelon wrote:
Tue Nov 19, 2019 8:30 pm
Kevin M wrote:
Tue Nov 19, 2019 5:13 pm
BogleMelon wrote:
Tue Nov 19, 2019 4:35 pm
After reading through this thread viewtopic.php?f=2&t=295026, I split my cash savings between Marcus and Fidelity MM fund instead of having them all in Ally. Was that a good move?!
Why Fidelity MM fund? Compound yield on SPRXX is only 1.54%. Ally savings is 1.70% APY, and no-penalty CD for $25K minimum is 1.90% APY.

Are you getting some kind of bonus rate at Marcus? I see their savings rate at 1.70% APY, so same as Ally. I would use Ally NP CD at 1.90% rather than this.

Kevin
I use Fidelity MM fund SPAXX because it is only the core fund. The amount is not that big, around $23K in Fidelity and another $25K at Marcus. Any amount over than ~$50K and earmarked for mid-term goals, I invest it in a conservative 30%-70% portfolio at the same account at Fido. I am at 12% tax bracket (MFJ), 6% income state (NJ).
Is what I am doing making sense?
I don't think using Fidelity and Marcus instead of just Ally savings, or even better, a no-penalty CD at Ally makes sense from a yield and simplicity perspective.

Compound yield of SPAXX is only 1.32%, and at your tax rates, compound taxable-equivalent yield (TEY) is only 1.37%. You could be earning 1.90% in an Ally NP CD. If for some reason you want to leave the cash in a Fidelity MM fund, there's no reason to leave it in the core (settlement) fund. Your best compound TEY at Fidelity in a taxable account with less than $100K initial investment is FDLXX, with TEY for you of 1.50%. Even if you scrounge up $100K for the initial investment (you can let it fall below that once you're in), FDZXX TEY is only 1.65%.

Caveat 1: I'm assuming your marginal tax rates are the same as your top tax brackets, which may not be the case. Example: my federal tax bracket is 12%, but my federal marginal tax rate is 27% due to marginal interest income pushing QD/LTCG from 0% to 15% tax rate. However, the marginal state tax rate is more important here, because the Treasuries and other US government obligations in SPAXX and FDLXX are exempt from state income tax.

Caveat 2: NJ is not one of the states that requires that 50% of assets be in USGO at the end of each quarter, as for CA, NY and CT, so you might get a state income tax exemption for a portion of the other funds, such as FZDXX and SPRXX, too.

Again, Marcus savings is same as Ally. Does Marcus offer anything like Ally NP CD at 1.90%?

All at Ally in a 1.90% NP CD makes more sense to me. Not only is the rate higher, but you lock in the rate for 11 months if you don't need the cash--that has been a winning strategy lately, with MM and savings account yields falling. If you can scrounge up another $3K, you could open two $25K CDs at 1.90%, and then if you need some emergency cash, just do an early withdrawal from one of them.

Kevin
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tibbitts
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Re: Why ally bank

Post by tibbitts » Tue Nov 19, 2019 9:13 pm

yadbugee wrote:
Mon Feb 04, 2019 12:21 pm
Why is ally bank so popular on this forum. I have around 200k in Discover and amex ..agreed with less interest rates...but have the a.c since last few years. Trying to understand is there a strong reason why ally is more preffered over disover or amex and shoulni switch
I'm too lazy to read the rest of the thread to find out what a.c. means. Please edit the original post to clarify.

BogleMelon
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Re: Why ally bank

Post by BogleMelon » Tue Nov 19, 2019 9:22 pm

Kevin M wrote:
Tue Nov 19, 2019 9:09 pm
BogleMelon wrote:
Tue Nov 19, 2019 8:30 pm
Kevin M wrote:
Tue Nov 19, 2019 5:13 pm
BogleMelon wrote:
Tue Nov 19, 2019 4:35 pm
After reading through this thread viewtopic.php?f=2&t=295026, I split my cash savings between Marcus and Fidelity MM fund instead of having them all in Ally. Was that a good move?!
Why Fidelity MM fund? Compound yield on SPRXX is only 1.54%. Ally savings is 1.70% APY, and no-penalty CD for $25K minimum is 1.90% APY.

Are you getting some kind of bonus rate at Marcus? I see their savings rate at 1.70% APY, so same as Ally. I would use Ally NP CD at 1.90% rather than this.

Kevin
I use Fidelity MM fund SPAXX because it is only the core fund. The amount is not that big, around $23K in Fidelity and another $25K at Marcus. Any amount over than ~$50K and earmarked for mid-term goals, I invest it in a conservative 30%-70% portfolio at the same account at Fido. I am at 12% tax bracket (MFJ), 6% income state (NJ).
Is what I am doing making sense?
I don't think using Fidelity and Marcus instead of just Ally savings, or even better, a no-penalty CD at Ally makes sense from a yield and simplicity perspective.

Compound yield of SPAXX is only 1.32%, and at your tax rates, compound taxable-equivalent yield (TEY) is only 1.37%. You could be earning 1.90% in an Ally NP CD. If for some reason you want to leave the cash in a Fidelity MM fund, there's no reason to leave it in the core (settlement) fund. Your best compound TEY at Fidelity in a taxable account with less than $100K initial investment is FDLXX, with TEY for you of 1.50%. Even if you scrounge up $100K for the initial investment (you can let it fall below that once you're in), FDZXX TEY is only 1.65%.

Caveat 1: I'm assuming your marginal tax rates are the same as your top tax brackets, which may not be the case. Example: my federal tax bracket is 12%, but my federal marginal tax rate is 27% due to marginal interest income pushing QD/LTCG from 0% to 15% tax rate. However, the marginal state tax rate is more important here, because the Treasuries and other US government obligations in SPAXX and FDLXX are exempt from state income tax.

Caveat 2: NJ is not one of the states that requires that 50% of assets be in USGO at the end of each quarter, as for CA, NY and CT, so you might get a state income tax exemption for a portion of the other funds, such as FZDXX and SPRXX, too.

Again, Marcus savings is same as Ally. Does Marcus offer anything like Ally NP CD at 1.90%?

All at Ally in a 1.90% NP CD makes more sense to me. Not only is the rate higher, but you lock in the rate for 11 months if you don't need the cash--that has been a winning strategy lately, with MM and savings account yields falling. If you can scrounge up another $3K, you could open two $25K CDs at 1.90%, and then if you need some emergency cash, just do an early withdrawal from one of them.

Kevin
Appreciate your reply.
For Caveat 1, your assumption is correct. My marginal tax rate is the same as the top bracket.
Marcus has a np CD (7 months only) with a minimum of $500. Same APY as Ally 1.9%
The thing is the 1.9% is before taxes. That is TEY of around 1.55% (compare to your suggestion of FDLXX 1.5%) I think it doesn't worth the hassle of adding CD's to my portfolio. I think I will go then with FDLXX with the money already in Fido. Question though, if I want to use some of these funds to buy other ETF's, do I need to sell the fund shares first?
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Kevin M
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Re: Why ally bank

Post by Kevin M » Tue Nov 19, 2019 9:41 pm

BogleMelon wrote:
Tue Nov 19, 2019 9:22 pm
Appreciate your reply.
For Caveat 1, your assumption is correct. My marginal tax rate is the same as the top bracket.
Marcus has a np CD (7 months only) with a minimum of $500. Same APY as Ally 1.9%
The thing is the 1.9% is before taxes. That is TEY of around 1.55% (compare to your suggestion of FDLXX 1.5%) <snip>
No, you've got it backwards. TEY is the yield before taxes on a taxable-equivalent basis. So you compare the compound TEYs I quoted to the APY of a savings account or NP CD. So FDLXX compound TEY of 1.5% is compared to 1.90% for the NP CD. The after-tax yield (ATY) of FDLXX is 1.22%, and the ATY of the NP CD is 1.54%. NP CD wins by more than 30 basis points.
BogleMelon wrote:
Tue Nov 19, 2019 9:22 pm
<snip> I think it doesn't worth the hassle of adding CD's to my portfolio.
I don't really think of the NP CD as a CD, since you can do a penalty-free withdrawal from the CD at any time after six days. I think of it more as a savings account, but with a rate guaranteed for 11 months, and that from which I must withdraw the full amount if I want the cash. It takes less than five minutes to open an NP CD at Ally, and the same to do an early withdrawal.
BogleMelon wrote:
Tue Nov 19, 2019 9:22 pm
I think I will go then with FDLXX with the money already in Fido. Question though, if I want to use some of these funds to buy other ETF's, do I need to sell the fund shares first?
No. One nice thing about Fidelity is that they will liquidate shares of non-core MM funds to cover trades--you don't have to have the cash in the core fund.

Still, I wouldn't keep much cash in Fidelity MM funds--the yields just aren't competitive. On the other hand, we're not talking about a lot of dollars of lost interest.

Kevin
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Re: Why ally bank

Post by BogleMelon » Tue Nov 19, 2019 10:05 pm

Kevin M wrote:
Tue Nov 19, 2019 9:41 pm
BogleMelon wrote:
Tue Nov 19, 2019 9:22 pm
Appreciate your reply.
For Caveat 1, your assumption is correct. My marginal tax rate is the same as the top bracket.
Marcus has a np CD (7 months only) with a minimum of $500. Same APY as Ally 1.9%
The thing is the 1.9% is before taxes. That is TEY of around 1.55% (compare to your suggestion of FDLXX 1.5%) <snip>
No, you've got it backwards. TEY is the yield before taxes on a taxable-equivalent basis.
This gives me a big "Ahaaaa" moment! I always read your TEY formulas and threads and think to myself, why the math is different than mine! Now it all makes sense! I was such a naive, it was the other way around all that time! :oops:

I think I may consider switching everything to NP CD then.

I again appreciate the insight and the education :beer
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Re: Why ally bank

Post by ARoseByAnyOtherName » Tue Nov 19, 2019 10:07 pm

Kevin M wrote:
Tue Nov 19, 2019 9:41 pm
On the other hand, we're not talking about a lot of dollars of lost interest.
This is the key point here. Doing a little math, assuming a $50,000 cash deposit:

Fidelity - ATY of FDLXX is 1.22%:
$610 a year in interest

Ally - ATY of the NP CD is 1.54%:
$770 a year in interest

So on a $50k balance you're giving up $160 a year by going with this Fidelity money market instead of an Ally CD. (And note that FZDXX at Fidelity has a higher yield but is limited to $100k and above).

That's not nearly enough for me to chase yield. Maybe it is for others, but not me.

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Re: Why ally bank

Post by zlandar » Tue Nov 19, 2019 10:15 pm

I've been with Ally since 2013. Switched from a traditional brick and mortar bank that was paying a fraction of .1% to a meaningful rate of interest. As others stated rates on checking/savings may not be the very best but they are always close. Their fees for stuff like wiring have always been reasonable. Extremely easy to create a savings account and instantaneously move money between Ally checkings and savings. Mobile app is easy to use for depositing checks.

I don't have a compelling reason to switch to another online bank.

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Re: Why ally bank

Post by nydoc » Tue Nov 19, 2019 11:20 pm

Nothing special about Ally. All online banks are the same. Marcus is a little better than Ally. Who ever gives you bonus use them. If you need to get real high yield, put it in money market account at Vanguard.

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Re: Why ally bank

Post by lazyday » Wed Nov 20, 2019 1:42 am

nydoc wrote:
Tue Nov 19, 2019 11:20 pm
All online banks are the same.
Except for different features/products/restrictions, different fees, different interest rates, different speed for ACH, different customer service, etc.

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Re: Why ally bank

Post by RJC » Wed Nov 20, 2019 8:34 am

Is Ally better than a credit union such as Navy Federal?

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Re: Why ally bank

Post by sperry8 » Wed Nov 20, 2019 8:39 am

Kevin M wrote:
Mon Feb 04, 2019 10:42 pm
Love Ally as a hub bank, for reasons that probably have mostly been mentioned already. Don't keep much money there though, usually, since better rates elsewhere. Sometimes there are exceptions, like when they offered a 1% bonus, up to $1,000, for adding new money and keeping it there about about two months; that was an annualized rate of over 6% for what was essentially a 2-month CD.

Mostly keeping cash in Vanguard Treasury money market now, which is earning taxable-equivalent yield (TEY) for me of 2.61%. Just this month starting to switch over paying the bigger bills from my Vanguard Advantage account, which basically means using Federal MM fund as the checking account (TEY = 2.54%) and Treasury MM fund as the savings account. Beats Ally checking at 0.1% and Ally savings at 2.2%.

Kevin
Agree primarily for reason I bolded above. The hub allows me to rate chase and send monies around to the top earning banks with ease. The interface can't be beat and allows me to see the exact day of arrival for new interest rates.

Ally's rates aren't the best (although better than most brick & mortar banks) but it is an excellent hub bank. It user interface is in the top 1%, perhaps the best/easiest to use.

Its customer service is good, significantly better than brick & mortar banks like Citibank and HSBC, but not better (or on par with) Schwab.

It offers a good bill pay service (easy to use).

It offers mobile deposit, although it is just good. However, takes too long to clear funds (whereas USAA clears them immediately).

And finally, its no penalty CDs and CD specials from time to time do get my funds there.

All in all - if more online/offline banks mirrored Ally most of these threads would go away since banks would finally move into the 2000s in terms of what banks should be doing at the base level.
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Re: Why ally bank

Post by mister37 » Wed Nov 20, 2019 8:49 am

Ally may have great customer service, good CD rates and a wonderful app. Our EF is at Baxter Credit Union (BCU) where we are getting 2.5% and 3% in our saving and checking accounts. No reason for us to chase anything else, we are happy with those rates.
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Re: Why ally bank

Post by HueyLD » Wed Nov 20, 2019 8:53 am

RJC wrote:
Wed Nov 20, 2019 8:34 am
Is Ally better than a credit union such as Navy Federal?
Absolutely because NFCU is not an option for a lot of people.

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Re: Why ally bank

Post by 3-20Characters » Wed Nov 20, 2019 8:57 am

I think their website and apps are if not best in class, certainly up there. Their rates are up there (competitive). I’ve read some complaints here about CS but have not personally experienced any myself. The few times I’ve called, they’ve been great. I don’t chase small % increases in interest (which are often temporary). I also have cash in Vanguard prime MM, so I can easily move money between the two. Not a big CD guy so I’m not looking for long term rates. So the question, why would I switch? I’ve had enough experience with banks to know good is enough is pretty darn good and don’t mess with it.

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Re: Why ally bank

Post by ARoseByAnyOtherName » Wed Nov 20, 2019 9:54 am

3-20Characters wrote:
Wed Nov 20, 2019 8:57 am
I think their website and apps are if not best in class, certainly up there. Their rates are up there (competitive). I’ve read some complaints here about CS but have not personally experienced any myself. The few times I’ve called, they’ve been great. I don’t chase small % increases in interest (which are often temporary). I also have cash in Vanguard prime MM, so I can easily move money between the two. Not a big CD guy so I’m not looking for long term rates. So the question, why would I switch?
You shouldn’t.
3-20Characters wrote:
Wed Nov 20, 2019 8:57 am
I’ve had enough experience with banks to know good is enough is pretty darn good and don’t mess with it.
Yup. This is something that a lot of folks gloss over, perhaps intentionally, in discussions of yield chasing and brokerage churning.

Simplicity is a key boglehead principal. Personally I’d rather give up a few bucks by not chasing yield or bonuses and keep my life simple.

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