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Moving to an Online Bank

January 12th, 2016 at 10:48 pm

I recently decided to finally switch banks. I've been postponing this because I know what a time-suck it will be to transfer all my different retail/membership/direct deposit/etc accounts to the new checking account.

I recently opened an interest-yielding checking account through online bank Ally and a savings account through them as well. I've read many good things about them on NerdWallet, BankRate, etc. Any of you have an opinion on Ally?

What finally made me put on my big girl pants and do this was because my dad recently passed away and he had life insurance in which I am a beneficiary. I didn't want that death benefit check sitting in a checking account doing nothing.
I am also in the progress of selling my townhouse in Minnesota and will be getting check for the mortgage/purchase price difference and didn't want that sitting in an account that wouldn't do anything either.

I've never done any investing other than a 401K (and buying a couple Powerball tickets this week for the first time ever) so I figured a high-yield interest savings account was the first logical step.

9 Responses to “Moving to an Online Bank”

  1. Butterscotch Says:

    I'm so sorry about your father. Good luck with the new banking. Are you able to keep your old account for all existing payments and direct deposits that you mentioned, and then just open another for these later amounts? Might save you the hassle of switching everything like you mentioned.

  2. Amber Says:

    I don't know much about Ally, but I've heard great things about them. Please keep us posted on your experience

  3. FrugalTexan75 Says:

    I'm sorry for your loss.

  4. Jenn Says:

    I opened a savings account with Ally about a year ago and I've been pleased with them. It's nice to see the interest compound. (The interest at my local bank's savings which backs up my checking account is like a joke in comparison.)

  5. AnotherReader Says:

    The checking account interest at Ally is not that great. My suggestion is to keep your existing checking account for awhile and open a savings account and a checking account at Ally. Keep most of the money in the savings account until you need it. Moving between the two Ally accounts is easy.

    Keep the old checking account for money that needs to be local and for the ATM network. You can gradually switch over to Ally if you find the local bank is unnecessary.

  6. snafu Says:

    Condolences, sorry to learn of your dad's passing. Happy to see you back. Has Montana been working out for you?

    Most of the information on Ally is positive. Both Kiplinger's and Money magazines offer very positive reviews. Do you plan to hold both chequing and savings accounts at Ally? Is it your plan to close an existing 'brick & mortar' account and pay bills and automatic withdrawals from Ally? In some instances financial institutions 'hold' funds without explanation on new accounts. You need to verify when funds will be totally released before any debits cause unexpected embarrassment and fat fees.

    The issue with Savings Accounts is the paltry interest paid out, especially when that is compared to interest charged for loans. Of course they need to make profit but some naive consumers are paying 22% interest on CCs. Does Ally offer it's own CC? Does it offer cash back or some benefit of value to you?

    Do you know the details associated with your 401K? Is it administered by employer or self directed? What investments] does it hold? What are the associated administrative fees and costs? Do you have a plan for the sums incoming from your late dad's estate and sum remaining from sale of MN condo? It's usually recommended to retain cash if there is planned spending. I suggest you might read The Automatic Millionaire , easily reads, likely available from your library as hard copy or audio. I realize the stock market is sliding downward just now but you could view this as 'on sale,' due to international circumstances and upsets. Many of us are carrying on with our over all, longer term plan.

  7. snafu Says:

    apology, my bewildering MacAir doesn't let me 'edit' and drops phrases... I was trying to suggest easy read books The Automatic Millionaire you might find helpful...

    if it doesn't work...sorry

  8. Amber Says:

    My apologies, I am sorry for your loss 🙏🏾

  9. natasha.cornelius Says:

    Thanks everyone for the kind words.

    To those of you asking if I'm planning on keeping my brick-and-mortar bank as well, I do plan on doing so for a little while at least while I test out Ally. My paychecks and rental income are direct deposit into my brick-and-mortar checking account so I'll wait to change up those just in case.

    @AnotherReader - Ally reimburses ATM fees up to $10 per billing cycle so I should be OK there. I can't recall the last time I went to an ATM anyway though, so I rarely will need to take advantage of that benefit.

    @snafu - Thanks for the very informational comment! First of all, I am still in Montana and still in the tiny house Smile With the recent family stuff and the holidays there really wasn't any time to look for a place to move (nor would it have made sense because I was flying back and forth from MN often to spend time with family.) My boyfriend and I are back on the house-hunt though... now I just need to decide if we want to keep renting or look into buying property since I'm selling the MN townhouse...
    So far in life I've never had an issue with credit card payments. I pay my balance in full each month. The only reason I use a credit card is to build credit and get the double cash back my CC company offers me (CitiBank). So even if Ally provides a CC I won't be switching.
    My 401K is administered by my employer (it's through John Hancock). They match what I put in up to a certain amount (I think it's 6 percent?) My 401K is a "balanced" portfolio. Some risk, but nothing crazy.
    I don't have a for sure plan yet with the incoming sums. For a little while there I didn't even want to think about it because I felt bad trying to plan for money that I wouldn't even have if my dad was still alive. My step-dad (who actually helped take care of my dad as he battled in the end against cancer) kept re-assuring me that I shouldn't feel guilty about having the money since my dad planned ahead and wanted me to have it. I work in the life insurance industry too so I really had no excuse to feel bad since I talk to people everyday about life insurance being a gift of love. I think I just plan on putting both sums into my savings account and if I end up buying property out here in Montana then that's what it'll be used for.
    Thanks for the book suggestion - I'm going to go Google it now.

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