Best High Yield Savings Accounts for 2020: Ally Bank and SmartyPig

For anyone looking to invest in their future, having a great savings or investment account is a good starting point. The big question for many new investors is “how to get started?” There are many things that must be put into consideration when looking at investment accounts to set up or brokerage firms that offer the best services.

There are different types of investment and savings accounts such as retirement accounts like IRAs and 401(k); savings accounts, certificates of deposits (CD), and micro-savings accounts like SmartyPig. In today’s world, there are multiple online account providers that use top-tech products to ensure their customers find it very conducive to make use of their platforms.

Investing is a big responsibility that requires commitment and consistency, and sometimes, the hardest part is picking the right brokerage firm or getting started. We’ve selected two investment accounts that are a good fit for beginners and people who only want to save for a particular goal.

Ally Bank

Ally (ALLY) Financial is the parent company of Ally Bank and Ally Invest, a publicly-traded company. In 2016, Ally Financials purchased TradeKing, a popular low-cost investment platform, and rebranded it as Ally Invest.  Though it is relatively new in the stockbroker industry, this brokerage firm has gained wide acceptance and popularity amongst both new and experienced investors. Its primary focus is on self-directed investing and options trading.

Ally Bank, on the other hand, is Ally Invest’s sister company and one of the leading online banks. Its interest rates and loans can be considered as one of the best in the United States and other locations it has coverage. It is strictly an online bank with over 7,000 employees and more than $71 billion in customer deposits.

This online bank offers customers a variety of financial services, permitting them to open any type of bank account whether for short-term savings or long-term savings. These accounts include an online savings account, money market account, interest checking account, and certificates of deposit.

Its online savings account pays a high annual percentage yield (APY) on deposits compared to other competitors in the market. The savings account offers a rate of 1.50% above the national 0.07% average. Its interest is also compounded daily, that way customers will earn more money on interest compared to other accounts that compound monthly. There is no required minimum initial deposit and no monthly fees. Customers can fund their accounts by transferring money from another account, mailing checks, writing funds, or making a mobile check deposit. While to withdraw, you would have to transfer funds from your Ally account to your linked account from another bank as Ally’s online savings account does not come with a debit card.

Generally, savings account with a good competitive rate is really a good option for funds that require regular or quick access. They are also recommended for people that aren’t comfortable with taking risks. Savings accounts can be used as short-term saving plans to meet short-term goals.

Ally’s money market account is a hybrid of checking and savings account. Customers can both earn interests and freely access their cash instantly. This account includes debit cards and free checks for easy withdrawal. Customers can also enjoy ATM services with no monthly maintenance fees. However, money market accounts have limitations placed on certain withdrawals which allow only six withdrawals per month.

Ally’s interest checking account is not just free but also pays a modest return on customers’ cash. Customers can earn as much as 0.10% on balances less than $15,00 and 0.50% on balances of $15,000 or more. You can also pay bills online or send instant and secure payments online with Zelle. This particular account also allows you directly deposit checks to your account via the mobile app.

Ally’s certificates of deposits (CDs) are called High-Yield CDs and the online bank has a variety of them. These CDs are traditional CDs that require customers to leave funds with the bank over a specified length of time. This attracts higher rates at issue. There is also no requirement for minimum deposits to get started, unlike many other traditional CDs that require a minimum deposit of $500. Customers who try to cash out of a High-Yield CD before the specified date stand a chance to withdraw a penalty from their proceeds.

Ally bank isn’t just an online bank designed to hold customer’s money. It is also a good online banking solution to customers who want to:

• Open a savings account with no required minimum account balance

• Open a checking account that comes with a debit card with no monthly maintenance fees

• Earn high returns on savings

• Earn more on their cash with CDs that do not require minimum deposits

Top Perks of Ally Bank

• Relatively high rates on savings accounts and certificates of deposits (CDs)

• Above-average 1.50% APY on savings

• It does not require minimum opening balance or monthly fees

• It has over 43,000 AllPoint ATMs across the United States

• It is a good short-term or long-term savings option for both new and experienced customers

• It is a great option for anyone seeking free online banking

• Highly competitive

• Good customer service

• Easily accessible website

Downsides of Ally Bank

• No physical or brick-and-mortar branches where customers can easily visit

• No provision of direct cash deposit to fund an Ally Bank account

• It charges a $10 fee on every outbound transfer done with savings account after the sixth time in a month

• The money market account pays less than the savings account compared to other banks’ money markets.

Bottom line: Ally Bank is a great option for people seeking free online banking services and higher interest rates. The online bank’s offerings allow it to give its customers savings in the form of high-interest rates. Its customer service also does a great job by instantly responding to customers with questions or account opening/maintenance needs. It offers 24/7 phone support which allows customers to see the estimated wait time before putting a call through. There’s also chat support which allows you to chat with any customer service representative.

SmartyPig

Created in 2008, SmartyPig is an online site that helps individuals save money for specific short-term goals. It can be considered as an online “piggy bank” with a high-interest rate. It helps customers “organize” their money so they can save for different financial goals. As its motto, it is “Simple. Smart. Saving.” It basically offers customers simple micro-saving services that are completely free to use.

SmarytPig comes in handy when you want to save for a new car, a vacation trip, a new computer, or even a down payment on a new home. To use SmartyPig, you would have to create a new goal and set up automatic bank transfers from your active checking account to fund it. The main purpose of creating SmartyPig is to help people develop a savings habit and reach small financial goals.

One unique aspect of SmartyPig is that it allows friends and family to contribute to your savings account. You can also contribute to other people’s savings account to help them reach their savings goals.

How to Get Started on SmartyPig

• Open a SmartyPig Account: Opening an account with SmartyPig is absolutely free and to do so, you’d have to visit their website. On the website, you’d find a “Create Account” button at the top-right edge of your screen, click on it! You must be at least 18 years old to register. You must also be resident in the US. Other requirements needed to fully set up your account include any state-issued ID or driver’s license number, home address, email address, mobile phone number, and Social Security Number (SSN).

• Choose a ‘New Goal’: Once your account has been fully set up, you will see a display on your dashboard which carried your active goals. Click on the “Add a New Goal” button to set up new goals. Each goal represents what you are saving for and the target savings amount.

• Fund Account: An initial deposit amount of at least $25 and a $250,000 maximum would be required to fund your account. You’d also have to select the date you’d like to reach your savings goal and the bank account you’d like to receive automatic transfers from.

• Set Up Recurring Deposits: This can be done on a monthly or bi-monthly basis or one-time transfers. However, SmartyPig recommends a regular savings deposit amount based on your target savings amount

NB: SmartyPig also makes provision for your friends or family to fund your account by contributing to your savings goals.

SmartyPig is a great short-terms savings platform and a good place to save “emergency” funds. However, for long-term savings and investments, SmartyPig is not a great option. There is no provision for investing accounts or retirement savings accounts. Anyone can use SmartyPig so long as they have an active checking or savings account.

Key Features

• Variety of options to help achieve your goals

• Allows you to set up as many goals as possible

• Allows you to receive contributions from friends and family

• Allows you to contribute to others’ savings account

• Provides tracking tools that let you track your progress

• Allows you consolidate your saving account in one place

• Easily access your account from anywhere at anytime

• SmartyPig savings account can be linked to other money management sites

The major thing that distinguishes SmartyPig from other micro-savings service providers is that account holders can broadcast their savings progress on social media platforms and receive contributions from family and friends who track the user’s progress Via Twitter or Facebook.

Once you meet your savings goal and you’re ready to cash in the money there are three options to access your money:

• A retail gift card which comes with a cash bonus up to 14%

• SmartyPig Mastercard debit card

• Bank transfer deposit

SmartyPig is FDIC insured by the partner BBVA Compass, just like regular savings account with a traditional bank. SmartyPig accounts also pay 1.60% in interest.

‘How does SmartyPig make its money?’

Given that SmartyPig is relatively free to use, they are still able to make money through other sources like their redemption program. They offer customers a cashback boost if they use retail gift cards to spend their cash or using their Mastercard debit card to make transactions. By using their retail gift cards to make transactions, the company will get a marketing commission fee per transaction.