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Don't sleep on Ally's high-yield savings account.
If you like earning money while you sleep (who doesn't?), then it's probably time to open up a high-yield savings account.
High-yield savings accounts offer much higher interest rates than your checking account or even a traditional savings account, which have average interest rates around 0.1% and 1%, respectively. The trade off, depending on how you look at it, is a limit on the number of transactions and withdrawals you can make - six per statement cycle - and no access to ATMs.
While there are dozens of banks offering competitive rates on high-yield savings accounts, financial planners and non-experts alike are obsessed with Ally's. Ally's high-yield savings account has no minimum balance or monthly fees, and is currently offering a 2.2% annual percentage yield.
Ally was named the best online bank and the best bank for millennials in 2018 by Kiplinger. It also ranked second in this year's J.D. Power's "Direct Banking Satisfaction Study," one point behind Charles Schwab. J.D. Power said Ally ranked "higher than average on competitiveness of interest rates."
Here's how to open a high-yield savings account at Ally
1. Go to Ally.com and look for its online savings account.
Ally Bank/Screenshot via Business Insider
2. The "open account" button will bring you to this page, where you'll let Ally know if this is your first account at the bank. At the top of the window, you'll see the five steps to open an account.
Ally Bank/Screenshot via Business Insider
3. Next, you'll specify what type of account you want to open and the amount of your initial deposit. Ally offers the same interest rate on all balance tiers for its online savings accounts.
Ally Bank/Screenshot via Business Insider
4. You'll get a chance to review your initial deposit before moving on to the next step.
Ally Bank/Screenshot via Business Insider
5. You must be a legal resident or resident alien of the US to open an account.
Ally Bank/Screenshot via Business Insider
6. Next you'll enter your basic information - name, birthdate, Social Security number, Mother's maiden name (for security purposes), and your occupation.
Ally Bank/Screenshot via Business Insider
7. If you don't feel comfortable providing your Social Security number online, you can call Ally directly to finish your application.
Ally Bank/Screenshot via Business Insider
8. You'll also be asked to provide your address history if you have moved in the last five years.
Ally Bank/Screenshot via Business Insider
9. Ally, among many other banks, uses your address history to verify identity. It helps protect against fraudsters opening accounts in your name.
Ally Bank/Screenshot via Business Insider
10. You're halfway there! Since Ally is an online bank, it needs you to sign a form consenting to electronic statements (you can still obtain paper copies, if you like).
Ally Bank/Screenshot via Business Insider
11. Before submitting your application, you'll need to sign another tax form. As with any high-yield savings account, if you earn interest throughout the year, you'll get a Form 1099-INT from your bank to include with your tax return, and your interest will be subject to taxes at your normal income tax rate.
Ally Bank/Screenshot via Business Insider
12. Ally takes less than a minute to review your application.
Ally Bank/Screenshot via Business Insider
13. If you haven't figured it out by now, Ally is a stickler for verification. The last step before your application goes through is answering a few specific security questions, however random they may seem.
Ally Bank/Screenshot via Business Insider
14. There's no minimum balance required to open a high-yield savings account at Ally, but you can make an initial deposit if you like.
Ally Bank/Screenshot via Business Insider
15. The final step is setting up your online account.
Ally Bank/Screenshot via Business Insider
16. Once your account is set up, Ally recommends adding even more security measures.
Ally Bank/Screenshot via Business Insider
17. If you opt-in to the security code feature, Ally will send you a security code by your choice of text or email each time you attempt to log in to your account from an unfamiliar computer.
Ally Bank/Screenshot via Business Insider
18. Here's what your dashboard will look like inside your account. Ally makes it very easy to open up and label multiple savings accounts for different goals, and keep track of how much interest you're earning on each account.
Ally Bank/Screenshot via Business Insider
That's it! You'll be provided with an account number and routing number, which you can use to set up a one-time or automatic, regular transfers. Remember that your transfer and withdrawal limit is six per statement cycle. Any transactions beyond the limit will incur a $10 fee.
Happy earning!
Want to open a high-yield savings account? Consider these offers from our partners:
Personal Finance Insider offers tools and calculators to help you make smart decisions with your money. We do not give investment advice or encourage you to buy or sell stocks or other financial products. What you decide to do with your money is up to you. If you take action based on one of the recommendations listed in the calculator, we get a small share of the revenue from our commerce partners.
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