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Updated on Friday, September 27, 2019
Banking has changed a lot since your parents’ days. Today, most Americans do their banking online — it’s easier, it’s often cheaper and online banks definitely offer the highest rates you can find if you look in the right places.
Ally Bank and Simple are two of the frontrunners in the online banking space. Simple is not actually a bank itself, but a fintech company that is owned by and partners with BBVA USA. Ally, meanwhile, is an internet bank that offers a wide range of products. Both are good options and offer plenty of consumer-friendly features, but in different areas. One may be better suited to you depending on what you’re looking for in a bank.
Ally Bank vs. Simple: A look at the online banks
Ally Bank has many fans in the financial community, and for good reason. It’s been around since well before the internet existed — 1919, to be precise, when it was known as GMAC — and it has weathered the transition to a digital existence better than most of its competitors. Often, people are worried about a lack of customer support with online banks, but Ally Bank has better hours than brick-and-mortar banks: It offers 24/7 customer support through phone, live chat, snail mail and secure email message within your account.
Ally Bank also offers a full suite of products that you’d expect from a bigger-name bank, including checking accounts, savings accounts, loans and insurance products, among others. While it offers a high interest rate, it doesn’t offer any fancy tech tools, instead preferring to stay more like a traditional bank — only located online.
Simple, on the other hand, is a new kid on the block, as it got its start in 2009. Because Simple is a fintech company and not a bank, any money you deposit with Simple actually lives in a BBVA USA bank account. Thus, your money is covered by FDIC insurance, just like at any other bank.
Simple has shaken up the banking world with its helpful tools for managing your day-to-day financial life, although it is limited in comparison to Ally Bank with regard to the financial services it provides and its customer support services. You’ll also need to be very comfortable with managing your finances on your smartphone to fully take advantage of Simple’s account services.
Ally Bank vs. Simple: How they compare on rates
While Simple does not offer a true savings account, it does offer the option to use its built-in savings tools to partition off money in a Savings Goal Account if you open a checking account. You can earn a rate of 0.60% on this Savings Goal amount, which is higher than the APY that Ally Bank offers on its savings account.
However, money that is not partitioned into a Savings Goal account at Simple earns a mere 0.00% APY. Ally Bank offers an APY of up to 0.25% for checking account balances over $15,000, which far exceeds the online bank average.
If you’re interested in opening a CD, it’s really no comparison because Simple doesn’t even offer CDs. Ally Bank offers an above-average rate on its one-year CD, though its rate on its five-year CD is currently slightly below the online bank average but still above the overall national average.
|Ally Bank||Simple||National Average*||Online Bank Average*|
|Checking||0.10% on balances under $15,000|
0.25% on balances over $15,000
|0.00% - 0.60%||0.202% APY||0.41% APY|
|Savings||0.60%||N/A||0.284% APY||1.52% APY|
|1-year CD||0.65%||N/A||1.365% APY||2.09% APY|
|5-year CD||1.00%||N/A||2.159% APY||2.70% APY|
Ally Bank vs. Simple: What account options are available?
Simple reliably stands by its name: It offers a simple account structure, composed of just a checking account with the option to set money aside to reach savings goals. If you’re researching Simple, you might notice that there are unique names for the accounts options available. Your checking account is comprised of Expenses and Safe-to-Spend buckets, while the Protected Goals Account is designed for your savings goals.
Ally Bank, on the other hand, offers a more full-service suite of products, including an interest-bearing checking account, a true savings account, three types of CDs with a variety of term lengths and a money market account. Additionally, it offers options beyond what’s listed here. This can come in handy if you’re trying to use certain financial tools for particular purposes, such as saving money in a CD ladder to earn higher rates.
|Certificates of deposit|
|Money market account|
Again, Simple makes things simple by not charging any of the common bank fees, including overdraft fees. It’s able to do this because it doesn’t actually accept overdraft charges at all — meaning that if you try to overdraft your account, the transaction will simply be declined and you’ll have to find another way to pay for the item, or simply not buy it.
Ally Bank also offers very fair policies, although it does charge more fees in some cases. It charges $25 per paid overdraft, though this charge is capped at one per day. Plus, this charge is relatively easy to avoid. For example, if you designate your savings account or money market account for overdraft transfers, you won’t be charged a fee to cover your charge. You’ll just have a lower savings account balance at the end of the day.
Ally Bank also offers a particularly good ATM policy. You won’t pay any ATM fees with Ally Bank for either in-network or out-of-network ATM use. Out-of-network ATMs may still charge a third-party fee from the ATM’s owner, but Ally Bank also does you one better here: It will reimburse you up to $10 per month for these charges. While Simple doesn’t offer reimbursement for these charges, it still does not charge fees for either in-network or out-of-network ATM usage.
|Standard checking account||$0||$0|
|Standard savings account||$0||N/A|
|ATM fee||$0 at in-network ATMs; up to $10 reimbursement per month for third-party ATM fees||$0 at in-network ATMs; no third-party ATM fee reimbursement|
|Overdraft fee||$25 per paid overdraft, maximum one per day; $0 for overdraft transfer||$0|
When to choose Ally Bank
- If you already have a good handle on budgeting
- If you want a larger range of financial products, including a savings account and CDs
- If you want more access to customer service
If you already have a good handle on your finances, including the creation of a budget, then Ally Bank is probably a better choice for you. It doesn’t offer any fancy systems for budgeting, instead assuming, like most banks, that you can figure this out on your own or use another program, such as YNAB.
Besides, once you’ve broken out of the cycle of living paycheck-to-paycheck, you’ll probably be ready for products like CDs and money market accounts, which Ally Bank offers and Simple does not. These accounts can sometimes be tricky to navigate (such as when it comes to understanding how the early withdrawal penalties on a CD work, or what you need to open a trust account), so having Ally Bank’s stellar customer support will also prove helpful in this area.
When to choose Simple
- If you want to get a better handle on managing your finances and budgeting
- If you interact with your mobile phone frequently
- If you’re tired of paying bank fees
If you find yourself avoiding your bank account because you’re afraid of what you’ll see, Simple might be a better account for you. Its budgeting tools are top-notch and do what any more seasoned budgeting program does, except it is integrated right into your bank account and does all of the money funneling automatically for you. It’s for people who are more tech-savvy than finance-savvy, to put it simply.
That’s not to say you need to be bad at money to be best for Simple. Even money managing pros might find that Simple offers a better solution to how they’re currently managing their money. However, since Simple isn’t as much of a one-stop-shop for financial products, chances are you’ll need to branch out to other banks or financial companies if you want to open a CD or money market account, start an investment and/or retirement account or get a loan. But for what it currently does, Simple does it well, and many people can benefit.