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Updated on Friday, March 15, 2019
You can’t really go wrong with Ally Bank or Capital One, as they both offer competitive rates and have been among the top online banks for quite some time. However, it’s worth noting that Ally Bank was selected as the top online bank of 2019 by MagnifyMoney for a reason — it offers consistently high rates on the majority of its products. And while Capital One offers solid rates and products compared to most banks, Ally Bank clearly outshines it on about every front, as you can see from our match up below.
Founded in 1919 and rebranded as Ally Financial in 2010, Ally Bank is an entirely online bank. Choose from products in a variety of categories, including banking, credit cards, auto loans, home loans and investment opportunities.
Capital One, the largest direct bank in the U.S. The bank rebranded its online products as Capital One 360 in 2013, after Capital One acquired ING Direct’s U.S. business. Enjoy a variety of product offerings, including several savings and checking account options.
In this review, we’ll compare and contrast Ally Bank and Capital One 360 products to help you decide which bank is the best fit for you.
Ally Bank vs Capital One: How their rates compare
One of the most important things to look for when opening a new account, is the rate it’s attached to. Even a few percentage points can make a big difference in the amount of interest you’ll earn, so make sure your money is hard at work for you.
Both Ally Bank and Capital One offer select rates that surpass national and online bank averages, but neither beats every mark. Generally speaking, Ally Bank’s savings account rates more than double that of Capital One. As for checking, Capital One offers better rates for two different types of customers — those with a minimum account balance less than $15,000 and those with more than $100,000 — but Ally Bank comes out on top for the rest. For one year CDs, Ally Bank has a slightly better rate, but the two banks offer the same above-average rate on five year CDs
Overall, Ally Bank is the better choice, because most of its rates just can’t be beat.
|Ally||Capital One||National average*||Online bank average*
|Savings||0.50% APY||1.00% APY||0.270% APY||1.52% APY
|Checking||0.10% APY, less than $15,000 minimum daily balance|
0.25% APY, minimum daily balance of $15,000 or more
|0.10% APY, minimum account balance of $0.01 to $49,999.99|
0.10% APY, minimum account balance of $50,000 to $99,999.99
0.10% APY, minimum account balance of $100,000
|0.189% APY||0.41% APY|
|1 year CD||0.55% APY||0.20% APY||1.356% APY||2.09% APY
|5 year CD||0.80% APY||0.80% APY||2.255% APY||2.70% APY|
Ally Bank vs Capital One: Which has better account options?
Since both banks have similar account options, it really comes down to choosing the bank that offers the best rates. In that case, Ally Bank is the better choice, because its rates are more competitive. Putting your money in an account with a higher rate will maximize your earning power.
Both banks offer one standard checking account, but Capital One also has a Money teen checking account. Available only online, you’ll have full access to your child’s account — log in with your own username and password.
When it comes to savings accounts, both Ally Bank and Capital One offer standard savings, money market, IRA and CD options. Similar to checking, Capital One also has a Kids Savings Account. You’ll have full access to your child’s savings account, including the added ability to transfer money, set up automatic savings and manage account details.
Both banks offer several different types of CDs, including high-yield CDs and IRA CDs. However, Ally Bank takes it up a notch with its Raise Your Rate CD and No Penalty CD. The former gives you the chance to raise your rate once over a two-year term or twice over a four-year term, if Ally Bank’s rate increases for your term and balance tier. The latter allows you to withdraw all your money after the first six days of funding and keep the interest earned with no penalty.
Ally Bank vs Capital One: How they compare on fees
|Standard savings account||No monthly maintenance fees||No monthly maintenance fees
|Standard checking account||No fee for everyday services and transactions||No fee for everyday services and transactions
|ATM fee||Use any Allpoint ATM in the U.S. for free and enjoy an up to $10 reimbursement per statement for ATM fees outside the network.||Enjoy complimentary access to 39,000 Capital One and Allpoint ATMs. Some banking products come with an up to $15 monthly reimbursement for ATM use beyond the network and outside the country.|
|Overdraft fee||Overdraft transfer service is free, but you’ll be charged $25 — maximum one fee per day — for overdraft items paid or returned.||Fees vary according to your overdraft settings. Those with a fee include the Overdraft Line of Credit — you pay interest on the overdrawn amount for the entire borrowing period — and Next Day Grace — you have one business day to repay the overdrawn amount or you’re charged a $35 fee.
Ally Bank and Capital One both offer savings and checking accounts without monthly maintenance fees, but overall, Ally Bank is the better choice. This call is made on the fact that Ally Bank clearly lists all possible fees, whereas Capital One is a bit more elusive about potential charges you could incur.
When you read the fine print, Capital One notes there could be charges for overdraft on credit — as highlighted in the table above — as well as overnight check delivery, overnight delivery of a replacement card, a stop payment, or if you write a rejected check.
On the other hand, Ally Bank charges a fee for cross border/currency conversion transactions, returned deposit items, overdraft items paid or returned — as noted in table above — stop payment items, rush delivery of debit cards or other items, overnight bill pay — delivery by mail — same-day bill pay — electronic delivery when available — outgoing wires — domestic only, international isn’t available — and account research.
Who should bank with Ally Bank?
Ally Bank is the best choice for independent customers who want an entirely online banking experience. Live customer service is available on a 24/7 basis, but the bank has no brick-and-mortar locations. This means features like face-to-face conversations with a bank teller and the ability to deposit cash are not available, so take this into consideration before opening an account.
If you plan to maintain a $15,000 minimum daily balance in your checking account, the bank’s 0.25% APY is highly competitive. However, its 0.10% APY for checking accounts with less than a $15,000 minimum daily balance falls short of both the national average and the online bank average.
Ally Bank’s competitive rates also make it an excellent choice to park your money in a traditional savings account or CD. The bank’s 0.50% APY for savings accounts, 0.55% APY for one year CDs and 0.80% APY for five year CDs surpass both the national average and the online bank average, allowing you to maximize interest profits.
Who should bank with Capital One?
Capital One offers the convenience of online banking, with the ability to stop by a Capital One cafe. If you want to do most of your banking online, but want the peace of mind in knowing you can visit your bank in person, this could be a good choice for you.
If you plan to maintain a high checking account balance, a 360 Checking account can be a great option. Both the 0.10% APY attached to a minimum account balance of $50,000 to $99,999.99 and the 0.10% APY offered with minimum account balance of $100,000 seriously exceed both the national average and the online bank average.
Based on rates alone, Ally Bank is the better choice for both a savings account and a one year CD, but the two banks currently tie for a five year CD. There’s no minimum deposit required to open a CD at either bank. However, Capital One charges an early withdrawal penalty of six months’ worth of interest for CD terms greater than 12 months, while Ally Bank charges a slightly less 150 days’ worth of interest for CDs with terms of five years or more.
Before opening a new savings or checking account, it’s important to shop around to find the best fit for your needs. MagnifyMoney offers free comparison tools that allow you to find the best rates on banking products.
*National and Online bank averages and any fees mentioned in this article were compiled and are accurate as of the date of publishing.