Barclays vs. Ally Bank: Which One is Truly the Best?

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Updated on Tuesday, September 24, 2019

The rise of online banking as a cheaper and more accessible option for customers has seen even long-standing traditional banks get into the fray. Barclays and Ally Bank are two such banks, with each having emerged from more traditional origins.

Beyond the commonalities that each bank shares, there are distinct differences between the two online banks. Barclays is competitive and in some cases surpasses Ally Bank with the rates it offers, but Ally Bank has some account types that Barclays doesn’t. Of course, for some customers, that won’t make any difference. If you’re just looking for an online savings account, for example, Barclays might be the winner thanks to its higher interest rate. However, Ally Bank takes the cake for breadth of service and ATM access, among other considerations.

Take a look at the differences between Barclays and Ally Bank to determine which bank might be the most appropriate for your specific banking needs.

Barclays vs. Ally Bank: A look at the online banks

Ally Bank

Online Savings Account from Ally Bank

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on Ally Bank’s secure website

Member FDIC

Ally Bank might not be familiar to all customers, but the online bank has a storied history. While the bank is now known as an online banking innovator, it traces its roots to 1919, when it was founded as GMAC, a division of Big Three automaker General Motors. As of 2018, the Utah-based bank, which has no physical branches, had $106 billion in customer assets.

Ally Bank offers a customer-friendly structure. There are no monthly fees or minimum balances associated with Ally Bank accounts, and it offers various services for free that many other banks charge for, including cashier’s checks, online statements, incoming wires and ACH transfer. Customers can access more than 43,000 Allpoint ATMs free of charge, and the bank reimburses up to $10 per month in out-of-network fees. Ally Bank’s daily ATM limit of $1,000 is also high.

 

Barclays

Online Savings Account from Barclays

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on Barclays’s secure website

Member FDIC

Barclays has an even longer history than Ally Bank, tracing its roots all the way back to 1690. The online branch, now known as Barclays US, is still backed by the original Barclays Bank, which issued the first credit card in the U.K., the Barclaycard, back in 1966. It wasn’t until 2012 that Barclaycard started the online bank that ultimately became rebranded simply as Barclays.

Barclays serves customers looking for online savings accounts and CDs. As an online bank, you won’t find any Barclays branches but you may find high rates on the accounts it offers. There are some small fees for rarely used services, such as $5 for a cashier’s check, but there are no monthly fees on the bank’s savings and CD accounts. At a quick glance, it’s relatively easy to tell whether or not Barclays is a good banking option for you, as the bank’s web site does a great job of listing the available products and what they pay.

Barclays vs. Ally Bank: How they compare on rates

If you’re looking to earn interest on your checking account, Ally Bank is the clear winner. Granted, the competition isn’t exactly fair — Barclays doesn’t even offer a checking account — though Ally Bank might take the crown even if it did.

With a 0.25% APY on checking deposits of at least $15,000, Ally Bank pays out triple the national average rate on interest-bearing checking accounts. Ally Bank’s checking account also has no minimum opening deposit, no ongoing balance requirement and no monthly maintenance fee, making it a solid choice for most consumers.

When it comes to its savings account and 1-year CD rates, though, Barclays slightly edges out Ally Bank; Ally Bank, though, currently offers a slightly higher rate on its 5-year CD (at time of writing). In all three categories — checking, savings and CDs — both banks far exceed national average rates.

 BarclaysAlly BankNational Average*Online Bank Average*
CheckingN/A0.10% APY on balances of less than $15,000; 0.25% APY on balances of at least $15,0000.202% APY0.41% APY

Savings0.60% APY0.60% APY0.284% APY1.52% APY
1-year CD0.40% APY0.75%APY1.365% APY2.09% APY
5-year CD0.40% APY1.00% APY2.159% APY2.70% APY
*As of the time of writing

Barclays vs. Ally Bank: What account options are available?

Although Barclays is part of a global financial powerhouse, the online version of the bank is purposely streamlined, with limited product offerings. Barclays offers a lean, easy-to-understand account lineup consisting of just a savings account and a line of CDs, though its parent company also issues a line of credit cards affiliated with third parties.

Ally Bank, on the other hand, offers a comprehensive package of just about any type of financial account you could imagine. Beyond the traditional checking, savings, CD and money market accounts outlined below, Ally Bank also provides a full-service lineup of home and auto loans and investment options.

 BarclaysAlly Bank
Checking account
Savings account
Certificates of deposit
Money market account

Barclays vs. Ally Bank: How they stack up on fees

Both Barclays and Ally Bank succeed admirably on the fee front. Standard accounts have no monthly maintenance fees, or opening minimums. Ally Bank not only has no in-network ATM fee, it also reimburses up to $10 per month in out-of-network ATM fees. This ranks Ally Bank among the best online banks when it comes to ATM fees, as many other banks don’t offer reimbursements — and some even tack on their own additional out-of-network ATM fees. Barclays can’t compete in the ATM-fee arena, as it doesn’t offer any ATM access to its accounts.

One area where Ally Bank falls a bit short is in terms of its overdraft fee. At $25, the fee isn’t among the most egregious charged by some other banks, but it’s still a blow if you overdraw your account. Barclays, on the other hand, ranks among the best banks when it comes to overdraft fees, charging just $5.

 BarclaysAlly Bank
Standard checking accountN/A$0 (monthly maintenance fees)
Standard savings account$0 (monthly maintenance fees)$0 (monthly maintenance fees)
ATM feeN/A$0, plus $10 in monthly domestic ATM fee reimbursements
Overdraft fee$5$25, maximum 1 per day

When to choose Barclays

  • Clean and simple product line
  • Top-paying savings account and 1-year CD
  • Low overdraft fee

Customers looking for high CD rates and savings account rates — and nothing else — may be happy with the Barclays product line over Ally Bank’s. By streamlining its operations and offering only savings and CD accounts, Barclays is targeting an audience that simply wants high rates on their savings investments.

Although Ally Bank gets a lot of press, Barclays actually currently pays a higher rate on its savings account, and its 1-year CD also tops Ally Bank’s offering. Rates are subject to change at any time, but currently, you can get more on your money if you pick and choose from among Barclays’ offerings as opposed to Ally Bank’s.

Barclays may also appeal to customers who occasionally overdraw their accounts. With just a $5 overdraft fee, Barclays is downright cheap in the banking world. Even low-cost competitor Ally Bank charges an overdraft fee that’s five times as high.

When to choose Ally Bank

  • Broad product line
  • No ATM fees and out-of-network reimbursements
  • No-fee checking account

Ally Bank is the choice to make if you need rapid access to your cash. In one sense, it’s not a fair fight, as Ally Bank offers ATM access, while Barclays does not. It can be argued both ways whether this is actually a strike against Barclays. Some would say that you should have instant access to your own money whenever possible, while others might argue that while this may be true with a checking account, a savings account isn’t meant to be a source of ready cash.

However, as a customer, ATM access is almost always seen as a plus. Toss in the fact that Ally Bank not only charges $0 for ATM withdrawals, but also reimburses up to $10 per month in out-of-network fees, and the bank is a clear standout.

Ally Bank also runs alone when it comes to competing for the best checking account between the two, as Barclays simply doesn’t offer one. Even in a true head-to-head competition, it would be hard to unseat Ally Bank, as the bank doesn’t charge any fees on its checking account and pays a respectable interest rate to boot on balances of at least $15,000.

The bottom line in the head-to-head comparison is that if you want ATM access to your funds and/or a checking account, Ally Bank is the only choice out of these two banks.

The bottom line: Is Barclays or Ally Bank the best?

For most customers, Ally Bank is the better overall choice for online banking than Barclays. The truth is that the two banks are both extremely competitive when it comes to rates. As of press time, Barclays takes the title for its savings rate and 1-year CD rate, but the difference is so negligible — and liable to change at any given time — that choosing one bank over the other in terms of these rates is really splitting hairs.

Ally Bank takes the overall title, however, based on its breadth and depth of service. While you may not need a no-fee checking account, it’s certainly good to know that there’s an option for that. For many customers, the lack of ATM access at Barclays would be inconvenient at best and a deal-killer at worst. Toss in the fact that Ally Bank won’t charge you any fees for your ATM withdrawals, and will reimburse up to $10 in out-of-network fees, and you’ve got a winning combination.

If you’re just looking for the highest rate you can get on your online savings, Barclays is the slightly better choice at the moment. But in the competitive world of online banking — and in an environment in which interest rates continue to head lower — those rates are subject to change at any time. Taking the whole package each bank offers into consideration, Ally Bank comes out on top in this battle.

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