The increasing popularity of online-only banks should come as no surprise. The institutions rarely charge service fees, and their interest rates for checking and savings accounts tend to be significantly higher than those found at brick-and-mortar banks.
Ally Bank and Capital One 360 are among the strongest online-only, or direct, banks. Both offer a variety of financial products and excellent mobile apps. Use our head-to-head comparison to determine which one is better for you.
Basic Checking Accounts
| Ally Interest Checking | Capital One 360 Checking | |
|---|---|---|
| Monthly fees | $0 | $0 |
| Minimum opening deposit | $0 | $0 |
| Interest on balances | 0.10% APY on balances of less than $15,000; 0.60% APY on balances of $15,000 or more | 0.20% APY on balances of less than $50,000; 0.75% APY on balances between $50,000 and $99,999 |
| ATM fee | Free access to more than 40,000 Allpoint ATMs; Ally will reimburse customers for up to $10 per month of out-of-network ATM fees | Free access to Allpoint ATMs and 2,000 Capital One ATMs; Capital One won’t charge customers for using out-of-network ATMs (but the ATM owner might) |
| Overdraft fee | $25 | Customers can set up free transfers from a 360 Savings account or apply for an overdraft line of credit, in which they’d pay interest — 11.25% APR — on the amount overdrawn, rather than paying a fixed overdraft fee |
>> MORE: NerdWallet’s Top Online Checking Accounts
Overview
At most national banks, a free checking account — if you can find one — does little more than hold your money. But Ally and Capital One 360’s fee-free checking accounts also bear interest, and their rates are well above the national average for interest-bearing accounts.
If you’re simply searching for the bank with the highest interest rate, your total balance will make a difference. Capital One 360 offers a higher rate for balances below $15,000, but Ally is a better option for balances between $15,000 and $50,000.
You’ll probably want to consider other factors as well, such as the banks’ overdraft policies.
Although Ally charges a flat overdraft fee of $25, it enforces that penalty only once a day, even if customers try to make several purchases. It also offers free overdraft protection by linking customers’ checking products to their Ally savings accounts. Other banks typically charge for this service.
Capital One customers can protect themselves with an overdraft line of credit. Instead of paying a fixed fee, users owe interest on the amount used to cover the transaction that led to the overdraft. This service is optional and free.
Unlike Ally, Capital One 360 offers a teen checking account with 0.25% APY. Parents can also access the account, making it a relatively risk-free way to introduce teens to personal banking.
Basic Savings Accounts
| Ally Savings | Capital One 360 Savings | |
|---|---|---|
| Monthly fees | $0 | $0 |
| Minimum opening deposit | $0 | $0 |
| Interest on balances | 1.00% APY | 0.75% APY |
| Automatic transfer from linked checking | Yes | Yes |
>> MORE: NerdWallet’s Top High-Yield Online-Only Savings Accounts
Overview
If you want to put your savings to work without paying monthly service fees, Ally and Capital One 360 won’t disappoint. Both banks offer high-yield savings accounts and allow customers to schedule automatic transfers between their checking and savings products.
Although its interest rates are slightly lower than Ally’s, Capital One 360 lets customers split their savings into multiple accounts. This is ideal if you’re saving for a specific purchase or event, such as a vacation or holiday shopping. You can manage your various accounts with Capital One 360’s “My Savings Goal” service. This tool lets you set an end date for your savings objectives and track your progress using charts and other graphics.
Ally has a money market account that comes with a 0.85% APY and a free debit card. Capital One 360 also has a second savings account that’s aimed at children and features interactive tools and a 0.75% APY. Kids have their own login information, but parents have total control over deposits and withdrawals.
>> MORE: NerdWallet’s Best Online Money Market Accounts
Certificates of Deposit (CDs)
| Ally | Capital One 360 | |
|---|---|---|
| Minimum opening deposit | $0 | $0 |
| APY on one-year term | 1.05% | 0.40% |
| APY on three-year term | 1.50% | 1.60% |
| APY on five-year term | 2.00% | 2.10% |
Overview
Neither bank’s CDs require a minimum opening deposit, and both APYs on one-year CDs compare favorably to the national average of 0.20%.
In addition to offering fixed-rate CDs, Ally has a “Raise Your Rate” option that lets customers increase their APYs if the bank’s rates go up. Capital One 360’s products all have fixed rates.
Customers looking for short-term CDs will be better served by Ally, which offers a total of 10 CD options. Capital One 360, which has nine CD options, has slightly stronger long-term rates.
Technology
Online-only banks are known for their slick, jargon-free websites; Ally’s and Capital One 360’s sites are no different. Both also have mobile apps with must-have features, such as mobile bill pay and peer-to-peer payment services. Ally’s mobile check deposit deserves special recognition, though, as it lets customers deposit up to $50,000 per day, far more than Capital One 360’s $5,000 limit.
Capital One also offers Wallet, a budgeting tool that makes managing your finances feel like less of a chore. However, you need to download it separately from the main mobile app.
Customer service
Both banks prove that physical branches aren’t necessary for quality customer service. It’s easy to get in touch with Ally and Capital One via phone or email, and their social media accounts tend to be active and engaging.
Unlike Ally, Capital One doesn’t have a live chat feature. It does, however, have Capital One 360 Cafés in seven metro areas across the U.S. that offer various banking services for customers who want in-person assistance from time to time.
The takeaway
Whether you select Ally or Capital One 360, you’ll receive much better rates than you would at a traditional financial institution. Still, it’s worth figuring out which direct bank is best for you.
Ask yourself: How much money do you plan on keeping in your checking account? Do you want access to a budgeting tool? If you want to invest in a CD, for how long do you want to stash that money? The answers to these questions will help determine which online bank you choose.
Tony Armstrong is a staff writer at NerdWallet, a personal finance website. Email: tony@nerdwallet.com. Twitter: @tonystrongarm.
Image via Ally.com.
from NerdWallet Credit Card Blog
http://www.nerdwallet.com/blog/banking/ally-bank-vs-capital-one-360-comparison/
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