Most personal finance experts — including Dave Ramsey, Ramit Sethi, and Suze Orman — talk about the importance of saving money. Whether it’s for an emergency fund in case you lose your job, or you’re saving for a specific purchase so that you don’t get into debt — a savings account will definitely keep you out of trouble.
But with the myriad banks that exist today, it can be a daunting task to find one that has a savings account that meets your needs.
Luckily, you don’t have to compare the features offered from every single bank. Two of the most well-known banks today are Ally Bank and Capital One 360. So I’m going to weigh the pros and cons of each of their savings accounts.
Interest Rate
Ally Bank’s rate is currently .50% Capital One 360’s rate is currently .40%. Since both of these rates are so low right now, it doesn’t make a huge difference in making your money grow.
Winner: Ally Bank
Compounding Frequency
This refers to how often your money grows and earns interest. The interest you earn is reinvested in your account, which gives you even more interest in the future. In other words, you earn interest on your interest.
So the more often your interest compounds, the more money you’ll make.
With Ally Bank, your interest is compounded every day. With Capital One 360, your interest is compounded on a monthly basis.
Winner: Ally Bank
Bonus Sign-up Offers
Sometimes, banks will offer you a bonus to entice you to open up for an account. Capital One 360 often offers sign up bonuses during special sales. (Right now there aren’t any promotions.) Ally Bank doesn’t offer a bonus at this time, either.
Winner: Capital One 360 (if you can catch one of their promotions)
Sub-Savings Accounts
Saving for the specific things you want — such as a vacation to Hawaii, Christmas gifts, or a new outfit — will help you stay focused on your goals. Having sub-savings accounts at the same bank lets you do this easily.
Both banks allow you to open sub-savings accounts, and even name them after the things you’re saving for.
Winner: Tie
Fees
Nowadays, there’s no need to open an account with a bank that charges fees just to hold and use your money. Luckily, both banks come with zero monthly maintenance fees, and no minimum balance requirements.
Winner: Tie
Depositing Checks
Since both bank accounts are online accounts, do you wonder what you’d do if you received a paper check? How would you deposit it?
Well, the good news is that both banks allow you to conveniently deposit a check from anywhere, using either a smartphone app, or by scanning it through your computer.
What if you prefer mailing your checks instead? Both banks will also let you mail your checks for deposit. But Ally Bank provides postage-paid envelopes, so that you can mail them for free.
Winner: Ally Bank
Accessing Your Money After You’re Gone
Lastly, if you’re going to open an account, you’ll want to be sure that your loved ones are able to get to your money easily if anything happens to you.
Payable on Death accounts let you do this without any hassle. Ally Bank offers this benefit with their accounts, but Capital One 360 doesn’t.
Winner: Ally Bank
My Thoughts and Recommendation
The thing I like best about Capital One 360’s account is the sign-up bonus. And the thing I really love about Ally Bank’s account is the Payable on Death feature.
But honestly? You can’t go wrong with either.
Which online savings account do you like best?
Source: wisebread.com