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Ally Bank vs. Capital One: Which is Better for You?

When choosing whether to open a bank account with Ally Bank or Capital One, it really comes down to whether you want access to physical branches when you bank. Ally Bank is an entirely online operation, limiting you to its website and mobile app. Capital One also offers those convenient features, but with the added benefit of brick-and-mortar branches throughout the country. Below, we take a closer look at each bank and what they can offer.

What to Know About Ally Bank

Despite rates having dropped over the last few months, Ally Bank offers some of the best APYs in the industry. For example, the bank’s CDs offer APYs as high as 0.80%, though they can reach as low as 0.15% too. Ally’s Online Savings Account also features a solid 0.50% APY, as well as decent rates for the bank’s Interest Checking and Money Market accounts.

Ally does work hard to fill in the gaps where physical locations would otherwise be. It does this with excellent and thorough online and mobile banking features. You can easily access your account(s) with your online banking information. You’ll also have access to more than 55,000 Allpoint® ATMs throughout the U.S.

Of course, if you really value having physical access to your bank, you may not enjoy banking with Ally. This is the bank’s main drawback. For one, opening an account may prove difficult since you may have to mail in proof of identification or address.

What to Know About Capital One

Capital One is excellent for those who want to earn at competitive interest rates and have the advantage of physical branches. The bank doesn’t have branches in every state, with locations only in New York, New Jersey, Texas, Louisiana, Maryland, Virginia, Delaware, Connecticut and the District of Columbia. You can visit the bank’s website to see if there is a branch near you with your address or zip code.

Capital One’s savings account earns at a solid 0.40% APY, and its CDs earn up to 0.80%. Even its MONEY checking account for teens earns a 0.10% APY. These solid rates, paired with the bank’s lack of monthly fees and minimum deposits, make for some great bank accounts.

You’ll also want to be on the lookout for a Capital One Cafe near you. These are a mix of a Capital One branch and a Peet’s Coffee bar. So while your state or city may not have a typical Capital One branch, you may have access to the same banking services at a Capital One Cafe.

Ally Bank vs. Capital One: Bank Accounts

Ally Bank vs. Capital One: Which is Better for You?

Both Ally and Capital One offer the same suite of accounts including savings, CDs, checking accounts, money market accounts and IRAs. Each bank has their own strengths, though, when it comes to these accounts. For one, Ally offers three different types of CDs, each with their own various terms and some of the best CD rates. Ally’s No Penalty CD forgoes the hefty penalty you would typically face for early withdrawal of a CD’s funds. This offers customers the opportunity to find the best kind of account for each financial preference and situation. Capital One, on the other hand, offers only nine simple CDs. Capital One CDs do allow you to add beneficiaries on your accounts online.

However, Capital One offers its Money checking account, which is tailored for teen account holders. An interest-earning checking account, the Money account can help teenagers manage their money together with a parent or guardian. As the adult guardian, you can teach your child how to be responsible with their money. You can also show them how money grows according to the account’s solid interest rate.

Ally Bank vs. Capital One: Fees

Ally Bank and Capital One are both leaders in the industry when it comes to fees. Neither charges monthly fees nor requires a minimum deposit amount for any accounts. This makes each account much more accessible to customers who may otherwise be unable to open such favorable accounts. It also ensures your money will grow unharmed by the bank’s fees.

Of course, there are going to be fees for certain actions you make, but can easily avoid. This includes overdrafts on checking accounts, returned deposit items and outgoing wires. Plus, neither bank will charge you for using an ATM that’s out-of-network. You should avoid using any out-of-network ATMs, however, since both banks provide access to thousands of ATMs nationwide, both bank brands and those within the Allpoint® ATM network. This means you can use more than 55,000 ATMs. Ally will even reimburse up to $10 of other ATM’s fees each statement cycle.

Ally Bank vs. Capital One: Rates

On the whole, Ally’s interest rates are slightly better than what Capital One offers. More specifically, Ally’s savings account boasts a 0.50% APY, while Capital One’s offers a lower 0.40% APY. On the other hand, their multitude of CD rates are quite similar. Ally’s best CD rates come with its 1- to 5-year accounts, while Capital One’s 3- to 5-year accounts offer its strongest rates.

It’s important to note that both banks’ money market accounts and interest-earning checking accounts earn interest according to balance tiers. This means that your rate depends on your account balance. In these cases, the higher your balance, the higher your rate. Ally’s High-Yield CDs and No Penalty CDs also earn based on balance tiers. Luckily, even the lowest balances earn at competitive rates.

Bottom Line

Ally Bank vs. Capital One: Which is Better for You?

Ally Bank is an excellent choice for those who want to earn at top rates and don’t mind the lack of physical branches. Capital One, however, still earns at rates well above its big bank competitors’ rates, with the added benefit of some physical locations. You’ll have to find out whether you have a Capital One Cafe or branch near you. Then you can determine which bank would be better for you according to each one’s rates, accounts and other features.

Tips on Finding the Right Bank

  • Still not sure which bank is right for you? It’s easy to get caught up in the bells and whistles a bank can offer. Your first step should be to figure out what you want and need from a bank. Do you need a break from fees with a free checking account? Or do you want one with the best overdraft protection. Knowing what you need will help you eliminate options and get you closer to choosing the right bank.
  • If you’re going to read customer reviews before you buy a new computer, why not do the same for your bank? It helps to do some research about your potential new bank, especially its customer service reputation. Check online to see how happy other customers have been. You may also want to check how often a human representative answers customer phone calls, since many banks nowadays lead you through a complex automated phone tree.

Photo credit: ©iStock.com/Weekend Images Inc., ©iStock.com/ablokhin, ©iStock.com/RyanJLane

Lauren Perez, CEPF® Lauren Perez writes on a variety of personal finance topics for SmartAsset, with a special expertise in savings, banking and credit cards. She is a Certified Educator in Personal Finance® (CEPF®) and a member of the Society for Advancing Business Editing and Writing. Lauren has a degree in English from the University of Rochester where she focused on Language, Media and Communications. She is originally from Los Angeles. While prone to the occasional shopping spree, Lauren has been aware of the importance of money management and savings since she was young. Lauren loves being able to make credit card and retirement account recommendations to friends and family based on the hours of research she completes at SmartAsset.
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