Mar 14 2013

Why I switched from Capital One 360 to Ally Bank


I’ve been a customer of ING Direct since 2005. I appreciated their sign-up bonus, referral bonuses, and high interest rates, though at the time I didn’t have much money to save anyway. When the company was bought by Capital One, I along with other ING Direct customers were disappointed. Though the purchase completed awhile ago, it was only last month when they finally switched over to the new name.

It was that change that spurred me to question whether I should stay or go.

For me, it wasn’t a tough decision.

Capital One’s credit card division had/has a lousy reputation. I didn’t like that. To be sure, their shady business practices won’t necessarily translate to Capital One 360. They’d be really dumb to pull stunts, because they’d lose their client base.

Still. I decided, why should I stay with a company that I wouldn’t have chosen to do business with in the first place?

A few years ago, I banked with National City. They were bought out by PNC and First Niagara. Somehow, my money got split during the sale — some accounts went to PNC and a savings account went to First Niagara. I thought I’d give both a chance, and then either pick my favorite to switch to, or find a new bank.

First Niagara was a joke. I loved PNC. It was a bank that I would have chosen to do business with anyway, I decided. So, I closed my First Niagara account and have been with PNC ever since.

I use PNC for my checking, bill payment and daily spending. I use my online savings account solely as a place to park most of my emergency fund. Rare transactions come out of it.

I was seeking:

  • Solid interest rates — either the same as my current .75% (ugh, I can’t believe that’s ‘solid’ these days) or more
  • Great reputation
  • No hoops to jump through. I don’t want to switch my checking account, set up direct deposit, make a set number of transactions per month…none of that. I just want a good place for my money to sit.
  • Easy access to my money, should I need it. Either a linked debit card, paper checks, or an in-person branch.
  • No fees

I found that in Ally Bank. While they don’t have brick & mortar branches, I can get a free debit card and also some free checks. When I initially saw their rates, they were at .9%, but today they are at .84%. Still, this wasn’t necessarily about rate-chasing for me.

The final perk that made me pull the trigger — Ally’s CD rates and terms.

I’ve been interested in doing a CD ladder to help my savings grow a tiny bit more. Once you open a CD, you’re locked in to the rate for the duration. In a time where rates just keep going down, that kind of rate lock is nice.

Ally’s CD options are way better than Capital One’s. They have several types, including “high yield CDs” which top out at 1.53% for a 5-year; a no-penalty CD that you can withdraw at any time (!?) at a rate of .85%, which is .01% higher than their current money market rate; and a “raise your rate CD” where if the rate goes up after you’ve bought the CD, you can switch to a new, higher rate (you can only do this once or twice, depending on the term).

The best rate at Capital One right now is .9% for a 5-year.

What’s more? The penalty for cashing out your CD ahead of the term at Ally is only 2 months’ worth of interest. To me, that’s no big deal.

Compare that to Capital One: a CD of less than 12m, cashed out early will have a 3-month interest penalty. For longer terms, it’s a 6-month penalty. Not worth it, especially for that lower interest.

I’m not keeping all of our e-fund in CDs. Just a partial amount (I’ll share more details of my CD holdings once they’re finalized).

My move isn’t yet complete. I’ve moved some money, but before I send it all I want to get my debit card and checks in the mail.

I had to confirm my Capital One bank account info through two small deposits Ally made into the account. I ran into trouble when I logged into Ally — I couldn’t find where I needed to confirm those amounts. I was thisclose to calling customer service, when I finally clicked around enough to find it:

Transfers >Transfers between Your Ally and non-Ally Accounts >Manage Accounts > My Other Accounts > Activate (I forget if this last word is Activate or something similar, but it should be next to your external bank)

I’m not sure why it was so hard to find.

Do I think every Capital One 360 customer should find somewhere else to do business? No. You have to do what’s right for you. If you use the bank for a lot of your day-to-day business, it might not be worth it to you to set up shop somewhere else.

The interest rates at Capital One 360 are still competitive with other online offerings. If you wanted to do CDs, then yeah I’d suggest switching.

This is just one gal’s decision. If you switch, consider all of your options. If you’re looking at Ally, verify all that I’ve said here (rates, terms, etc.) are still the same.

How about you? Are you switching banks?

Posted under Uncategorized | 4 Comments »

4 Responses to “Why I switched from Capital One 360 to Ally Bank”

  1. Yes, I will also be leaving Capital One 360. Capital One has been shady with my husband’s credit card account a number of times and I don’t want them to profit from my money. I am considering going to American Express’s bank though. They have been great to us as credit card customers.

  2. I really appreciate this article. We’re also with Capital One 360. We have our mortgage with them right now, but once we pay it off (hopefully in about a year), then I’ll look into moving. My first choice will be just going to my local credit union, where my checking is. I’ll definitely have to look into Ally as well!

  3. I’m interested to hear about your experience with starting a cd ladder. I have been wanting to do this for a while. I checked rates and a credit union that I have a car loan through has the best cd rates but they aren’t local. I called to talk to someone about it, left a message and never received a return call. And so now I’m just back to thinking about it until I get motivated again.

  4. We had been with ING since 2004 and are with CapitalOne360 now. We are waiting to see if there are any negative changes…

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Hey! I'm Kacie, wife and mother of 3. I write about my family's finance: how we save money, improve our spending, and plan for the future.

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