Should I bank with Amex or Ally? #CashNews.co

Welcome to This Week on Reddit, our weekly series that answers redditors’ biggest banking questions. Each week, our editors choose an interesting and relevant user question to examine. Read on for our expert analysis.

Not all banks offer the same products, services, and interest rates. The financial institution you choose to entrust with your hard-earned money should meet all of your banking needs and help you reach your goals. That’s why it’s important to weigh your options carefully before deciding on a bank.

Two popular options, especially among those who prefer online banks, are Ally Bank and American Express (Amex). And one Reddit user is weighing their options, wondering which of these two banks is the better choice. So what’s the answer?

A user by the name of Winterbear0303 posed the following question last week:

So, what did fellow redditors have to say?

User kipsterdude noted that they use Ally as their primary bank — including a checking, savings, and money market account — with no issues.

Another user known as gdq0 commented, “My experience with Ally has always been fantastic, except that I had some issues with ACH transfers that failed to a specific account. Key thing I like about Ally is that you can schedule recurring Zelle transfers and the APY is frequently competitive.”

And user soundwithdesigned noted that they haven’t banked with Ally, but think “Amex is great and their app and customer service are top notch.”

However, a few commenters pointed out that neither of these banks are leading the industry in terms of deposit account rates, which could be a drawback if the goal is to earn as much as possible on bank account balances.

So which is the better bank: Ally or Amex…or someone else?

Ally and American Express are both popular FDIC-insured online banks that offer a variety of deposit account options. Both banks boast no-fee models, and neither have minimum opening deposit requirements for their savings or checking accounts.

Additionally, both banks offer 24/7 customer support for banking customers, making it easy to resolve issues in a timely manner.

Here’s where these two banks differ: American Express offers a higher interest rate on its high-yield savings account and rewards checking account. At 4.00% APY, its high-yield savings account rate is more than nine times the national average, while the checking account rate of 1.00% APY is more than 12 times the national average.

Meanwhile, Ally offers a high-yield savings account rate of 3.85% APY and checking account rate of 0.10% APY, making Amex the better choice for growing account balances at a faster rate.

However, if you aren’t already an American Express credit card holder, you won’t be able to open an Amex checking account; to open one, you must have a basic U.S. consumer card issued by American Express that is at least 35 days old.

Read our full review of American Express National Bank here

Ally Bank does not charge any fees to send or receive transfers from other financial institutions or between your own Ally accounts. Ally does not, however, offer same-day external transfers, though it does offer next-day external transfers (which can actually take up to three business days, depending on when the transfer is initiated.)

A few commenters on the Reddit thread also mentioned Ally’s budgeting tools as a reason to bank with Ally. And we agree: If you’re saving for a future goal, Ally’s mobile app allows you to create up to 30 customizable savings buckets so you can save for multiple goals and track your progress at the same time.

However, even with these helpful tools, Ally’s mobile app has an average rating of 3.5 stars across the Apple and Android storefronts. On the other hand, the American Express mobile app has an average rating of 4.4 stars and offers its own budgeting tools, auto pay features, rewards, and more.

Read our full review of Ally Bank here

Overall, both Ally Bank and American Express are excellent choices if you’re looking for an online bank with competitive interest rates, low fees, and robust online tools. In fact, both banks made our list of the 10 best high-yield savings accounts available today.

However, if your primary goal is earning the highest rate possible on your savings, you may want to consider a different bank altogether.

Read more: Savings accounts with interest rates of 5% and up (updated weekly)

If you’re searching for a new bank account, there are a few key factors you’ll want to consider before making your decision:

• Branch and ATM access: Online banks are becoming increasingly popular, but it’s important to remember that these financial institutions operate solely online with no physical branches. If an in-person banking experience is important to you, make sure you select a bank with branch locations in your area. The same goes for ATMs — verify that your bank offers a large ATM network and provides a debit card for easy access to your funds.

• Account options: Not all banks offer a variety of deposit accounts. For example, some banks only offer checking accounts, while others may only have savings and money market accounts. Review the account options offered by the various banks you’re considering and be sure it has everything you need, especially if you’re hoping to keep all of your accounts in one place.

• Fees and account minimums: Read through your prospective bank’s account terms and conditions to ensure you’re able to meet all requirements to earn the highest interest rate and avoid fees.

• Access to customer support: Customer support may not be at the top of your mind when exploring your bank options, but it will be an important consideration when you run into an issue with your account. Find out the different methods you have for getting in touch with a representative, as well as the bank’s customer support hours. You may want to prioritize a financial institution that provides 24/7 support or live chat.

• Mobile app rating and tools: Certain banks have more robust mobile apps than others, with features such as credit score monitoring, budgeting tools, in-app customer support, and more. Take some time to read customer reviews and learn more about the capabilities of these banking apps to determine if a particular bank or credit union is right for you.

• FDIC or NCUA insurance: Always ensure that your bank or credit union is federally insured. This will give you peace of mind that even if your financial institution fails, your money is protected up to the limits set by the federal government.

Read more: Guide to choosing a bank for the average consumer