---
title: Ally, a Leader in Online Banking, Keeps Lowering Its Savings Rate. Here's Why
description: Ally, the best online bank according to MONEY, is cutting interest rates for savings accounts again. What's the best savings rate now?
authors:
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published: '2019-10-10T17:24:56.000Z'
modified: '2024-04-17T12:15:30.000Z'
section: Banking
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![Online banking](https://img.money.com/2019/10/ally-savings-rate-cut-594793679.jpg)

Ally Financial, often cited as the [best online bank in America](https://money.com/best-online-bank-2018/) by Money, is once again chipping away at the savings account interest rates that give its customers an edge over many traditional bank goers.

Ally is part of a new wave of online-only banks that have gotten rid of many customer fees associated with physical branches and managing paper statements. Thanks to its user-friendly mobile app, 24/7 customer service, and [competitive interest rates](https://money.com/online-savings-account-high-interest/), Ally has been named [the best online bank](https://money.com/best-online-bank-2018/) overall, according to Money’s rankings.

But on Thursday morning, Ally customers woke up to a message informing them that the bank's savings account interest rates would be shrinking.

“\[Customer name\] the Annual Percentage Yield (APY) on your Online Savings Account will be moving from 1.90% to 1.80% on all balance tiers,” Ally's email said. "Your new APY is effective 10/10/2019 and will show online in your account details on 10/11/2019.”

This isn’t the first time Ally has decreased interest rates in 2019, and it’s definitely a pivot from the gradual increase customers had grown accustomed to in prior years.

A lack of overhead expenses means online banks have had the advantage of giving customers more for their savings accounts. In 2018, this led to [a race among online banks](https://money.com/online-savings-account-high-interest/) to see who could give customers the highest possible return. Ally's [savings interest](https://www.ally.com/bank/view-rates/?setPanel=savings-panel?) went as high as 2.2%.

But lately, changing market conditions have led to [some backtrack](https://money.com/high-yield-savings-account-rates/) on that front. After years of [raising interest rates](https://fred.stlouisfed.org/series/DFEDTARU), the Federal Reserve made it clear that it wouldn’t be doing it again in 2019. In June, Ally responded by cutting its rate on savings accounts [from 2.2% to 2.1%](https://money.com/high-yield-savings-account-rates/), with others following suit (e.g. Goldman Sachs, which decreased the interest rate on its own online bank, Marcus, to 2.15%, and later, down to 1.9%).

How will Ally's changes affect the return on investment for customers? For example, if you had $10,000 in an Ally account when the rate was 2.2%, you'd earn $220 in interest over the course of a year. But when the rate is 1.8%, your return is only $180.

With a 1.8% APR, Ally still boasts the highest interest rate for savings accounts among [online-only banks](https://www.findabetterbank.com/online_banks.html), and it boasts a solid mobile app and good customer service. Yet there are other kinds of banks with higher APYs on savings accounts: According to [Bankrate](https://www.bankrate.com/banking/savings/rates/), financial institutions such as Marcus, State Farm Bank, and Barclays all currently offer savings accounts with interest rates of 1.9% or higher.

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