Not everyone is ready and willing to put their money into the stock market, particularly during the current coronavirus crisis, as millions of Americans are filing for unemployment benefits and the economy appears to be in free fall. What little cash you may have might be better off in a savings account. Instead of potentially losing money, it only gains money through interest.
But not all savings accounts have the same features or offers. And when it comes to the best high-yield savings accounts, there are plenty of banks vying for your business. Here’s a breakdown between two leaders: Ally and Marcus by Goldman Sachs.
What is a high-yield savings account?
A high-yield savings account is a savings account that earns more interest than a regular savings account. For example, right now, a Wells Fargo savings account is earning 0.01% interest. At both Ally and Marcus, you can earn at least 1.50% interest as of this writing. In other words, you’re yielding a higher return compared with traditional banks, which means extra cash in your pocket.
High-yield savings accounts also tend to have fewer fees and a lower account minimum requirement to get started compared with regular savings accounts.
Ally vs. Marcus: At a glance
Since high-yield savings accounts vary in offers and protection, here are some key features to look out for when comparing Ally and Marcus.
| Ally | Marcus | |
| Minimum deposit | $0 | $0 |
| APY | 1.50%* | 1.55%* |
| Withdrawals per month | 6 | 6 |
| Fees | Overdrafts: $25; Returned deposit: $7.50; Excessive transactions: $10 each; Outgoing domestic wires: $20 | None |
| How to make deposits | Bank transfer, direct deposit, wire transfer, mail checks | Bank transfer, direct deposit, wire transfer, mail checks |
| FDIC-insured | Yes | Yes |
Keep in mind that annual percentage yields — or APYs — fluctuate. The APY that companies list today might not be the same in a few weeks, months or years from now. Variable interest rates tend to drop when the Federal Reserve cuts rates. In the past, both Ally and Marcus have dropped rates around the time the Fed has made interest rate cuts.
Neither Ally nor Marcus charge monthly maintenance fees, which some regular banks do. This fee usually pops up when you drop below a certain dollar amount or don’t hit another type of threshold set by the bank.
What does Ally offer?
Ally is a leader in online banking because it was one of the first online-only banks to exist. It not only offers a high-yield savings account, but you can also check out:
- Money market accounts
- CDs
- IRAs
- Checking accounts
- Home and auto financing
- Self-declared investing and managed portfolios
With so many features, it’s easy to add another one to your list through a high-yield savings account. So if you have a car loan through Ally, you might decide to open an IRA or another account there as well. That way, you can manage multiple accounts within one website.
What does Marcus offer?
Marcus doesn’t have any fees whatsoever but says that your third-party bank may charge fees for certain activities. For instance, if a transfer from your third-party bank causes you to drop below your minimum account requirement there, you may get hit with a fee.
However, Marcus will close your account if you don’t have any funds in there after you open it. You have 60 days from when you open your account to add money to it, or you could face account closure.
Marcus by Goldman Sachs offers not only high-yield savings but also CDs and loans. The range of products isn’t as wide as Ally, but having no fees might be the most enticing part.
Ally vs. Marcus: Which one is right for you?
The savings account you choose comes down to what you’re looking for out of a particular company. Ally and Marcus have a lot in common: no minimum balance to get started, a similar APY and the same ways to move money around.
But Ally has a slew of other products that can make you feel like opening a savings account there is worth the convenience. For example, you can make IRA contributions directly from your savings account.
Marcus, though, has fewer fees than Ally, even though Ally is upfront about what they charge you. This might be the determining factor in your decision.
Keep in mind the limitations of both Ally and Marcus during your decision-making. If you plan on using your savings account a lot, the six withdrawals per month for both Ally and Marcus might feel too limited. You may want to look into an account with a little more flexibility, like a Wealthfront Cash account or Betterment Everyday account — both of which offer unlimited, free transfers.