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Ally Bank just raised the rate on its high yield savings account from 0.75% to 0.90% APY.
That makes the latest in a string of rate increases from Ally and other online banks following the Federal Reserve’s decision to raise federal interest rates over the past few months. In just the past month, Ally has increased its savings APY from 0.50% to 0.60% and then to 0.75%, before this week’s jump to 0.90%.
Experts predict interest rates will only continue to increase through the rest of 2022.
Ally is already one of our picks for the best high-yield savings accounts, and ranks among the best savings account rates today. Here’s why, and what the new rate means for your savings:
How Much Can You Earn with Ally’s 0.90% APY?
Let’s say you have $10,000 reserved as an emergency fund in an account with Ally.
At the previous 0.75%, you’d earn about $75 in interest in a single year. Now, with a 0.90% APY, you’ll earn about $90 in the same 12-month period.
That may not seem like a lot of money in the long run, especially considering the large $10,000 balance. But compare that to the current national average savings interest rate of 0.07%, which is more in line with what you’d find at a traditional national bank with physical branches. With the same $10,000 in a traditional savings account earning that average, you’d only increase your earnings by $7 over the course of a year.
Now consider you have $10,000 in your account today, and you can contribute an additional $100 per month over the next year. Here’s how much you could earn by the end of the year earning 0.90% APY, compared to making no additional contributions, and by contributing the same amount with the national average 0.07% APY.
|Ally Bank 0.90% APY||Ally Bank 0.90% APY plus contributions||National Average 0.07% APY||National Average 0.07% APY plus contributions|
|Starting Savings Balance||$10,000||$10,000||$10,000||$10,000|
|Total Savings Balance After One Year||$10,090||$11,296||$10,007||$11,207|
For more comparison, here’s a …….