SOFI vs. ALLY: Which HYSA should you open in 2024?
Summary
TLDRThis video offers a detailed comparison between two online banks, Ally and SoFi, focusing on their high yield savings accounts (HYSA). It covers the benefits of HYSA, including liquidity, low risk, and minimal fees, and highlights key features such as FDIC insurance, no maintenance fees, and overdraft protection. The video also discusses the annual percentage yield (APY), mobile banking experience, and unique features like savings buckets and vaults. The presenter shares personal pros and cons of each bank and advises viewers to try both to find the best fit, emphasizing the importance of letting money work for them.
Takeaways
- 🏦 A high yield savings account (HYSA) is a place to save money with higher interest rates than traditional savings accounts, without the need to invest in the stock market.
- 💰 HYSAs offer liquidity, meaning you can withdraw funds at any time, and are considered low risk with few to no fees.
- 🏦 Both Ally and SoFi are online banks that offer HYSAs and are FDIC insured, protecting deposits up to $250,000.
- 💵 Both Ally and SoFi do not charge maintenance fees or require an initial deposit, making it easy to open an account.
- 💰 SoFi offers a sign-up bonus of up to $300 for setting up a direct deposit, and potentially $325 with a referral link.
- 🚫 Neither Ally nor SoFi charge overdraft fees, which can be a significant benefit for account holders.
- 📈 The annual percentage yield (APY) is a key factor in choosing a HYSA, with SoFi offering 4.6% and Ally offering 4.2% as of July 25th.
- 📊 A 2% difference in APY can have a noticeable impact over a 5-year period, especially on larger deposits.
- 🏦 Ally offers additional features like CDs (certificates of deposit) and a lower APY on checking accounts, which might be appealing to some users.
- 📱 Both Ally and SoFi have user-friendly mobile apps with features like savings buckets or vaults that help organize and visualize savings goals.
- 🚫 A potential drawback of online banks like Ally and SoFi is the lack of physical branches, which can make certain transactions more challenging.
Q & A
What is a high yield savings account (HYSA)?
-A high yield savings account is an account where you can save money to make more money without having to invest in the stock market. It is liquid, meaning you can withdraw funds whenever you like, and it is low risk. Typically, there are few to no fees associated with these accounts.
Why are high yield savings accounts often offered by online banks?
-High yield savings accounts are often offered by online banks because these banks do not have the overhead costs like brick and mortar institutions, which allows them to offer higher interest rates to their customers.
What is FDIC insurance and why is it important for a bank account?
-FDIC insurance guarantees that your money is protected up to $250,000 in the event of any bank failure. It is important because it provides a safety net for your deposits.
What are the benefits of having no maintenance fees or initial deposit requirements for a high yield savings account?
-The benefits include the ease of setting up an account without stressing about an initial deposit and not having to worry about ongoing fees that can eat into your savings.
What is a sign-up bonus and how does it work with Sofi?
-A sign-up bonus is an incentive offered by some banks to new customers who meet certain conditions, such as setting up a direct deposit. With Sofi, you can receive a sign-up bonus of up to $300, and it can even be $325 if you use a referral link.
Why is the annual percentage yield (APY) an important factor to consider when choosing a high yield savings account?
-The APY represents the interest you can earn by depositing money into the account. A higher APY means more potential earnings on your savings, making it a crucial factor when comparing different accounts.
What is the difference between the APY offered by Sofi and Alli as of July 25th?
-As of July 25th, Sofi offers an APY of 4.6% while Alli offers a 4.2% APY on their high yield savings accounts.
What are the benefits of having an APY on checking accounts?
-Having an APY on checking accounts means that you can earn interest on the money you keep in your checking account, which is typically used for everyday transactions. Although the rates are small, it's an additional way to earn interest on your money.
What are the 'buckets' or 'vaults' feature in the banking apps and how do they help with financial management?
-The 'buckets' or 'vaults' feature allows you to create digital envelopes within your account to organize your money. This helps you visualize where your money is going and manage your savings more effectively, such as setting aside money for specific goals like an emergency fund or a car fund.
What are some challenges associated with online banking accounts like Sofi and Alli?
-Challenges include the lack of physical branch access, which can make handling transactions that require in-person assistance difficult. Additionally, cash deposits are not directly accepted, and customers may need to find workarounds. Lastly, there can be considerations regarding ATM access and fees.
What are some personal pros and cons the speaker has experienced with Sofi and Alli?
-Pros of Sofi include a sign-up bonus, referral program, and the ability to connect all accounts for a comprehensive financial view. Cons include limited auto-pilot frequency for savings and only one checking account. For Alli, pros include more options for auto-pilot frequency, buckets in checking accounts, and a straightforward user interface. The main con is a lower APY compared to Sofi.
What is the speaker's recommendation for someone considering opening a high yield savings account?
-The speaker recommends trying out Sofi for six months and then switching to Alli for another six months to see which one better suits their needs. They emphasize that both accounts are free to open and close, so there is no financial loss in experimenting.
Outlines
🏦 Introduction to High Yield Savings Accounts
The speaker introduces the concept of high yield savings accounts (HYSA) and their benefits, emphasizing that these accounts allow for earning interest without the risks of stock market investments. They explain that HYSAs are typically offered by online banks, which have lower overhead costs, and that these accounts are FDIC insured up to $250,000. The speaker also highlights the importance of doing personal research and not relying solely on the video for financial advice, providing links to additional resources in the description for further information.
🔍 Comparing Ally and SoFi High Yield Savings Accounts
The speaker compares two online banks, Ally and SoFi, in terms of their high yield savings accounts. They discuss common features such as no maintenance fees, no initial deposit requirements, and no overdraft fees. A sign-up bonus offered by SoFi for direct deposits is mentioned, along with the different APYs offered by each bank. The speaker also compares the user experience of both banks' mobile apps, highlighting features like saving buckets or vaults that help with financial organization. Additionally, they discuss the limitations of online banks, such as the lack of physical branch access and challenges with cash deposits and ATM fees.
📊 Personal Experience and Recommendations
The speaker shares their personal experience with Ally and SoFi, outlining the pros and cons of each based on their own banking needs. They mention SoFi's sign-up bonus and comprehensive financial tracking features as advantages, while noting Ally's flexibility with auto-savings and spending buckets. The speaker also addresses the lower APY of Ally compared to SoFi. They suggest trying both banks for a period to determine which better suits individual needs and emphasize the importance of not delaying the opening of a high yield savings account to start earning potential earnings.
Mindmap
Keywords
💡High Yield Savings Account (HYSA)
💡Online Banks
💡FDIC Insurance
💡Fees
💡Sign-up Bonus
💡Overdraft Fee
💡Annual Percentage Yield (APY)
💡Liquidity
💡Banking Apps
💡Buckets or Vaults
💡Checking Accounts
Highlights
The video compares two online banks, Alli and Sofi, focusing on their high yield savings accounts.
The presenter is not a financial adviser and encourages viewers to do their research.
A high yield savings account (HYSA) is defined as an account where your money can earn more without investing in the stock market.
HYSA offers liquidity, low risk, and usually few to no fees.
Online banks like Alli and Sofi have lower overhead costs compared to traditional banks.
Both Alli and Sofi are FDIC insured up to $250,000.
Neither Alli nor Sofi charge maintenance fees or require an initial deposit.
Sofi offers a sign-up bonus of up to $300 for setting up a direct deposit.
Both banks do not charge overdraft fees, with varying coverage amounts.
The annual percentage yield (APY) is a key feature, with Sofi offering 4.6% and Alli offering 4.2% as of July 25th.
A graph is provided to illustrate the impact of a 2% APY difference over a 5-year period.
Alli offers Certificates of Deposit (CDs), a feature not available with Sofi.
Both banks offer APY on their checking accounts, with Sofi at 0.5% and Alli at 0.25%.
The mobile apps of both banks are praised for their user-friendly interfaces and features.
The 'buckets' or 'vaults' feature allows for organized saving within one account.
Alli allows up to 30 savings buckets, while Sofi allows up to 20.
Alli also offers 'spending buckets' within their checking account for budgeting expenses.
The lack of physical branch access is a consideration for online banks.
Cash deposit challenges and ATM access and fees are discussed as potential drawbacks.
Personal pros and cons of using Sofi and Alli are shared based on the presenter's experience.
A recommendation to try both banks for six months each to determine which suits the user best.
The importance of not waiting to open a high yield savings account to maximize potential earnings.
Transcripts
heard time and time again that you need
to open a high yield savings account but
you don't know which bank to go with in
today's video I wanted to take you
through my two online bank accounts Alli
and Sofi we'll compare common features
I'll share some of my personal opinions
things I wish I knew before opening
these accounts and recommendations but
before we get started it would be
irresponsible for me not to mention and
remind you guys that I'm not a financial
adviser so I would highly highly highly
encourage that you guys continue to do
more research I'll also link other
helpful videos and sites that you can
reference in the description below so be
sure to check that out after you watch
this now let's get back to it let's
start with the basics before we dive
into the details and make sure we're on
the same page so what even is an hysa or
a high yield savings account and what
are the benefits simply put a high yield
savings account is an account where you
can save money to make more money
without having to invest in the stock
market in these accounts your money is
liquid meaning that you can withdraw
funds whenever you like it's low risk so
you can't really lose money from keeping
your money in these accounts and usually
there are few to no fees high yield
savings accounts are often online banks
which don't have the overhead costs like
brick and mortar institutions such as
City Bank Chase Bank of America Etc with
that covered let's dive in into some
common key features that you should
consider before opening up a high yield
savings account we'll compare Sofi and
Alli and see how they stack up against
each other quick story time when I first
told my dad I was going to be leaving
our Wellsboro account to open an LA
account he asked me if the bank was FDIC
insured and I said
huh and I had to do some research and I
found out that FDIC Insurance guarantees
that your money is protected in the
events of any bank failure the good
thing is that both of these banks are
FDIC insured up to
$250,000 which is amazing and also D
approved next let's talk about fees
which can be a huge pain as I mentioned
earlier one of the benefits to a high
yield saves account is that there are
few to no fees luckily for us both Ali
and Sofi offer no maintenance fees or do
they even require an initial deposit
when you open an account so what does
that mean this means you can easily set
up an account without stressing about an
initial deposit but if you're planning
to do a direct deposit anyways Sofi does
sweeten the deal because they do offer a
sign up bonus for up to $300 when you
set up a direct deposit it can even be
$325 if you use the link in my
description below now another great
benefit to both of these accounts is
that they do not charge an overdraft fee
and girl trust me we have all been there
where we thought we had more money in
our accounts than we actually did so
Sofi offers up to $50 to cover and then
Alli offers up to $250 depending on your
standing with the bank the next key
feature which is arguably the most
important or the one that most people
carow is the annual percentage yield or
the apy this represents the interest you
can earn by depositing money into the
account apy do fluctuate so I would
highly recommend just double-checking
the rates at the time you're watching
this video as of today July 25th Sofi
offers an apy of 4.6% while Alli offers
a 4.2% apy on their high yield savings
account just wanted to put together this
graph to kind of show you what this
would look like over a 5year period
assuming that the apy remains consistent
if you were to deposit $1,000 into both
of these accounts that 2% difference
will show a noticeable though not
dramatic impact I will say despite Alli
having a lower apy it does offer other
features that Sofi doesn't like CDs
which can be important to some people
depending on your banking needs one
notable advantage that I did want to
mention about these online banking
accounts as well is that they do offer
an apy on their checkings accounts which
they're very small but I do believe that
something is better than nothing Sofi is
currently at a 0.5% and then Alli is at
0.25% apy for their checkings account
the last thing I wanted to compare is
the online and Mobile Banking experience
both have topnotch mobile apps that make
everything so easy to do from checking
your balances transferring money Autos
saving and even depositing checks all
within an app and as someone who
appreciates really good design I feel
like both Ally and sofi's apps have
amazing user interfaces that are
friendly and intuitive now one feature
that I did want to call out that are
within these apps and whoever thought of
the saving feature I personally need to
give you a hug because they have changed
the game on how I manage my money
financially are these buckets or vaults
and essentially you can create these
like digital envelopes that allow you to
split out your money and kind of like
organize it all within one account but
the real power of these vaults is that
it allows you to visualize where your
money is going emergency saving fund I
have AAS fund I have a car fund I have a
home fund and every time I save into my
savings accounts I know how much money
I'm putting into each bucket without
having to track it manually and I think
that is just so genius I love it so much
and I couldn't go this entire video
without talking about it with Ali I
believe you can create up to 30 savings
buckets and then with Sofi it's up to 20
savings volts what's particularly cool
about Ally though that I do want to
mention is that they also offer this
feature in your checkings accounts but
instead of savings buckets they call it
your spending buckets so for example you
don't really save for rent it's
something you pay for every month but
you do want to save a portion of your
paycheck to make sure that that's going
to rent specifically
you can create a bucket for that and put
it into that bucket so you know that
that money is specifically for your rent
with all the key features covered I do
quickly want to mention three things I
wish I knew before opening an online
banking account that I feel like some
people should consider depending on your
circumstances the first one is is that
there is no Branch access Sofi and Alli
are both online banks they do not have a
physical location so it may be difficult
to handle transactions that re require
an in-person assistance such as cash
deposits noing documents or Consulting
with a banker face to face another thing
is that there can be cash deposit
challenges Sofi and Ali currently do not
accept cash deposits directly customers
typically have to find workarounds such
as depositing cash into a traditional
bank and then electronically
transferring that over or they use
networks like Green Dot and the last
thing is ATM access and fees this one
isn't really an issue because both Sofi
and Ali have a large network of ATMs
that you can use for free but that's
just something I wanted to bring up in
case that is an issue so some things to
consider for me personally they were not
big deals but I think may be important
for certain people to know now that you
know all of this you can see why Sofi
and Ally go head-to-head for opening up
a high yield savings accounts I
personally have been using both of these
accounts for the past 3 years and I just
want to share my own pros and cons for
each please please note that these are
just based off of my current banking
needs which is just a day-to-day bank I
do not invest through any of these
accounts though I do know that is an
option and something someone might want
to consider so starting with Sofi my
first pro is that they do offer that
$300 sign up bonus and they also have a
referral program so you can always share
your link with your friends and family
and you'll get a bonus every time a
family or friend signs up which is
something that Ally doesn't offer
another Pro is that I like that you can
connect all of your accounts your credit
card accounts your investment accounts
other banking accounts to your Sofi app
which will track your monthly spending
and your net worth this feature I think
gives you just a comprehensive view of
how you're doing financially and because
of this functionality for me personally
I feel like it enhances the user
experience making sofi's app stand out a
little bit more than allies when I open
up my Sofi app I can see my monthly
spending I can see my net worth I can
see my credit score and it just gives me
a clear picture of my Financial Health
and just helps me become more effective
in in my own financial management the
cons of Sofi is that you can only have
one checking account personally I like
setting aside money out of my paycheck
for rent every single month so this is
why I've decided to still keep Ally
because I'll just transfer that portion
to my Ally checking account the other
con that I have with Sofi that is so
small but bothers me a lot is the
frequency in which you can set up your
autopilot functionality and into your
savings I think allies is way better
because you can choose from like
bi-weekly monthly weekly and Sofi for
some reason looks like this where you
can do it only one time a month or
monthly on a certain day so for me it
just makes it a little bit harder to set
up those auto trans on a bi-weekly basis
so far if you're watching this please
fix that for Ally I think the pros of
Ally that are worth REM mentioning and
their Auto sa functionality that gives
you more options for the frequency the
next one is the buckets in your checking
account so this would eliminate my issue
of having multiple checkings accounts
open and then although I said I do like
sofi's user experience better I think
allies user interface is just
straightforward and I can see how sofi's
UI might be busy for some people the
list of cons compared to Sofi I really
think that the overall functionality of
Alli is solid and the only drawback is
that it has a lower apy overall both of
these banks are and I honestly think you
can't go wrong with picking one or the
other what I recommend doing is trying
out Sofi for six months and then
switching over to Ali for another 6
months or however long that you want to
and then seeing which one better suits
you like I mentioned they're free to
open they don't cost anything to close
them out so really you're not losing any
money by having these accounts open and
I'll leave a link to the description
below to make it easier to sign up but
again also do your research if you're
looking for more specific things in a
banking account or a high yield savings
account my main piece of advice though
whether you pick Sofi Ally or another
bank is do not wait too long to open a
high yield savings account the longer
you wait the more potential earnings you
might be missing out on do not work for
your money let your money work for you
with that I hope this video was helpful
you all so much for watching let me know
which bank you choose below or if you
have these Banks what are your own
personal pros and cons so we can help
out this community also if you enjoyed
this video or if you gained any insights
don't forget to like comment and
subscribe it really helps out me and
this Channel and I'll also be posting an
updated payday routine video very soon
I'll see you guys in the next video love
you so
much bye
[Music]
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