SOFI vs. ALLY: Which HYSA should you open in 2024?

Summary

This 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

00:00

🏦 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.

05:03

🔍 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.

10:04

📊 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.

Keywords

💡High Yield Savings Account (HYSA)

A High Yield Savings Account (HYSA) is a financial product where consumers can deposit money to earn a higher interest rate compared to traditional savings accounts. In the video, the HYSA is the central theme, as the speaker discusses the benefits of using such accounts to make more money without investing in the stock market. The script mentions that these accounts offer liquidity, low risk, and usually have minimal to no fees.

💡Online Banks

Online banks are financial institutions that operate primarily over the internet, without the traditional physical branches. In the script, the speaker compares two online banks, Ally and SoFi, highlighting their features and benefits. Online banks often provide higher interest rates due to lower overhead costs.

💡FDIC Insurance

FDIC stands for the Federal Deposit Insurance Corporation, a U.S. government agency that insures deposits in banks up to a certain amount. In the video, the speaker emphasizes the importance of FDIC insurance for protecting consumers' money in the event of a bank failure, noting that both Ally and SoFi are FDIC insured up to $250,000.

💡Fees

Fees in the context of banking refer to charges that a bank may impose on customers for various services. The script mentions that both Ally and SoFi offer no maintenance fees and do not require an initial deposit, which is a significant advantage of high yield savings accounts.

💡Sign-up Bonus

A sign-up bonus is a promotional offer made by a bank to attract new customers, often in the form of cash or equivalent benefits. In the video, SoFi is highlighted for offering a sign-up bonus of up to $300 for setting up a direct deposit, which is a key incentive for potential customers.

💡Overdraft Fee

An overdraft fee is a charge that banks impose when a customer's account balance is insufficient to cover a transaction. The script points out that neither Ally nor SoFi charges overdraft fees, which is a consumer-friendly feature of their high yield savings accounts.

💡Annual Percentage Yield (APY)

The Annual Percentage Yield (APY) represents the amount of interest that an account will earn annually, expressed as a percentage. In the video, the APY is a crucial factor in comparing the two banks, with SoFi offering a higher APY of 4.6% compared to Ally's 4.2%, indicating the potential earnings on deposits.

💡Liquidity

Liquidity in financial terms refers to the ease with which an asset can be converted into cash without affecting its price. The script explains that high yield savings accounts offer liquidity, meaning customers can withdraw funds at any time without penalties.

💡Banking Apps

Banking apps are mobile applications that allow users to manage their bank accounts, perform transactions, and access various banking services. The video discusses the user-friendly interfaces of Ally and SoFi's apps, which facilitate tasks like checking balances, transferring money, and depositing checks.

💡Buckets or Vaults

In the context of the video, buckets or vaults refer to a feature within banking apps that allows users to create separate categories or 'envelopes' for different savings goals. The speaker praises this feature for helping to visualize and manage money effectively, with Ally allowing up to 30 savings buckets and SoFi up to 20.

💡Checking Accounts

Checking accounts are bank accounts designed for daily transactions, offering easy access to funds. The script notes that both Ally and SoFi offer APYs on their checking accounts, with SoFi at 0.5% and Ally at 0.25%, providing a small but valuable return on everyday funds.

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

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