Update: 10/5/2009 – Ally Bank has increased their interest rate to 1.80% APY

Ally Bank (formerly GMAC) bank is offering a competitive high-yield savings account that is currently offering a 1.75% APY interest rate as of September, 2009.

Ally’s high-yield savings account offering has no minimum balance requirements and charges its customers no monthly account fees, however there are fees for excessive transfers, outgoing wires, returned deposits and cashier’s checks that are similar to other online savings account. Interest at the bank is compounded daily and credited monthly.

The interest rate that Ally is offering is relatively competitive in today’s market. Some of the behemoths in the online savings account world, such as ING Direct and Emigrant Direct are only offering 1.30% rate of return. Some of the more competitive banks, such as FNBO Direct and HSBC Direct are offering rates of 1.45% APY. The 1.75% rate that Ally is offering is well above the average interest rate that most online savings accounts are currently offering, but it’s certainly not the highest.

Ally bank is also one of a few institutions offering a no-penalty certificate of deposit (CD). Ally is offering a 1.85% APY 9-month CD that has no penalties for early withdrawal. You can open a no-penalty CD for any amount of money and there are no fees for the privilege. The rate Ally is offering for a short-term CD are relatively competitive, but it would be nice to see no-penalty options with more varying term options.

Ally bank is a united of GMAC financial services. Until May 15th, 2009, Ally Bank was known as GMAC Bank, but GMAC Bank rebranded itself, as USA Today said, “hoping to smooth its image and entice new customers as it works to drive deposit growth.” Ally Bank is a FDIC member.

Ally Bank received a 2 star rating according to BankRate.com’s “Safe and Sound” ratings system, which is listed as “below peer group.” Ally Bank’s two star rating should not be a major concern, but you should always ensure that all of your savings are FDIC ensured.