Ally Bank Foolishly Losing Our Business

May 22, 2009 by  
Filed under Fools of Finance

fool_financeGMAC Bank has re-branded itself as Ally Bank. Mr. ToughMoneyLove is not impressed. The reason? Ally Bank has not changed it’s new account policies and fixation on credit scores. Because of that, we are moving the rest of our money away from Ally/GMAC to a bank that values customers with money more than customers with credit scores.

First, some history of how Ally Bank earned the “fool of finance” designation.

Several years ago we opened a savings account at GMAC Bank. The purpose of the account was to accumulate funds that would be used to pay off our mortgage. When that first account exceeded $100k (the FDIC insured limit at the time), we opened a second account in my wife’s name. All was fine until …

Last year I suggested that our second son open a savings account at GMAC Bank because of the convenience and relatively high interest rate being paid on deposits. He took my advice and made the attempt.  The morons at GMAC refused to take his money and open the account. Why? Because he had no credit score. Here was a young man with a good job, debt free, positive cash flow, and positive net worth. He has a bright financial future. He simply chose not to use credit.  Good for him.

I was incensed. I called GMAC and asked to speak to a supervisor. I wanted to know why GMAC would not accept money from a customer who had it. I was given the usual “that’s our policy” explanation. When I probed further and asked the business reason for the “policy” all I was told was that “our investors require it.” 

That was enough for me. I immediately started calling other online banks and asked if they did credit checks before opening new deposit accounts. Most said that they did, but only to verify identity. Then Capital One Online Bank told me that it did no credit check. If you have money, they want it. How revolutionary. So guess where I moved most of our mortgage pay-off money?

I left a little money at GMAC Bank, just to keep our options open if the FDIC insured deposit limits changed. When I learned this past week about the re-branding to Ally Bank, I decided to contact them again. I wanted to know if their policies had changed. This is the email I sent:

I am a current GMAC now Ally customer. Previously I recommended that my son open a savings account at GMAC bank.  He has a good job, positive cash flow, positive net worth, no debt and an excellent financial future. However, to my surprise and chagrin, GMAC refused to accept his money because he has no credit history. 

What a brilliant marketing strategy that was – turn away new customers who have the strongest balance sheets and are most likely to develop a profitable deposit relationship with a bank, because they choose not to use credit. After I learned that, I moved most of our GMAC money to Capital One Online Bank, which did not have this ridiculous policy.  I am now deciding what I should do with funds remaining at Ally and with future deposits.  So this brings me to my question:

Is Ally Bank continuing the GMAC Bank policy of not opening accounts and not accepting deposits from people who have never used credit and therefore have no credit score? Or has a return to reason and logic accompanied the change in name?

I look forward to your response. Thanks.

Two days later, I received this response:

Thank you for taking the time to contact Ally Bank.  At this time our account opening policies have not changed.  Ally Bank has the same requirements as GMAC Bank has in place.

Once again, no attempt was made to provide a sound business reason for the “policy.” Instead, a confirmation that only the name has changed. Meet the new fools, same as the old fools.

Now I am sure there are readers out there who will tell me that there are good reasons for a savings bank to require that a depositor have a credit score. Short of weeding out criminal elements and terrorists, at this point I don’t care what they are. I refuse to play by rules that FICO and the other members of the credit score mafia are trying to impose on us.

Most consumers bend over and take it. Some become credit-score junkies, as if the person with the highest score wins. Not me. I don’t know my credit score. Never have. I focus on building wealth. That seems to work, as it did before FICO began taking over our financial lives.

I accept that I am a lonely voice in the credit score-obsessed wilderness on this. So be it. If I can vote with our money – as in this case with Ally Bank – that’s what I’m going to do.

Image credit: Oddsock

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57 Responses to “Ally Bank Foolishly Losing Our Business”
  1. kitty says:

    I wouldn’t be too tough on banks that check your credit and too happy about the bank that doesn’t check it: in most cases of online banks this is indeed an extra check for your own security: to make sure you are who you say you are and to prevent identity theft.

    Most don’t do hard check or get your credit score, all they do is get some information and then generate some questions based on this information and let you answer these questions to see that you are who you say you are.

    Here is how it worked when I opened an online saving accounts in the past. They connect to a credit report, get some info and then ask you questions like “In 1987 you had a mortgage with XYZ bank. Select the amount of your monthly payment” – and they will list several amounts as well as 0 or “None of the above”. “In 1995 you had a car loan from. Which lender was it from?” – then there’ll be some selection of bank names as well as “None of the above”. Some questions may be applicable to you, others may not, but you are the only one who knows the answer.

    When you open an account in brick and mortar bank, they ask you to show them your license. But when you do an online application they don’t do it. Sure they could ask you to upload a scanned driver license but unless they see your face they don’t really know if it is real. I’d be curious how Capital One verifies that you are who you say you are and prevents someone else opening some money laundering account in your name.

    • jim d says:

      kitty says:
      May 25, 2009 at 8:11 pm

      I wouldn’t be too tough on banks that check your credit and too happy about the bank that doesn’t check it: in most cases of online banks this is indeed an extra check for your own security: to make sure you are who you say you are and to prevent identity theft.

      that a bogus concept. i have 6 forms of gov’t issued photo id. driver’s license, passport card, passport, police officer’s license, fire department photo ID and a TWIC card (port security ID) and have offered to show the bank them,. all they want to see is driver’s license.

  2. Tom says:

    Flexo from Consumerism Commentary sent me to this post in a response to a comment that I made.

    I wanted to say that I am 100% with you on this. The credit scores and even the credit record system we have is a joke. And in my opinion the only reason it works is because we let it. I have great credit, but I do not care — I want a system that assesses ability to pay instead of ability to handle debt. And for a bank especially, that means ability to take a deposit — usually it is strong evidence that a person can pay when they hand the bank a check or even better cash!

    I wrote an article on this on my blog which I am just starting on. I wrote it a few days ago — I had not seen your post yet. I hope you don’t mind me providing the link here. The post is on Voting with Dollars: Credit Bureaus (

    Thanks for the great article and great example why we need to stop encouraging use of credit scores.

  3. We all need to remember that we have our own policies as managers of our wealth, just like the businesses have their own policies. The only difference is that we are always the policy maker, and we rarely get to speak with the policy makers at the businesses. A quick story about me switching banks because of some phony policy.

    I went to deposit a sizable cashier’s check at a bank where I had opened an account 30 days before. They told me they were going to have to hold it for 10 days – it was their policy. I told them repeatedly (teller, supervisor, vice president and president) it was unacceptable.

    I explained to them that they could hold it for one business day and that was all it would take to verify the funds. It was that, or my cashier’s check and my bank account were going elsewhere. At my suggestion, they finally called the bank where the cashier’s check was issued and agreed to accept it as cash that same day.

    Too late. Their policy is to use my money for 10 days without interest payments, and my policy is to go to another bank where it isn’t so damned hard for me to be a customer.


    • D says:

      Federal regulations allow US banks to hold funds from any check for up to 7 business days. This is to protect against many things such as fraud, money laundering, crime and terrorist funding, and other forms of financial crime. you still earn interest on the funds as they must deposit it into your account right away, they just don’t release the funds for withdrawal until after the 7 business days. It is standard to hold the funds for a full 7 business days on first deposits and accounts less than 30 days old. After that 2 business days is more typical. Checks NEVER clear same day or in one business day, and the time it takes to clear has little to do with contacting the issuing institution. You need to learn about how the banking and financial system works in the US as well as what the federal regulations are.

      • A says:

        For the love of GOD, D. Seriously?! More than one site on the same day claiming that people don’t understand the banking system is a little suspect. You went after this “Ally bank” issue like it’s YOUR JOB. If your are an “ex-employee” like you claim, why do you even CARE what the customers are saying? Why do you have the claim that there is problems with the bank but you never seem to say what they are? Out with it already. >.>

  4. Dan says:

    This whole post was off the wall. I think you are totally mistaken by the whole situation.

    While I am sure your son is a great person and all those great things you said are true. But, how is a bank to know that?

    Say there is someone trying to make an account to try and ripoff money from the bank somehow, they try to sign up, have no credit history and gets rejected. You would be happy about that…

    But over the internet, what is the difference between the person trying to ripoff the bank’s application, and your son’s application?

    The answer… there is none! They are both forms filled out online, and their systems try to weed out the bad ones.

    Soooo… no credit history, means the person has pretty much no financial history with lending institutions, meaning that they cannot find anything out about this person submitting the request…

    It needs to be rejected. To get a credit history, you just need a credit card, or a cell phone bill, or heck, even a credit card for a gas station or clothing store, they LOVE giving those cards away…

    But in order to get any of the above mentioned items, you need to be a real person, with real ID, and a real social security number, with a real address… So… in the long run, thats why Ally bank, as well as almost EVERY other bank does these checks. And I guarantee if Capital One does not have this policy, they will end up getting ripped off, they will change their policy, you will catch wind, get angry, and transfer your funds out of there…

    This was a pretty angry post you made over such a normal check with very common sense reasoning. I am a GMAC/Ally Bank customer and I am very pleased all around, and it saddens me to see someone posting negatively about them over something blown out of context.

    Good luck!

    • Dan – My son is a real person, with a real address, a real SS #, a real job, checking and savings accounts at a brick and mortar bank, and a debit card, all of which GMAC/Ally bank can confirm. He does not have a credit score because he has never used credit. My complaint is not so much about verifying his identity, it’s in requiring that he have a credit score. I and millions of other Americans have opened millions of bank accounts, long before FICO even existed. Now FICO determines who gets to put money in the bank? Not my bank. Unfortunately, folks like you and others are just bending over and letting FICO and its allies control your financial behavior. That saddens me, particularly when people like my son are more financially responsible than most people who have credit scores. The entire tone of your comment is that it is appropriate and necessary that people who do not use credit should be treated as undesireable customers. How off the wall is that?

    • I says:

      It makes sense to require a credit rating to obtain credit (i.e. a withdrawal/loan).

      It does not make sense to require a credit rating to accept a deposit.

      In fact, the bank should be presenting his son with their detailed credit rating or collateral showing their capability to repay his deposit.

      Incidentally, I joined GMAC/Ally just before they became Ally. They are cool with me and always improving.

      I was just repeating my age old conversation today about the banks coming to you when you have money (apply for our credit card / use our cash advance checks), and staying away from you when you need money. I bet his son gets these solicitations but never accepted them.

  5. Tom says:

    To be honest it seems quite backwards to expect someone to have a credit card *before* they have established that they can appropriately handle a bank account. Someone should not have to have credit lines open before they have the opportunity to deposit their own money to a bank. Frankly if we asked the banks for a credit score the majority of them would not be able to pass right now.

  6. Dan says:

    Toughlove and Tom.

    I dont think this has anything to do with a credit score, Ally bank honestly doesnt give a hoot about your credit score, they want your money, they have ramped up what, $37 billion in deposits by offering higher than average interest rates, which even triggered the ABA to file a complaint with the FDIC.

    I highly doubt all $37 billion came from people who had excellent credit, but I do guarantee that they all passed the initial checks.

    Thats great that your son does not need to use credit, but I think we know the entire foundation of America is based on credit. Your son will need to get a loan someday, for something… so getting a no annual fee credit card and purchasing one thing, and paying it off, would do nothing but benefit you in the long run.

    Without any credit, your son wont be able to purchase a car or a home. I urge people to use credit responsibly, as it really does help you down the road.

    But, back to the point about Ally bank, anyone can put down a valid address in the form, so using that as a check would be incredibly insecure, the only thing you mentioned that is a valid check, is your SSN, and they do the check against your SSN, and thats the credit check, to see if you have a history, to validate your identity (for the most part).

    I understand that you are upset about this, and that kinda sucks, I think you are looking at this at the wrong angle, and we can discuss back and forth and not make any progress. But I can assure you that the check is in place not to check your credit score, but, to protect the bank, as well as the person who owns the SSN.


  7. SonnyG says:

    My version of the hard truth?

    I agree with Dan. Your son would benefit greatly from at least purchasing a few things on credit (or charge) cards and then paying them off right away instead of always using a debit/checking account. I can’t understand why you wouldn’t encourage him to build some sort of credit history when he seems so capable of doing it financially and could achieve a high FICO score with relative ease.

    Does your son ever buy things online? From a security standpoint, it’s also a good idea to have a separate credit card for shopping online instead of using a debit card linked to a checking account.

    In your review, you didn’t mention any problems as a customer yourself, just problems with your son as a potential customer. In one sense you have given Ally a great review.

    Outside of your mortgage, you failed to mention your own credit history as a contrast to your son’s. Also, I wonder what the difference in response would have been if your son had contacted them instead. I’m not convinced that the tone of your email really encouraged a lengthy, apologetic reply – especially *after* yanking your sizable deposits out.

    I do agree with you that a credit check seems like a bit much after identity is confirmed for a savings account. I’m curious if Ally is using an AmEx-like strategy to collect (supposedly) less risky customers who are more likely to leave their money in for a while.

    Finally, it is nice to see that you take so much pride in your son. Kids need that.

    • Sonny: My son did contact them and was turned down for an account because he had no credit score. My credit history was established long before FICO scoring became the norm. Lenders looked at a persons’ entire financial picture, not just a 3 digit number.

      Finally, you are partially missing the point. I understand that a bank opening an account online must have a way to verify the customer’s identity. That can be done without also requiring a minimum credit score.

      • Andrew says:

        Kinda late on the post – your missing the point. in this case it is not about the score so much as the established history they can use to identify someone! Get it? And also in response to this

        “I and millions of other Americans have opened millions of bank accounts, long before FICO even existed. ”

        Were those millions of accounts online bank accounts Mr. ToughMoneyLove? I dont think so..

        • Yeah I get it Andrew but you don’t. Ally requires a minimum credit score to open the account – nothing to do with identification which can be verified independently of a FICO score. But nice try.

          • D says:

            I think you are still mistaken. There is a difference between needing a certain score and having no credit history at all. The score requirements are quite low but you need to at least be on record. I am en ex Ally Bank employee and I will tell you that it really is mostly an identity issue. And I don’t like the company so I am not just towing the company line here.
            Online banks have no idea who you are, and checking with other banks or institutions is not an option. Banks are not allowed to do that. The only resource they have is to check credit histories. Now maybe this should not be the case, but you should be blaming federal laws, not Ally Bank or other online banks. People just don;t understand the difference between signing up for an account in person with ID at a brick and mortar bank and signing up online. even though I worked there I still think it is kind of ridiculous that online only banks even exist. If I were the customer I wouldn’t trust them either. You have no idea how easy it is for minimum wage employees with no education to get a job at a customer service center contracted by Ally and gain access to personal and financial information. There is too much disconnect between online banks and customers for either to trust each other. The whole concept is stupid really.

  8. SonnyG says:

    Why did your son choose not to build a credit score when he is positioned to have a good one and so many companies use it? Credit isn’t inherently evil, it’s like any other tool that can be misused. Does your son see the difference between simply not needing credit and having credit & using it well?

    I don’t carry balances and use credit for: extending warranties, purchase protection, bank account protection, financial insurance, etc. I have a great credit score and a credit history. If I can have those benefits with little-to-no fees AND get cash back, it makes no sense to avoid credit.

    And you can have all of that without being credit score obsessed. Contrary to the financial talking heads and ads on TV creating consumer fear, if you are consistent and disciplined with your finances you don’t have to obsess about your FICO score.

    So basically, would we even be having this discussion if your son had built some sort of credit history? Probably not. You’d probably still have your money with GMAC/Ally and be benefiting from their curiously high interest rate.

    Also, identity might be enough to open most accounts, but maybe not for others. As for missing the point, “can” and “must” are very different (as are “no score” and “low score”). Which are we talking about?

    Lastly, companies aren’t required to provide reasoning for their policies. While it is usually good customer service to explain policies, sometimes there are business reasons not to do so in depth. For example, as soon as your risk management scheme is exposed you have competitors analyzing or copying your model, customers trying to game the system, etc. Next time, use honey instead of vinegar to get answers. You seem involved enough with your son’s finances, did you ask if you could have co-signed for your son’s account?

    • Michael says:

      Hi my name is SonnyG. I am a robot. I do not have any critical thinking skills and cannot think out of the box. I just rehash the legal analysis spewed by big banks. I use the vague term “business reasons” to protect banks from practices that hurt ordinary consumers. Do you seriously believe everything banks tell you on the phone, or do you work for a bank?

      Seriously, people, when are you all going to realize that the only reason banks are so obsessed with credit scores is because ultimately, they want everyone to be in debt so they can make money from finance charges and interest. News Flash, ever since the days that Reagan destroyed savings and loan institutions, making money off of deposits is a losing business model. Deposit accounts at large banks nowadays are just a gateway to having customers eventually get themselves to use bank’s credit cards. That is where big banks make their money. This is why Ally and other banks are so obsessed with credit scores, because they only want consumers that will make them money by getting themselves into debt! As the original commentator noted, there are obviously a million other more logical ways to confirm a person’s identity and make sure they are not criminal.

      Another news flash, banks’ reliance on credit history/scores is not, as they claim, for purposes of identity. You are correct, SonnyG, that there are other “business reasons” at play, namely the purpose of getting customers into debt so they can rake in the finance charges by charging interest rates 7-20 times the prime rate set by the Fed.

      Wake up America!

      • D says:

        This is the case for many financial institutions but not Ally Bank as they offer no loaning services whatsoever. So clearly they are not trying to get you into debt. Use your head.

  9. Sonny: My son has no credit score. Let’s assume he was 17 with money saved from summer jobs and no credit history. He wants to deposit his saved money at Ally Bank. He can prove his identity and they can verify it. They still won’t take his money because, at 17, he hasn’t used credit yet. That, my friend, is a stupid policy for any bank that wants deposits. Now fast forward to age 23. Son has even more money to deposit because he is a college graduate with a full time job. Nope – Ally says we don’t want your money because you haven’t used credit yet. Local banks – even megabanks – will take his money. Other online banks will take his money. But not that genius bank, Ally. Apparently it knows something about my son’s money that other banks don’t. Tell me what that is? What risk management scheme is that exactly?

    • D says:

      I’m honestly not sure what you mean when you say your son can prove his identity with an online bank without a credit check. There is literally no way to do this, so clearly no other online bank is doing this for him. You realize that I can just lift someones wallet and then send in a copy of their ID and then say I am them right? This does not establish proof of anything. They need to see a credit history showing the same name, address, SSN, mother maiden name, and other personal information. This credit history could not be established without someone verifying your identity in person at one point, therefore it makes sense. Since this is the only existing way to make such a confirmation (again, maybe there should be other ways to do this, blame the US government), they NEED to do this to open an account for you if they cannot verify your identity in person. I am not sure what you don’t understand about this.

      • The argument that a credit score is needed by Ally Bank to identify a depositor is complete bullshit. I know this because I have accounts at other online banks that do not run even a soft credit check. You are just a shill for Ally. Even Ally didn’t make this argument. They just said “their investors require it.”

  10. Tom says:

    Sonny, you are correct that Ally or any other business can use whatever scoring they like (as long as it doesn’t involve discrimination on ethnicity, gender, etc) And they do not need to divulge why they turned someone down (although I expect that to change, since lenders are required to report that information.

    But, I still choose to do business with companies that do not use the credit score over companies that do. It is ridiculous for companies to use a score that indicates how well people can overextend themselves, versus using a score or a report or a paystub or whatever that indicates ability to pay. That’s my opinion, and I will be encouraging my children to avoid credit as well.

  11. SonnyG says:

    I agree with you TML, it seems like a stupid policy considering savings institutions need to get their hands on other peoples money in order to make money. I guess some institutions are trying to stay away from riskier customers and a credit check is the most cost effective (if sloppy) way for them to figure that out. There are probably so few people without credit histories applying for their accounts that they don’t miss the capital that much, and if its coming from people who are starting out, they probably don’t have a lot to begin with. Maybe not the most compassionate move by a company, but they are getting stimulus money and need to show they can deliver.

    Also, a good job today with a bright future is not as good of a predictor as a proven past, and even the proven past has uncertainty as a predictor – especially considering the events of the last couple of years where millions of people thought their jobs were stable and reliable, that they’d be able to pay their mortgages, and that gasoline would never go north of $4/gallon.

    Aside from whether or not Ally should be checking the scores, credit is the norm of our society; I’m not saying you have to like it, but that’s the way it is. Your son has chosen to act outside of the financial norm and, as a consequence of that choice, has hit an abnormality within the system. Does that mean it’s hard for young people, people who opt out of credit, immigrants, or others who are just starting out? Yup. And it’s supposed to be. They are a riskier group and need to prove creditworthiness. After they build a credit history and grow some more wealth, they can be measured and trusted with more (assuming they behave themselves). Parents can always help by getting their children those ‘extra’ credit cards attached to the parents’ accounts and by cosigning loans/leases/accounts in the beginning to help get things started.

    I’m glad Tom and TML are activist consumers when it comes to perceived FICO abuses and encourage you to continue BUT just because you don’t like FICO it doesn’t logically follow that using credit is bad. Not using credit just because it’s credit is irrational and akin to hiding your money in a mattress. Almost every finance professor warns their students about abusing credit, but not a one says don’t use it at all. The only reasons to actively avoid building a credit history are 1) because of personal religious beliefs about credit/lending and 2) to hide by creating fewer records of your existence. You don’t need credit, but it really doesn’t hurt, and it doesn’t have to cost you one dollar to build a credit history.

    I’m not sure what Tom means by “a score that indicates how well people can overextend themselves”. You can’t tell that from the FICO metric alone; you’d need more information. Is it possible that some companies misuse FICO scores or don’t understand what they represent? Most definitely, yes, and it’s probably so in this specific case with Ally.

    What if FICO is replaced and you don’t have a credit history for the new system? It will still make things more difficult with auto loans, mortgages, rental agreements, etc. No one can make you build a credit history, just don’t act surprised when the person across the table is surprised you don’t have one; the overwhelming majority of society does and systems are built around that fact.

    I understand wanting to change how FICO works/is used, and supporting companies that don’t use it is one way to encourage that change. However, I’m not convinced that FICO is altogether evil nor have I been convinced that Ally must accept a financial customer with no credit history under any circumstances. Not everyone without a credit history is in the great position TML’s son is. Some companies offer benefits by cutting things others deem important. Southwest Airlines is for people who want cheap airfare and don’t mind not having a specific seat assignment; Ally may offer high interest rates for people who don’t mind having a credit history.

    I guess we differ on our views of the importance, ease of creation, and value behind a credit history (regardless of FICO’s existence). Remember, businesses will never love your son the way you do.

  12. Tom says:

    I just meant that FICO has, at least in the past, favored those who have a high amount of credit. This credit is not always associated by debt, but personally I feel our current economic situation demonstrates vividly that for many it now is. To the point where many people are overextended.

    My opinion is that FICO and a reliance on credit is our own creation, and that we can only reduce its influence by favoring companies and methods of payment that don’t cater to it. How important is it to do that? Not very important to you maybe, but it is important to me. Only because I prefer a system where a company looks at my ability to pay, not my available credit and past credit history. Credit history is an indicator of ability to pay (one that lenders were all too eager to ignore recently), but I believe it is a flawed one.

    I am definitely not surprised if a company would use the credit report and score for evaluating me. But aside from credit worthiness I think it is a misleading indicator (it is just unfortunately one of the few indicators available).

    Businesses will never love my kids the way I do, unless we give them a reason too. If my kids choose to go the route of strong credit report / scores instead of cash, that is their choise. But I will encourage them to use cash. This just goes to my overall belief that we rely on debt way too much. Credit does not necessarily imply debt, but I am not sure what else someone would really want credit for — unless they wanted debt eventually.

    Anyway, it is a good discussion. And I think the vast majority of people feel that credit is a good thing. I used to be one of them… I am just not anymore :)

  13. SonnyG says:

    Cash just isn’t safe for using online – debit cards are a direct link to your checking account. For safety’s sake, you can avoid purchasing things online or you could limit your exposure by managing several checking accounts (e.g. one for online purchases), but why not just use a credit card, let the card company cover that risk and just pay off your balance right away. My point is: you can use credit as if it were cash with one extra step that adds a level of security along with other potential benefits with extended warranties, cash back(!), etc. Prepaid cash cards can be good except when you have to pay a 3-5% fee up front; that fee is no different than paying interest and not all online sites take those cards.

    If you are disciplined, you can very easily use credit without accumulating debt. I have one debit card and one credit card. I use the credit card for online shopping or large purchases I have saved up for (electronics, vacations, furniture, etc.), and then pay it off in full right away which because of the grace period means I don’t pay interest. This method goes against what I’ve been told to do -carry a balance- for a supposedly good FICO score but seems to work just fine. I haven’t had any problems so far getting the lower interest rate loans, carry no debt, and haven’t checked my FICO score once. It can be done without much effort and is the best of both worlds.

    If you are afraid of accumulating such short-term, interest-free debt then maybe limit your usage. Maybe only buy a few things infrequently. Perhaps the temptation to use credit becomes too much for some, which makes that a third argument to avoiding credit (the first being religion, the second being attempting to limit your record trail).

    I guess one feature of having a third-party credit evaluation is that you don’t have to give your entire history to each and every lender you encounter. And just because they aren’t using FICO doesn’t mean that you will be treated any more fairly by those lenders either; their evaluation could be sloppier or more restrictive.

    When thinking about the 5 C’s of lending, by eliminating Credit, you shift the emphasis of a lending decision to Capacity and Character. If you aren’t face-to-face, Character (one of the most important of the C’s) can be very difficult to determine. Capacity is somewhat subjective as well. I like to have as much information as possible when I make a decision, and having only 50-70% of the information I’d like to have makes me more nervous and careful.

    I agree. Good discussion.

  14. Henry says:

    My wife and I are fairly young, in our mid 20s but are both professionals with years in our fields. College graduates, me former military, homeowners, tax payers, even light stockholders. We save a substantial amount of our monthly income and have more savings than most. We are also brand new parents, and before our daughter was born, we started a college savings plan for her. Up until now it’s been mixxed into our total savings acount, but I made up my mind that when she had 2000 or more we would open a seperate acount for her so that she could start seeing the benefit of compound interest. Imagine our surprise when we were denied an account on the basis of our credit scores by Ally bank. The reason? We are modifying our home loan through a law firm because our house value is so low now that we couldnt refinance, and the law firm suggested we stop paying our mortgage while the loan is in negotiations. Well the bank didnt want to play for the first month and charged a 30 day late to our credit. After that, all was fine, but because of that one 30 day late from our mortgage lender (which is being fixxed as we speak by the law firm) we were denied a SAVINGS account. I was contemplating moving the bulk of our 6 figure savings over to Ally to take advantage of their high savings, but I wouldnt move it now if they were offereing 5 percent on principal. I cant believe that a bank that is part of a bankrupt company would balk at two otherwise sure bets. We have never been turned down for anything in our lives, from homes to cars to TVs, whatever we have ever applied for we were able to get and we always pay our bills. I dont get it, our scores werent even hit that badly, maybe down from the mid 8s to the low 8s. Rediculous!!!

    • Henry – Thanks for your comment. I certainly agree with your sentiments about the foolishness of Ally Bank and its reliance on credit score as a measure of the worth of a depositor.

      • D says:

        They only require a 600 to open a checking account here, so you are lying about your score. Secondly, why do you own so much on a low value house and why are you trying to refinance if you have 6 figures sitting in a bank account. This is what is wrong with Americans and why they don’t understand that they are all a risk to US banks. I am always absolutely amazed to see people who make that much money and still somehow manage to spend way more than they make. This is the reason for the recession. Sure, most people were indoctrinated into it by people trying to take advantage, but at what point does common sense come through and inform people not to spend more than they have. People who make less than 100 Gs a year should not own million dollar houses, plain and simple. Stop making and buying million dollar homes you morons. Stop taking more than you can afford even if it is being pushed upon you. Canadians weren’t hit hard by the recession because we don’t live so far beyond our means.

  15. Dan says:

    Wow I didnt even think that they used the credit score… I was wrong, I just thought you NEEDED one for them to do a check against…

    But regardless the 6 figures would have been nice for ally, but you wouldnt have got that high interest rate for every penny you had in there, I do believe they have limits up to 5 figures, and low at that… not positive.

    But that is honestly the first time I have seen someone get rejected solely on a poor credit score… I have seen people getting rejected for no credit score…

    With 6 figures in savings, how would you even consider trashing your credit… you really decided to play with fire on that one… I dont know how expensive your home is, but for most people they could just pay it off… and you were refinancing??? Geeze… none of this is adding up…

  16. AnnJo, Seattle says:

    I recently opened a new account (at a bricks-and-mortar major bank), set up my online access and accidentally shredded the username and password hints I jotted down. When I called for help accessing my account online, I was startled by some of the security questions I was asked, all of which, I was told, came from information on my credit report. (One question, for instance, was what County I associated with the address of a rental property I sold two years ago.) It was more than a little creepy to realize how much information about me and my business was in the hands of a bank that had, so far, only $500 of my money in hand.

    Yet, on the other hand, the level of difficulty of the security questions was reassuring, in a way. Even with a copy of my credit report in hand, an identity thief would have had an almost impossible time answering all three of the questions correctly.

    I don’t know how much Ally’s policy is motivated by security concerns as opposed to credit-worthiness concerns, but it would be a valid motive.

  17. GMACAllyCustomer says:

    I have been with Ally (GMAC) for 3 years. I had no problem with GMAC before.

    Recently I spend 2 months in Ally and still can not open a new account, this experience is very frustrated. The customer representatives have inconsistent answers. One day they call you with one answer, and please don’t feel surprised for the call from them in the following days with another answer; I fax the documents to them, and they can not find/locate the fax. I am tired with several rounds of this kind of inconsistence.

    My question is:
    If representatives can NOT provide standard guidance/answer, what’s the meaning of customer service of the bank?

    Although they have 7-24 call service, it won’t help if they can NOT solve your problem. (In fact, it wastes your time!)

    I am searching for another bank with relative high rates. Enough is enough.

  18. Bob says:

    The FICO score is an “I love debt” score. Debt, and its mismanagement (by individuals, businesses and the government) is the major reason for our present economic concerns. Banks make tons of money by encouraging debt. That is why there are no tears being shed at my house about the bankruptcy of the corrupt banks. The credit card crash will be worse than the housing crash. Just wait and see. There is NO reason to check a FICO score to open a deposit account. There is also no valid reason to do this with people trying to rent… or to issue insurance policies… People have bought into Fair Issac’s silly number and abandoned manual underwriting. Stupid. Ally bank wants to lend money, so they only want accounts from people they can sell “debt” to… making our national problem worse. Stop Debt! Live on what you make. The borrower is slave to the lender. Deposit your funds with a local credit union… at least they help your community!

    • D says:

      I agree with you that the borrower is slave to the lender and we have to eliminate the debt system. Unfortunately this requires a more radical change as the central bank (federal reserve) lends all printed dollars to the country with debt attached. This is the real reason the system works the way it does. Banks borrow money with debt attached and they then need to put people in debt to transfer the loan from them to someone else.
      Unfortunately this is not an argument against Ally as they do not loan money, so they are clearly not trying to get you into debt.

  19. Josh says:

    You guys seem a little confused. Ally Bank is not performing a hard check on your credit history to establish your identity. If that was the reason they would simply do a soft pull like most other banks and your credit score would be irrelevant.

    The reason they perform a hard check is because they have overdraft protection on their savings accounts, which is essentially an agreement to extend you credit.

    Personally, I am upset that the overdraft protection is not optional. I am also upset that they do not make a greater effort to warn away people with limited credit. But as far as their policy is concerned, I think it is fairly reasonable.

  20. Steven says:

    It’s too funny to read all the comments on this web site and others defending Ally’s decision not to accept new accounts with no credit history. It’s one thing if all banks are rejecting applications with no credit history but Ally’s strategy is not a common practice. I have wasted too much time with Ally completing forms and submitting documentations to support my 18 year old son’s application for an online bank account and CD account. For a bank to reject a $10,000 cash deposit is insane. The bank did accept his application for a $40,000 CD. However, since the bank cannot give me a logical explanation why they cannot accept my son’s online banking application (other than saying it is their policy), I decided that the bank does not deserve my business and I took it to another bank that has more business sense. The bank has the right to set their policy but to me it is a STUPID policy that makes no sense.

  21. jim d says:

    after i had opened two different cd accounts, i was also denied a money market
    account.i had 549,566 and 605. now i’m 678,720 and 768 but i wont do business
    with them again.

  22. Kyle says:

    Why would you put money in a low interest savings account in anticipation to pay off a higher interest mortgage? You are losing money each month.

    Put the money on the mortgage and close the savings.

  23. Private says:

    It’s a ponzi scheme. Remember “Made” OFF?
    It’s a ponzi scheme. Remember “Made” OFF?
    It’s a ponzi scheme. Remember “Made” OFF?
    It’s a ponzi scheme. Remember “Made” OFF?
    It’s a ponzi scheme. Remember “Made” OFF?

  24. August Woerner says:

    Ally Bank falsely advertises on TV that there is no penalty for early CD withdrawals, I bought a CD from them and tried to withdraw it four months from maturity. This is a bank, “too large to fail.” So, in protest, I decided to withdraw my money from their bank. I phoned therm. I was first told they would charge me for mailing me the check, more if I wanted a wire transfer. Then they said there would ba a penalty for early withdrawal. Rather than pay those penalties, I decided to wait until the CD matured.

    • D says:

      This is blatantly false. There is only one penalty they offer than has no penalty for early withdrawal and they very clearly state that for any other CD they will charge you a fee equal to 60 days worth of interest for early closure. Also, they never charge you to mail you a check.

  25. Steve says:

    The rates are good and competitive. I have multiple accounts and CD’s. There customer service experience is exasperating and painful. Even after calling the corporate office, they do not care. The constant shuffle off until you give up. Don’t bother. In the future I will take the lower rate of my local bank and deal with folks who actually care about my business.

  26. August Woerner says:

    I bought a CD from Ally because they said I could withdraw whenever I wanted. Straight forward they were not. Yes, I was told I could withdraw but what they don’t tell you is that you would be penalized for doing it. I would have lost most, if not all, my interest, so I was forced to continue until the CD matured.

    When my maturity day arrived, I was told I would receive my check in six days. When it didn’t arrive they said I needed to wait five to ten business days. I asked when it was mailed. First they said on my maturity date. Then, they said the maturity date was on a Saturday, and it was mailed two days later on Monday. When it didn’t arrive, I checked as to where the check was mailed. I was told Pennsylvania. If they mailed it on that Monday, the mail from Pennsylvania takes 3-4 days. When it still didn’t arrive they repeated the “five-ten business days” mantra. Mail doesn’t adhere to that mantra. The US Post office operates 24/7 but doesn’t deliver on Sunday. Mail from Nevada comes to our home 4-5 days. My check finally arrived eleven days later.

    Ally gives you the “run around” not service.

  27. Peta says:

    And who on earth gave ally the green light to discriminate legitimate established, since many years in business, firms and – just like that – stamp a company as “SCAM” ?

    Who? Ally itself? Ally – you can change face a thousand times, people will learn very quickly who you really are!

  28. Mark James says:

    A private business (e.g. Ally Bank) can set whatever policy they want for their customers. In fact, except for very particular cases (gender, race, religion) they can discriminate on their customers however they feel like. For example, “No Tie, No Service”. And the customer can choose to deal with that business or not.

    There is no point in whining about some bank policy being unfair (“What do you mean I have to wear a tie to get service?!?”) If you don’t like it, give your money to somebody else. If you want a completely fair banking, then you should have told your congressmen to federalized the banks when they were bailed out. I think they have those in Russia.

    * And for you guys who thinks banks should have been allowed to fail: If they did, our unemployment rate would be more than 50%. I shit you not. And only jobs left would have been federal employment. Our country would have become a socialist country if banks were allowed to fail. People seem to forget that TARP was passed under George W. Remember when McCain stopped his campaign so he deal with this “Historic Crisis” in Congress? IT REALLY WAS THAT BAD. We could all be living through Great Depression II right now.

  29. Ted Dennis says:

    I recently went through 2 weeks of hell, having debit card access blocked to my account nightly while on vacation. I spent hours on the phone with Ally and emailed senior executives.

    Eventually, the problem was corrected to where I can access the account. The bottom line is:

    1. Ally does not have the automation systems in place to function as a bank
    2. Ally isn’t a bank at all in the since you cannot go to an Ally location and withdraw your money (I was prepared to fly there to get my money)
    3. Ally continues to advertise falsely regarding their customer service.
    4. Ally will not compensate you for any losses that are their fault. You are on your own, baby.

    Don’t waste your time with this bank imposter.

  30. jess says:

    I too was denied an account at Ally. I asked why? They wouldn’t tell me. Said maybe others have a similar name, or there is an address mistake. But didn’t know. Then they sent me a package asking for photocopied id. Okay – I have no problem in copying my driver’s licence..etc and sending it to them. However, a professional such as a medical doctor, dentist, judge, lawyer, engineer, vet or accountant must verify me. I don’t feel comfortable asking any of these people. It’s not my dentist’s job to do this.? And I’m not friends with these people. I asked if the principal of a high school could verify me or another type of professional such as a professor (who I actually know) they said no – it’s not on the list. So, I say no I will be not opening an account.

    Also, I’ve read remarks regarding their webpage isn’t good. That there are glitches in their system.

    In addition, my family does not have ANY credit cards (I do – just to build up some credit score). They paided outright for their house and cars. Saved first then purchased. They do this constantly. I don’t think you need credit, and lots of people actually don’t have credit cards because there is no need. I got one because I might need some credit someday. However if you don’t get any credit cards, and have the money (like my family does) why should they get credit cards.

  31. x1134x says:

    I don’t understand the logic of throwing up to 100k in a worthless savings account pulling maybe 1 percent when you owe over 100k that is racking up 5 to 7 percent.

    Throw it at the debt already.

  32. Justin Y says:

    Per my conversation today with Ally Bank; a minimum credit score of 635 is required to open ANY type of deposit account with them.

    • jim d says:

      i tried to open a money market savings account in june 2009. the credit score required was “top secret”. i.e. they would not tell me.
      i have a 549,566 and 605 then. i have a 764,768 and 831 now.
      life is good.

    • Oceans99 says:

      Hmmm I opened up a money market account 6 months ago with fico of 569. Had no issues. Just opened checking last week. No issues. So not sure about fico score issue?

  33. jim d says:

    actually i opened a cd with those scores but i think a cd is not a “deposit account”

  34. Shawn says:

    Hmm, I just opened an Ally account about a month ago and didn’t run into any problems. I’m 18 with no credit score and no report on file with any of the credit bureaus. I checked with the bureaus after JPMorgan Chase refused to allow me to open a checking account with them, saying that I needed to jump through all these ridiculous hoops to verify my identity, such as a sealed letter from the Social Security Administration confirming that my SS card is actually mine. Obviously I wasn’t going to oblige with that outrageous demand; I felt the renowned “Chase Bankster” atmosphere before I even got to open an account!

    Ally, however, has been great, and accepted my application for an interest checking account immediately. Perhaps someone should get in contact with them again to see if their opening requirements have changed (which they obviously have, or else I somehow slipped through the cracks :p).

  35. Franklin says:

    I agree with you. I opened an account with Ally because of interest paid, and established a transfer ‘link’ with my local bank to transfer several thousand dollars into Ally. They did their test deposit thing and told me the link was ‘successful.’ So I transferred the money. I also mailed in another deposit. Behind the scenes, they decided they had a wrong account number somewhere and ‘suspended’ my inter-bank transfer despite them telling me the link was tested and successful (after all, i saw their deposits and withdrawal from my home bank so something musta been correct). Ally never told me but instead, popped me for a NSF fee after they had stopped a transfer worth thousands and had deposited my smaller paper check as well, which was large enough to cover my bill pay debit. Their customer service is no better than the reviews i had read but hoped were not true. So, you just can’t give Ally money, it seems, and you can’t rely on their communications to you telling you that everything is hunky dory. It ain’t.

  36. Stephen says:

    I have a car loan with Ally that will be paid in full in 11 more payments. Never have I been late. I was attracted to the interest rates Ally claimed to offer its account holders for online checking and savings. So, I attempted to open an online checking and online savings account to take advantage, with a $0 initial deposit with the intent to transfer my money after the accounts are open. I call Ally a few days later because I had not heard anything from them. Long story short, my request was denied for undisclosed reasons that I will be receiving in the mail. So today, I wanted to test the system. I just opened an online savings account now pending an initial deposit worth several thousand. By giving them money up front, lo and behold, the account is open. I also applied for an online checking account shortly thereafter with a much smaller initial deposit. I receive the same notification I did originally when my request was denied. Now I must wait for a piece of mail to tell me my application was denied, again. I guess if you don’t give them enough money up front, you aren’t worth their time or resources…. I’ll be closing the savings account shortly.

  37. Jennifer says:

    I’m sorry I don’t have credit either and that would upset me greatly if it were myself or my son.
    Credit is nothing but a debt, if you save your money and or invest it wisely you can by a car, or a house and anything else you need, with out every needing credit.

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