Ally Invest Cash Sweep Account Options
Free cash balances at Ally Invest are protected by SIPC and earn no interest. This is the default option for cash deposits with the broker. There is a
$250,000 limit on the insurance that covers these balances. The broker allows checks and a debit card to be added to a trading account, but requires a
staggering $100,000—in cash—to acquire these cash management tools.
There is also an FDIC-insured sweep program available to Ally Invest customers. The broker requires a very steep $200,000 in uninvested cash to apply for
it, though. Even worse, this cash option only earns 1 basis point in interest right now. Only non-retirement accounts can sign up for this option.
Ally moves free cash balances to participating banks where they are protected by the government up to $250,000. A paper form must be filled out and sent
to the brokerage firm in order to participate in the service.
Ally Invest Money Market Fund Rates
A money market mutual fund cannot be used as an account’s core position at Ally. The broker does, however, offer 156 money market mutual funds for
purchase as a regular holding. Funds without a load at Ally cost $9.95 to buy and sell, while load funds are always free to trade.
Other Ally Invest Cash Sweep Options
Perhaps the best way to handle cash with an Ally Invest account is to open an Ally Bank account, which will automatically be linked to your Ally
brokerage account. Ally does require the bank account to be added to the securities account before funds can be transferred between the two. And
transfers must be initiated on the brokerage side.
Although Ally Invest’s cash management features aren’t very appealing, Ally’s deposit accounts have some pretty attractive features. Checks and a
debit card are free of charge. And the company reimburses ATM fees incurred in the U.S. There is a $10 maximum per month on this policy. A way around
this rule is simply to use Allpoint cash machines, which don’t charge Ally customers any fees.
Ally’s savings account currently earns 1.05%, while its money market deposit account yields 85 basis points. Either account can have a debit card
attached at no cost. The money market account can have checks added as well. If you need more than 6 withdrawals per month, Ally offers a checking
account, which pays 10 to 60 basis points, depending on account balance.
These linked bank accounts come with their own 24/7 customer service. Ally doesn’t charge any monthly fees for them, and it’s possible to send other
people funds using Popmoney.
Summary
Compared to other brokers, Ally Invest doesn’t bring a lot to the table for cash management. Other brokers, like Fidelity, do allow a money market fund
to act as a brokerage account’s core position, for example. Schwab currently pays 0.15% on its FDIC-insured brokerage balances, 15 times what Ally
pays. But Ally’s deposit accounts are more lucrative than Schwab’s or Fidelity's and linking them is easy.
Read detailed review of Ally Invest account.
Get a $100 cash bonus or $500 in commission-free trades with Ally Invest.
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Updated on 7/11/2017.
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