I’m not in the habit of getting into knock-down drag-out fights with my financial institutions. I prefer to reserve my WWE style skirmishes for cell phone and internet providers.
But every once in a while, a bank will do something so egregious that I cannot help but screw my teacher voice to the sticking place and make some very stern phone calls. And that’s what happened two weeks ago, when Ally Bank decided to mess with the wrong financial expert.
Here’s how I went from blandly approving of the bank holding my online savings accounts to ready to burn it to the ground in the space of a couple of days:
The Background: Targeted Savings
One of the most complex-but-reassuring money tasks I engage in is targeted savings. This means I set aside a specific amount of money each month into a savings account named for its purpose.
For instance, each month, we automatically send $350 from our checking account to a savings account entitled “New Car.” This works like a kind of reverse car payment, so that the account will have enough to either pay for or put a major down payment on a car the next time we need to purchase one. (We also use the New Car fund to pay for any expensive repairs we might need to take care of on our current cars).
Because I don’t do anything by halves, I maintain nearly 25 targeted savings accounts into which I have automatic transfers deposited monthly. Each account represents an expense that does not occur monthly. The point of these targeted savings accounts is to have the money already set aside when the expense occurs. My targeted accounts include the following:
· Emergency Fund
· Home Repair/Improvement
· Vacation
· New Car
· Synagogue Dues
· The Boys’ Bar Mitzvahs
· New Computer
· Property Taxes
· My Dream Trip to Hawaii
· Husband’s Midlife Crisis Motorcycle
· New Furniture
· Eyeglasses
· Summer Camp
· Auto/Homeowners Insurance
· Bathroom Remodel
While this may seem like overkill (because it probably is), this kind of set up works well for me. Having our money earmarked for its specific purpose means I’m not tempted to spend the property tax money on a vacation, nor do I have to wonder if I have enough money set aside in a giant slush fund to handle all of our expected expenses.
I’ve been doing this kind of targeted savings for a long time—since 2004. My original online savings was set up with ING Direct, which became Capital One 360 about 8 years ago.
And last August, prompted by promises of higher interest rates, I decided to move all my money to Ally Bank’s online savings accounts—a decision I now regret.
Switching to Ally
I’ve been aware of Ally Bank for many years now. They are a regular sponsor of the financial conference I attend each year, and they are well-known among FinCon attendees for giving away white-chocolate covered Oreos, emblazoned with their logo, at every conference. So, I had a pretty positive impression of Ally for quite some time, since such delicious treats are a decent way to my heart.
So, with dreams of higher returns on my savings accounts dancing in my head, I started the arduous process of opening Ally accounts, transferring the money over from Capital One 360, cancelling the automatic transfers to Capital One, and setting them up with Ally.
This took a lot more work than I anticipated. While switching banks is never a giant bowl of cherry Jell-O, I was surprised at how much time this took.
I had to make phone calls to Ally to make sure I could open all the accounts I wanted. (They claimed you could open unlimited accounts, but after opening 5 in a row, Ally started requiring me to call. Which, okay, isn’t that unreasonable. I mean, who other than me needs and opens 24 different savings accounts all at once? But it still added to the work I needed to do to switch to Ally).
Sadly, as I was in the midst of switching, Ally lowered its rates.
Cue sad trombone.
The lowered rates were still better than what I was getting at Capital One, but it was below the threshold I needed to feel good about doing the work to switch. Ah, well. All’s fair in love and interest rates, right?
Trouble in High Interest Paradise
Despite that lowered rate, I was initially happy with Ally Bank. The accounts earned interest in satisfying ways. The automatic transfers occurred without a hitch…
Well, not quite.
Ally, unlike every other bank I have worked with, asked me to set the date I would like an automatic transfer to arrive in my Ally account, rather than set the date I would like the money to be debited from my external account. Since I want automated transfers to be debited on the Friday my husband’s paycheck arrives in our checking account, I had to set the transfer date as the following Tuesday to get the debit date I wanted.
I thought this was kind of weird, but didn’t worry overmuch about it. Money danced from our checking account into our Ally accounts per my automatic transfer preferences, and I enjoyed the feeling of my finances being a well-oiled machine.
Yes, there were a couple of instances of the money being debited on Thursday instead of Friday because of an oddly-timed bank holiday, but we always had enough of a buffer in our checking account, so it didn’t matter. It wasn’t my preference, but things were working out fine.
Until October 8, 2020.
The Day That Will Live in Infamy
On Thursday October 8, I logged into our banking accounts to discover that our checking account was overdrawn by over $1,500. Ally had debited all of our scheduled automatic transfers on Thursday instead of Friday. Unlike previous early transfers, I could not make heads nor tails of why the money was gone before I expected it to be.
(What’s additionally infuriating is that it wasn’t yet in the Ally account. It was just yeeted out of existence for several days, which may be normal procedure, but it felt especially galling when it meant my checking account was overdrawn).
I called the customer service line and was informed by a condescending representative that the transfer was initiated early because of the federal holiday falling on Monday October 12, which I had completely forgotten about because it did not affect either school schedules or my husband’s corporate schedule, and because it’s a holiday that needs to be forgotten since it is named for someone who is in the Bad Place.
I explained that initiating an automatic transfer a day early in response to an upcoming bank holiday makes no sense whatsoever. Condescending Representative informed me that Ally believes its customers need the money to appear in their Ally accounts on a specific day in order to pay their bills, so this policy allows that to happen. When I pointed out that this may be the case if money is being transferred to a checking or money market account, it’s a ludicrous claim for savings accounts, since you are limited to 6 withdrawals from an online savings account per month. NO ONE is paying bills out of a savings account—and who needs money to appear in their savings account on a specific day?
When I asked Condescending Representative what Ally could do to make this overdraft right, she informed me that I could change my automatic transaction schedule. I reiterated that I wanted ALLY to do something (like an ally) to make up for the fact that their policy had caused my account to be overdrawn.
I was pretty heated at this point and mentioned to Condescending Representative that she did not need to talk down to me, as I was a personal finance expert and the author of four books. She responded by saying, “While that is very impressive, I think you have a fundamental misunderstanding of how this process works.”
You may have heard the sound of the fireball coming out of the top of my head, if you were wondering what that FOOOM was that you heard coming from the direction of the Midwest around 10am CT on Thursday morning.
That’s when I successfully requested a transfer to Condescending Representative’s supervisor. (Yes, I pulled that card). The supervisor was a gentleman named Ben who seemed to understand my concern. I requested that Ally reimburse me for any overdraft fees I am charged—a suggestion he demurred. He invited me to send a screenshot of any fees I ended up being charged as a result of this, and Ally might possibly think about maybe perhaps sorta reimbursing me maybe.
Lest We Forget the Emails
While I was on the phone with Condescending Representative, I quickly opened my email account that is associated with my Ally account. Ally helpfully sends me a separate email alerting me of an impending automatic transfer every time one is initiated. Since I have 24 accounts and have transfers occurring at least every two weeks (not counting other transfers that come from my separate checking account and any manual transfers I make to pay for the targeted expenses I’m saving for), I don’t necessarily look these emails over with the level of examinatory vim one reserves for legal documents with the Devil.
It was entirely possible that Ally had warned me that the automatic transfer would occur a day earlier than I was expecting so that I could adjust the dates manually before my checking account was overdrawn.
However, upon checking my emails, I discovered that the emails looked exactly the same as they always did:
Yes, Ally did alert me that the funds would be withdrawn on October 8, 2020 rather than October 9, 2020. But there were no font changes to indicate something was different from usual, no flashing lights to draw one’s attention to the date, nor even any dancing bears spelling out the words “This is earlier than you expect.”
Granted, I wouldn’t have seen it even if they had done something within the email to draw attention to the changed date, but the point stands: Ally did not do anything specific to indicate to its customer that the withdrawal would be initiated on Thursday rather than Friday.
Since I don’t always read these emails, had there been some indication of the changed withdrawal date, I would have recognized that I was wrong, taken the overdraft fees on the chin peacefully and quietly, and kicked myself for missing it.
Instead, it seemed as though Ally was leaning on the fact that it was meeting the letter of the law rather than recognizing what this would mean for its customers.
$102 in Overdraft Fees
I woke up Friday morning to discover that my checking account got hit with three separate overdraft fees at $34 each, for a total of $102 in unnecessary fees. YAY!
I called Ally back, had the new customer representative transfer me immediately to a supervisor, and had him walk me through uploading a screenshot of the fees to Ally so they could have a chance to offer me a courtesy refund.
Reader, that is not what happened.
Instead, despite requesting a phone call response, I received the following email:
After reiterating to me exactly what happened (which I already knew), Ally’s email told me that there would be no courtesy refund because they hadn’t done anything wrong NEENER NEENER!
I called the phone number with a quickness and left a somewhat unhinged voicemail because nobody answered.
Making Some Headway
The next day, I received a call back from an Iman in the Ally Executive Customer Relations department.
I would like to commend Iman’s professionalism in the face of my ferocious anger. Because I was angry, and she was polite, cool, and responsive throughout. Her professionalism unfortunately didn’t change my opinion of Ally.
I reiterated to her how badly their policy serves their customers. I pointed out that every single other bank I have ever worked with initiates transfers the day after a bank holiday if one falls on a transfer date, rather than the day before. I critiqued her email communication skills (as she was the author of the above email), which I regret. (The email did make me feel like the company was saying “NEENER NEENER! This case is closed!” and that was apparently not what she wanted to convey, but having an angry customer critique your writing is not what anyone shows up to work for).
I also told her that I will not ever be recommending to Ally for targeted savings again, because I can’t promise my readers won’t face this same problem and therefore also get hit with overdraft fees.
While we spoke (well, yawped on my part), Iman looked up the “We Initiated a Transfer Request” emails that I received for the October 8 debit, and compared them to the emails from two weeks prior, when the debit occurred on a Friday, as I intended. She remarked that they looked exactly the same and that I was right in pointing this out as a problem.
She also told me that she handles all the complaints that come through Executive Customer Relations and mine was the first ever complaint about this problem. Which tells me that either most customers who have experienced this problem have a more robust cushion in their external accounts (as I did the previous times this has occurred) or most customers just don’t think it’s worth their while to complain.
Iman told me she had taken copious notes about my concerns and that she was sympathetic about the communication issue. Specifically, she thought Ally would be able to do something about making sure their emails let customers know if a debit would occur earlier than usual because of a federal holiday. However, it seems unlikely that Ally will make any changes to its policy of customers scheduling when the money arrives in Ally, rather than scheduling when the money is withdrawn from the external account, which would prevent this problem altogether.
Returning to Capital One 360
The entire situation made me long for the simple days of having Capital One 360 handle my targeted savings accounts. Capital One initiated transfers on the day I asked them to, even if that meant the money would show up in the account a day later than usual because of a federal holiday. That kind of consistency is well worth a lower interest rate.
I went back to my Capital One sign in, and was delighted to discover that I had never closed my accounts, merely emptied them when I switched to Ally.
So, I spent a feverish hour and a half transferring my money back to Capital One 360, while cackling with petty glee.
I cancelled all future automatic transfers to Ally and set up recurring automatic transfers to Capital One.
And on Thursday October 15, exactly a week after learning that Ally was debiting my checking account early, I spent nearly two hours on the phone closing my Ally accounts. Because each account has to go through a specific process that takes several minutes, and because the customer service representative handling the account closing had to read me regulatory information that I had to agree to with for each and every account, and because I did literally have 24 accounts, this took some time.
But I’m petty enough that I will MAKE the time when I need to.
I noticed once I returned to Capital One that the current interest rate with them is basically the same as Ally’s current rate: I now earn 0.599% APY with Capital One, whereas Ally was boasting 0.60% APY.
I know that the rate difference between Capital One and Ally will only grow as rates (eventually) bounce back. But I honestly don’t care. The $102 in overdraft fees that I had to eat will never not stick in my craw, and how long would I have to be saving at the higher interest rate to make up that loss? And while I am very glad to earn interest on my savings accounts since it can help to offset inflation, it is not the point of my targeted savings practice.
I do this complicated money dance from checking to myriad savings accounts so I can feel reassured that the money I need will be available when I need it. I can’t feel that confidence if I’m worried about Ally’s weird holiday timing throwing off my checking account.
The Power of Being Mad
Falling into the kind of hair-on-fire angry I experienced with Ally is not exactly fun. I don’t like feeling that level of impotent rage at something I can’t fix, and I really am not a fan of the sort of snippiness I engage in when I’m pissed off.
But I do think that my anger accomplished something, other than transferring my savings back to a trusted institution. I know that I got through to someone in the Ally team about how badly their policy is serving their customers, and while I don’t believe they’ll change their policy, they may at least change their communication. It’s not much, considering the fact the policy is the harmful part, but ensuring they give ample warning to their customers may prevent others from having to deal with an overdraft.
If I had to break out my don’t-mess-with-this-finance-bitch voice to get their attention and foster this small change, then I’m glad I did.