Why Ally’s Surprise Savings is terrifying
I explore the Surprise Savings product from Ally and suggest a different way to achieve the exact same results.
Last night, I was logging on to Ally to adjust some of my automatic transfers between my checking account and my savings accounts, when I noticed some new tools that Ally is offering.
In the past, I’ve found updates to their core Savings platform were both welcomed and needed, such as when they introduced Buckets, and when they improved their process for signing up for multiple savings accounts. So I’m always keeping an eye on what they come up with.
This time, I found a new tool called “Surprise Savings”.
Surprise savings? That sounded good to me. I’ve been a fan of fooling yourself into savings for a long time now.
And who knows, maybe Ally would find a way to-surprise!-give you more savings. Maybe they found money behind their couch. Hey, I can dream, right?
But no, Surprise Savings turns out to be surprising, but not in the way that they intended.
You can find Surprise Savings under their list of “Boosters”. As the name implies, these are programs designed to help you grow your savings faster.
The first booster is “Recurring Transfers”, which suggests that you set up an automatic transfer into your savings accounts. I love this, and use it all the time. I treat savings like a bill that I pay each month, and like all bills, I don’t pay them; they pay themselves.
The second Booster they offer is called “Round Ups”. This one rounds up your purchases to the nearest dollar and uses those extra cents to fund your savings accounts. I don’t use this one, mainly because I believe it would make my own internal bookkeeping more challenging, but it is the online equivalent of the “change jar”, which many of us don’t really use anymore.
What Surprise Savings is
The third Booster, the one we’re talking about today, is Surprise Savings.
This is their blurb about Surprise Savings:
“We’ll analyze all the checking accounts you add for us to track, and transfer money when it could work harder in your savings.”
Ally will monitor your linked checking account for, as they put it, “money that we find could be working harder in your savings account”. If it finds this money, it will transfer it into your savings account.
They will only move money in $1-$100 increments, and will only do this on Mondays, Wednesdays, and Fridays when banks are open.
The goal here, of course, is to help you manage your savings more effectively, and to help you save more.
Some serious questions
Immediately a whole raft of questions came up for me. What does “working harder” mean? Does it refer to interest rates?
Ally’s current interest rate is 0.50%, which is actually lower than my checking account interest rate. So would it decide to never transfer anything for me? And if my checking account interest rate was lower, would it drain my checking account? “Yeah, you’re better off with The Purple.”
In the fine print, Ally says that they won’t cause you to overdraft:
“We’ll do our best to make sure none of your Surprise Savings transfers will cause you to get too close to $0 in the account we’re analyzing, and we’ll send you an alert when we start your transfer.”
That sounds nice and all, but how would they know when I’m about to drop an unexpected $1,000 purchase? Are they clairvoyant? Now that would be a surprise!
The biggest question I had when it comes to Surprise Savings was, “how does it determine when to make a transfer?”
Calling customer service
I couldn’t find my answers anywhere, so I called Ally customer service (I first tried the chat feature, but it was after hours). Commendably, within two minutes I was connected to a very helpful representative, who answered my litany of questions with nary an audible eye-roll.
She said that the transfer criteria wasn’t based on interest rates, but rather based on spending habits. The AI (I’m sure it’s an AI) would learn your spending habits and make decisions on how much could be safely removed from checking and sent to savings.
Now, I keep a few thousand dollars of float in my checking account at all times. Would the AI decide that I had too much float and start to transfer it out in $100 increments, like Mickey’s brooms in the Sorcerer’s Apprentice?
Where would it stop? How would it know to stop? Who’s driving this train??
The representative couldn’t say, only that the system would decide.
I asked if I could put some guardrails in place, such as to never transfer any money out if my balance would go below a certain specified amount. She said there was no such feature.
On the other hand, she did say that every time the system wanted to make a transfer, I would receive a notification about it. This was nice, I thought, in that I could just decline a transfer I didn’t want to approve.
But there’s a catch. According to customer service, declining a single transfer turns off the entire Surprise Savings machine. Evidently, you either like what they do, or do it yourself.
Do it yourself
So that’s exactly what I’m going to continue to do. I’m going to keep my balance where I want it, and when I have extra money on top of that, I will transfer the excess into savings.
And I’d recommend you do the same.
I don’t offer financial advice, but my suggestion is to keep an amount in your checking account such that, at the beginning of the month, you could (theoretically) pay every single bill and do all of your spending for the month, and not run out of money.
Keep that number constant each month, so you have the same amount at the end of the month that you had at the beginning. And if you have extra at the end of the month, transfer it into a savings account.
I applaud Ally for coming up with creative-and free!-products that encourage saving. I’m a big fan of what they do, and I can wholeheartedly recommend them for your savings account needs.
And since I don’t do affiliate marketing, you can trust that I’m not being paid to promote them. I just think they do a good thing and do it well.
But when it comes to savings, I want you in control. Sometimes, you don’t want any surprises.
Originally published at https://empathicfinance.com on February 21, 2022.