Over the next several days, I’ll be detailing all of the tools I use in my financial ecosystem, from accounts to services. I’ll explain what I use and why.

Checking Account: Ally Interest Checking

The foundation of any good financial management system is the checking account. Practically everything you do will interact with this account in some way. You want a checking account with few surprises and even fewer fees. Unless your lifestyle requires regular visits to your local branch, I can’t recommend brick and mortar banks, these days. Take a look at the fees they charge and you’ll see why. Online-only banks have lower overhead costs and are able to keep their fees low as a result.

Interest earning accounts are a plus, but in this economy, the amount of money earned from interest is negligible unless you carry a large balance on your account. Ally is offering pretty high interest rates for a checking account, currently 0.50% APY for balances up to $15,000. (Tip: When comparing interest rates, be sure to look at the APY, or Annual Percentage Yield. It will take into account how the interest is compounded.) There are a handful of other banks that offer higher interest, but they either require a larger initial deposit, have various other restrictions, or don’t offer all the features I wanted in a checking account. I wouldn’t recommend choosing a checking account based on the interest rate alone.

Ally’s Interest Checking account has very few fees, and even reimburses fees charged by any ATM you withdraw money from. You get a standard debit card and even real life paper checks – something that my previous bank (ING Direct) doesn’t offer. Being an online bank, depositing money is currently a small hassle. You either need to transfer money from another bank – I have a credit union account that is used only for this purpose – or you can have Ally send you deposit envelopes for mailing your checks to them. They’re in the process of rolling out an e-check deposit system that will let you scan your checks and deposit them directly into your Ally account. My wife and I both have our paychecks direct deposited and I very rarely need to make any other deposits, but this will be a welcome feature, nonetheless.

Some other features that Ally offers:

• No minimum to open an account
• No maintenance fees – Many banks require periodic activity or a minimum balance if you want to avoid maintenance fees. Not cool.
• Ally Perks – Money back from stores, restaurants and more, just by paying with your Ally debit card.
• No ATM fees – As I mentioned above, you can withdraw money from any ATM. Period. Ally won’t charge you anything, and if the ATM you use does, Ally will reimburse it automatically.
• Bill pay – Something that most banks offer these days, but that doesn’t make it any less useful. (Note: In the near future, I’ll write a post on automating all your monthly bills.)
• 24/7 customer service – This is something that Ally brags about a lot, and with good reason. Knowing that they’ll be there any time – and that they speak English – provides a certain piece of mind.

Full disclosure: I’m still currently in the process of switching to Ally from ING Direct. I’m waiting on my antiquated employer to finish changing my direct deposit over. I was with ING Direct for years and had zero complaints, until now. As you may have heard, ING Direct recently announced that it will be purchased by Capital One. I have no interest (finance pun?) in being a Capital One customer. Most people would call me irrational for switching before any changes have been made, or even before the deal has gone through. That’s probably true, but it’s a personal decision. If you have no reservations about what Capital One might do to ING Direct, I can still recommend them for now. It’s really been a fantastic bank for the six years I was with them. Having said that, I have yet to find anything that ING offered that Ally doesn’t.

Image: Salvatore Vuono / FreeDigitalPhotos.net