You've Seen The TV Ads. So What Is Ally Bank?

CANDICE CHOI

NEW YORK (AP) — Its TV and print ads poke fun at the bait-and-switch tactics of other banks. Its interest rates on CDs have been the most generous in the industry.

Ally Bank's tactics have drawn in customers, but they've also irked rivals and gotten the attention of regulators. As the rebranded banking unit of GMAC Financial Services, Ally Bank has the backing of billions of dollars loaned to GMAC by the federal government.

After the name change in May, Ally offered a 2.8 percent interest rate on 1-year CDs. That was more than double the national average of 1.23 percent, according to Bankrate.com.

Federal regulators have since intervened, after an industry group expressed concerns about Ally's ability to afford to pay such rates for deposits.

Still, company executives note that Ally's rates remain competitive. Ally currently pays 1.93 percent on a 1-year CD, much closer to the national average of 1.72 percent. And the bank continues to burnish its populist image in a national media campaign.

GMAC Financial spokeswoman Gina Proia said the online bank's lower cost structure is a key reason it can offer competitive rates and service.