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More Rate Cuts at Ally Bank

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Ally Bank
This is the second Friday in a row that Ally Bank made significant rate cuts, and it makes you wonder if the pressure from the FDIC is having an effect. On the positive side, the no-penalty 9-month CD rate remains at 2.30% APY and the online savings account rate remains at 2.05% APY.

The largest rate cut was on the 3-month CD. That rate fell from 1.60% to 1.40%. With a 3-month CD rate this low, I don't know why anyone would open this rather than the online savings account. The 12-month CD rate also had a sizable rate cut. It fell from 2.49% to 2.35% APY.

Last week, the savings account rate fell, and the money market account rate held. It's the other way around this week, but the money market rate drop was minor with a cut of 5 basis points. It's now 1.85% APY.

The table below shows how the deposit rates have fallen over the last two weeks.

Account 5/29 Rates 6/5 Rates 6/12 Rates 2-Week Chg
Term APY APY APY BPS

Savings 2.25% 2.05% 2.05% -20
MMA 1.90% 1.90% 1.85% -05
No-Penalty CD
9-month 2.50% 2.30% 2.30% -20
Classic CDs
3-month 1.70% 1.60% 1.40% -30
6-month 2.10% 2.00% 1.90% -20
9-month 2.60% 1.90% 1.85% -75
12-month 2.80% 2.49% 2.35% -45
18-month 2.60% 2.40% 2.30% -30
24-month 2.75% 2.55% 2.50% -25
36-month 3.10% 3.00% 3.00% -10
48-month 3.25% 3.00% 3.00% -25
60-month 3.50% 3.50% 3.45% -05

For more information on Ally Bank and the savings accounts and CDs, please refer to this post. Ally Bank deposit accounts are FDIC insured (FDIC Certificate # 57803).

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  Tags: Ally Bank, CD rates, savings account

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Comments
13 Comments.
Comment #1 by Vnhn5150 (anonymous) posted on
Vnhn5150
Is Ally considered an "at risk" bank or what? Does the legislation enacted recently effect Ally's future rates or are they just reacting to the market place?

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Comment #2 by Mike (anonymous) posted on
Mike
Everyone keeps complaining about Ally lowering their rates due to pressure from "above". But, maybe it is just because they are bringing in more money than they need for loans. This is very common for banks covered by this banking blog to do. Just a thought.

As always, thank you banking guy for all.

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Comment #3 by Anonymous posted on
Anonymous
Ally Bank is no ally of the savers.

1
Comment #4 by Jim (anonymous) posted on
Jim
What do they gain by offering a 9-mo. no-penalty CD? Do they think they'll have to raise their online savings rate within 9 months and people won't notice that they're locked in a 9-mo CD at 2.3% when the savings account has gone up to 3% or something?

Or is it an accounting trick where they don't want the money in a savings account vs. a CD b/c they can do more behind the scenes leveraging on top of CD deposits?

The no-penalty CD withdrawal takes a few days longer to get your money out, but it seems like a decent deal compared to letting the money sit in a savings account for a while.

I suppose the main risk is that there will be a "bank holiday" and you hear about it four days in advance (which isn't long enough to get your money).

1
Comment #5 by vnhn5150 (anonymous) posted on
vnhn5150
So is this bank the real deal or what? I just opened an online savings account and am having regrets already. If they drop their rates within the next few weeks it will be a total bummer. I'm tired of moving this cash around and rate chasing. Maybe I'll just stick with the Vanguard MM accounts (taxable and TE - both rates are rock bottom) and be done with it. Thoughts??

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Comment #6 by Snippy (anonymous) posted on
Snippy
Vnhn5150: Yes, by all means, teach Ally Bank a lesson by moving your money to another institution offering accounts with really low rates. That will really show... you.

"Go ahead and jump."

1
Comment #7 by Anonymous posted on
Anonymous
I opened 6 smaller no penalty CD’s the other day so if I needed some money, then I could get it without closing a large CD as they force you to close the entire CD if you want the money. Something interesting is that it was taking me 5 or 6 minutes to open each CD. I funded each account from my Ally Bank On Line Savings account and it funded instantly one you finish opening the account. Each time I opened a new CD, I compared the new account number to my last account number and it was varying by 20 to 35 numbers upward. I’m assuming that this means in this 5 or 6 minutes it took to open a new CD, 20 to 35 other people had opened new CD’s. If this is true, then Ally Bank is taking in money fast.

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Comment #8 by Anonymous posted on
Anonymous
vnhn5150, I'm with Snippy. Go ahead and dump your money in a lower rate account somewhere... anywhere... while I keep mine at Ally and laugh all the way to the bank.

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Comment #9 by Anonymous posted on
Anonymous
Good idea, Anonymous, at 7:28 PM, June 12, 2009. I may do that myself this weekend.

1
Comment #10 by Anonymous posted on
Anonymous
Vnhn5150: Maybe you should just take your money out in cash and keep it in your matress!!!

1
Comment #11 by Anonymous posted on
Anonymous
vnhn5150:

I understand your frustration about the falling rates and moving your money around as rates keep falling. It does seem like a futile attempt to earn a bit more money on your funds. I had a rather large amount of money (close to 1/2 million) in the Vanguard Tax Exempt MM Fund last year when it was paying over 5%!!! Wow, was I making a lot of money on my account. Then rates plummeted and the fund is now under 0.5% APY. I know that the difference between 0.5% and 2.8% is not that great. But I still get close to a 5 figure interest payout by moving my money. Even though the Vanguard account interest is tax exempt, I am able to get the higher rate account interest payout as tax exempt as well, so why would I be lazy to move my money to get that free money? If I didn't do that, I am either too lazy or too stupid to move my funds. I have a habit of procrastinating a lot, but if I did that for my funds, I am only shortchanging myself. I would only leave my money in Vanguard if I had some kind of "loyalty" feelings about leaving my money with them. They are a good company in keeping operating expenses low, but I don't have that great of a personal bond with the mutual fund company.

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Comment #12 by vnhn5150 (anonymous) posted on
vnhn5150
The Anonymous poster from 4:21pm today - thanks for your thoughts. Unlike the previous posters your thoughts made total sense and worth the effort to move the $$. Thanks again for your comments and good luck to you.

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Comment #13 by Anonymous posted on
Anonymous
vnhn5150:

You are welcome. People come from many different viewpoints and have different ways of reacting to something that people state. I used to chat almost 24/7 back when I first got online in a chat room and came across people of varying ages, personalities, and attitudes which ranged from the extreme coarseness to the extreme politeness.

Just remember and old saying that was quoted by Nuveen investments many years ago- it is not what you earn, but what you keep that matters. Sometimes a higher rate is more attractive, but it all boils down to your net profit.

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