Ally Bank Increases Its Savings & Money Market Account Rate
Late this morning, another internet bank increased its savings account rates. Ally Bank increased the rate of its savings and money market accounts from 0.89% to 0.95% APY (Hat tip to the readers who mentioned this news in the discussion forum and in the comments.) This is the highest rate for Ally's savings and money market accounts since October 2011.
Ally Bank has kept the rates of the money market and the savings account the same since December 2009. If you're deciding which one to open, the money market account, unlike the savings account, offers limited check writing and a debit card. Everything else is the same. Both have no monthly service charges and no minimum balance requirements. I have more details in my Ally Bank savings and money market comparison.
This Ally rate hike came soon after Sallie Mae Bank raised its money market yield from 0.90% to 1.00% APY. We have seen several other internet banks hike rates in the last few months. With news that more Fed action to further drive down interest rates is likely, it's nice to see these rate hikes. As I said in the previous post, competition must be the primary reason we're seeing these rate hikes, and hopefully, this will continue to put pressure on the internet banks to keep their rates competitive.
Ally Bank CD Rate Cuts
Unfortunately, not all of Ally Bank rates went up today. Its 5-year CD yield fell from 1.74% to 1.72% APY. The 4-year Raise Your Rate CD yield fell from 1.49% to 1.44% APY.
With internet savings account rates rising and CD rates falling, long-term CDs are looking less appealing. If you have CDs maturing, will you roll over that money into new CDs? Or will you move your money into these savings and money market accounts?
If you think rates will continue to fall like they have in the last few years, moving more money into your savings accounts, may not be the best choice. On the other hand, with CD rates so low, you can't lose much by keeping that money liquid.
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- Weekly Rate Summary
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- 40 Ways to Get the Most Out of Your Bank
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- Difference Between Banks and Credit Unions
- Interest Rate vs. APY
- Difference Between Wire Transfer and ACH
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- Do I Have to Pay Taxes on Bank Account Interest
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3-year Term IRA CD
1.21% APY
larkin - #1, Friday, August 31, 2012 - 2:31 PM
A nice jump for them. I wonder if the government involvement has lessened...
Anonymous - #2, Friday, August 31, 2012 - 2:44 PM
#1...........You would characterize a move from 0.89 to 0.95% as a "nice jump"? Really?
larkin - #3, Friday, August 31, 2012 - 2:47 PM
it's all relative :-)
Shorebreak - #4, Friday, August 31, 2012 - 2:53 PM
Of course longer rates will fall in about three weeks when QE3 kicks in. The yield curve eventually will be flat at about 1% no matter how far you go out. So if you want to lock-in a 5 to 7 year certificate yielding about 2% now might be the time to do it. Personally I don't find going out 5 to 7 years to gain 1% very appealing, even with a low EWP.
Anonymous - #5, Friday, August 31, 2012 - 3:24 PM
larkin........You're right of course. :) A sad state of affairs.
Anonymous - #6, Friday, August 31, 2012 - 4:52 PM
I know what I need to survive and it can't be 1%. So guess what I have been busy doing. I don't think we can depend upon Bernanke to raise those rates any time soon especially after hearing him today. Even if Romney makes a miracle and gets the Presidency, I don't think it will affect our savings rates.
Anonymous - #7, Friday, August 31, 2012 - 5:00 PM
What, looking for a job?
Fixed Income Folks (anonymous) - #8, Friday, August 31, 2012 - 6:42 PM
What, eating dog food to save money?
That's what Bernanke and the Pres want us to do!
Anonymous - #9, Friday, August 31, 2012 - 9:51 PM
Okay I guessed what you are doing, now time to tell, what is it that you are busy doing? No teasing!
empty chair (anonymous) - #10, Friday, August 31, 2012 - 10:09 PM
I live in the philippines as a retired american as it is cheaper housing wise and medically to live here but food is very expensive if bought off of store shelves and canned dog food with hot sauce dumped on top actually tastes like refried beans with alot of hot sauce dumped on it.
Jeanne Marie (anonymous) - #11, Friday, August 31, 2012 - 10:21 PM
I am 83 yrs. old and now surviving on dollar-store crackers soaked in ketchup packets that I get at McDonald's, mixed with salt and pepper and microwaved. I have a small nest egg now earning me barely 2% interest rate, not enough to pay my bills. If it goes to 1% I will be forced to get rid of my 17 year old car, my only way to get around.
Anonymous - #12, Friday, August 31, 2012 - 10:42 PM
Eew, some of these "food" (& I use the term loosely) suggestions are getting pretty nasty.
Ken_not_BankingGuy (anonymous) - #13, Saturday, September 1, 2012 - 9:21 AM
Does anyone who has a money market account at Ally Bank recommend or not recommend them?
I am thinking of moving out of Capital One Direct Banking. Yield is no longer competitive.
mrvirgo - #14, Saturday, September 1, 2012 - 10:42 AM
#13 I can recommend Ally's money market without any reservations. I have not had any problems with the account or with Ally bank since I opened my account in 2008.
Anonymous - #15, Sunday, September 2, 2012 - 9:32 AM
Is Ally still giving the bump rate for renewing CDs ???
Anonymous - #16, Sunday, September 2, 2012 - 2:01 PM
Yes, I got a .25% loyalty bonus on a no-penalty CD that just renewed.
Anonymous - #17, Sunday, September 2, 2012 - 6:26 PM
thanks for the info (:)
Anonymous - #18, Monday, September 10, 2012 - 2:00 PM
That 3% 5yr CD I renewed at Ally 2 yrs ago doesn't look so bad anymore, sigh
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