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My Experience with Ally Bank's Loyalty Rewards Program for CD Renewals

POSTED ON BY

Ally Bank

For the last few years Ally Bank has been offering a loyalty rewards program to its CD customers when the CDs mature. This is intended to encourage customers to renew their CDs at Ally rather than moving the money to another bank. I was able to take advantage of this program when one of my Ally CDs matured in February, and I thought it would be useful for me to share my experience with this program. Other DA readers have already shared their experiences. One of the best reviews of this program was done by DA member cumulus in this forum thread. I provided a summary of the program in this April 2012 blog post.

One important thing to note about this loyalty rewards program is that there's no guarantee that it will be offered to you. Ally has consistently extended the program, but there's no guarantee that it will continue. Ally can always choose not to offer it.

In November I had opened a small 3-month Ally CD. Since the 3-month CD rate is lower than Ally's savings account, it doesn't make much sense to open this CD. However, there's no minimum deposit for CDs, so the deposit can be small. So you won't miss out on much interest. For example, a $500 balance in a 3-month CD (that currently pays 0.29%) would earn a total of 36 cents. If that $500 were in the savings account for 3 months, the total earnings assuming the APY remains at 0.90% would be only $1.13.

When this 3-month CD matured in February, I was offered a 0.25% rate bonus to renew this CD as part of this loyalty rewards program. I didn't find a notice online. A letter about this renewal bonus came in the mail.

When the CD matured, I called Ally Bank and spoke with a customer service rep. I was told that I could change the term to any of Ally's CD terms and still receive the rate bonus. In addition, I could add any amount to the CD. So I decided to change the CD to a 5-year term. I also added to the CD with funds from my Ally savings account.

The CSR applied my request over the phone and provided verbal confirmation. However, she informed me that I would not see the bonus rate applied in my account for another 11 days. At that time, the rate bonus would be applied retroactively and it would be shown in my account when I'm logged in. Also, if the standard rate went up during that time, Ally's 10-day best rate guarantee would apply. It turned out that the standard 5-year CD rate remained the same during this time (1.59% APY). I can confirm that before the 11th day, I saw the new CD with a 1.59% APY. As promised, that went up 25 bps to 1.84% APY after 11 days. That 1.84% APY is now shown for that CD when I log in.

Other 5-Year CD Alternatives

This Ally loyalty rewards program is a good deal, but I don't consider it a "hot" deal since Barclays still offers 1.85% APY on its 5-year CD (as of 3/7/13), and it has an early withdrawal penalty of only 90 days of interest (just a little larger than Ally's 60 days of interest). Barclays CDs can be opened and funded very easily. However, they do have some downsides such as the lack of interest disbursements (see review). You can also get higher CD rates with all-access credit unions. Refer to our CD rate table to find the highest CD rates available nationwide and in your state.

Why I Locked into a 5-Year CD?

Some may wonder why I locked into a long-term CD in today's low rate environment. In January I reviewed the question of CDs or Savings Accounts in Today's Low-Rate Environment?.

First, I'm not putting all my eggs in one basket. This Ally CD is just one of several CDs in my CD ladder, and the CDs in my ladder are only a part of my total portfolio.

Second, CD ladders typically do better than trying to predict future rate changes or keeping all of your "safe money" in savings accounts. When interest rates go up, the CDs in my ladder will gradually get higher rates as they mature. There is a risk that rates will skyrocket and early withdrawals may not be possible. However, I consider it a larger risk that rates will remain low or only rise slowly. In these cases, the CD ladder will result in a higher return than keeping all my "safe money" in savings accounts or short-term CDs.

  Tags: Ally Bank, CD rates

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Comments
13 comments.
Comment #1 by OldGuy posted on
OldGuy
Although I hated Ally when it changed the language of its deposit account agreement regarding early withdrawals, I still rolled all my maturing 2-year CDs into 5-year CDs in December because of the loyalty bonus.  One CD grace period straddled year-end, and I withdrew part of the principal to buy PenFed 3-year CDs at their December rate of 1.75%.  When PenFed raised its 3-year rate to 1.85% on January 1, Ally let me withdraw additional principal, and I still got the loyalty reward on the balance I left there.  This is a great program, and it's hard not to take advantage of.

7
Comment #2 by melman posted on
melman
I started building a ladder in 2010 when the 5-yr rate was over 3%.  I stopped about a year ago when the rate dropped below about 1.75.  I did roll over a 2-yr Raise Your Rate that matured last year, into a 5-yr, and got the 0.25% bonus.  This strategy of opening a 3-month CD with a minimal amount, and converting it to a 5-yr with additional funds AND the 0.25% loyalty bonus, is something I hadn't considered.  Sounds like a good idea.

6
Comment #3 by Anonymous posted on
Anonymous
I won't go out any more than 2 yrs for a CD paying top tier rates. The current economic climate is much too unpredictable. Rates cannot drop much more than they already have and the potential for a swing to the upside can occur much sooner than realized.

2
Comment #4 by Robert (anonymous) posted on
Robert
I've opened small 3-month CD's for the past couple of years for the purpose of renewing them as longer term CD's with more money added and the loyalty bonus APR boost.  Ally allows this and I can't remember the last time I did NOT get the 0.25% loyalty bonus offered to me when my CD's renew.

4
Comment #5 by Robert (anonymous) posted on
Robert
5-year CD has been holding steady at 1.59% APY for a while.  But other Ally CD rates have been dropping fast: 3-month, 1-year, and the 11-month (no penalty) CD's have gone done a lot recently, including today.  But the Online Savings account has stayed steady at 0.90% APY throughout this.

2
Comment #6 by Anonymous posted on
Anonymous
The rates are the inverse of gas prices.  The rates drop fast but savings rates won't rise fast.  Ally is the only 1 of 15 major banks that has a Tier 1 capital ratio where 5 is considered the standard.  But hay it's really trhe Goverment Motors Acceptance Corporation that just changed their name so they won't go under

3
Comment #7 by Anonymous posted on
Anonymous
WHETHER YOUR GETTING .25% OR 1.85% ITS JUST NOT WORTH THE FIGHT

I BLOW THAT MUCH ON BEER EACH WEEK

BUT WAIT!!--A LADDERED ACCOUNT COULD PAY FOR MY BEER

GOT TO GET INTO THE ALLY THING.

THANKS

 

2
Comment #8 by Joe Elwell (anonymous) posted on
Joe Elwell
 
From today's marketwatch article:
"Ally only bank below Fed standard in stress test"

http://www.marketwatch.com/story/ally-only-bank-below-fed-standard-in-stress-test-2013-03-07-161035116?link=MW_popular

1
Comment #9 by Anonymous posted on
Anonymous
Ally Failed the Stress Test?  WTF

1
Comment #10 by Robert (anonymous) posted on
Robert
You really have to watch Ally like a hawk.  Recently, they renewed a CD of mine, but gave it the wrong maturity date.  On my monthly statement once, they neglected to list an entire CD.  They have forgotten to renew CD's that I asked them to renew.  And let's not forget how they messed up on 1099 interest for 5-year CD's a couple of years ago.  But so far, they have always corrected their ****-ups.

5
Comment #11 by Randy (anonymous) posted on
Randy
Looks like early withdrawals from Ally CDs may be available once again.  The latest deposit agreement posted last month on Ally's web site does not have the language that they have the option to consent to the early withdrawal.  It just says that if you make an early withdrawal, the may charge you a penalty of 60 days interest.

1
Comment #12 by klink posted on
klink
Randy....as was mentioned in another blog/forum post, you have to go to the end of that agreement to note the change. Having just logged into Ally to verify your comment I find the terminology in question is still being used. I do see that Ally has not changed anything up front to include the new wording and I would think that Ally is hoping on the ignorance of folks not to investigate in-depth what they buy or sign up for. It's too bad as I have an acct. with Ally and had planned to take part in the 5yr with EWP up until this issue was made known. Now waiting for Ally to eliminate the wording and things to return the way they were.

2
Comment #13 by Anonymous posted on
Anonymous
Robert,

5-year CD has been holding steady at 1.59% APY for a while.  But other Ally CD rates have been dropping fast: 3-month, 1-year, and the 11-month (no penalty) CD's have gone done a lot recently, including today.  But the Online Savings account has stayed steady at 0.90% APY throughout this.




Really?  Last time I looked the Ally Savings rate was 6 basis points below your quoted rate.  If you want that rate you quoted you need to move to Discover and their premium savings account.

1