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Ally Bank's CD Loyalty Rewards Program Changes for 2014

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Ally Bank

Ally Bank will be changing its CD Loyalty Rewards Program. Effective January 18, 2014, the loyalty reward will be 0.15% instead of 0.25%. The program has been extended to 3/31/2014. I have confirmed this with Ally. Thanks to DA member cumulus for posting on this news in the forum.

For the last several 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. The current reward is a 0.25% rate bump. This means that Ally will add 0.25% to the posted interest rate of the CD. When the CD matures, Ally Bank allows customers to renew the CD into a different term. For example, you can change a 3-month CD into a 5-year CD. Also, Ally allows you to add money to the renewed CD.

In March I described my experience with Ally’s CD loyalty rewards program.

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.

Ally Bank’s 5-year CDs

This loyalty rewards change and the recent change in the early withdrawal penalty will make Ally’s CDs less attractive. As I reported in October, Ally increased its early withdrawal penalties. These took effect on December 7th. The EWP for the 5-year CD is now 150 days of interest. This is still below average for EWPs on 5-year CDs, but it’s no longer the hot deal of only 60 days of interest. For example, if you opened an Ally 5-year CD today with a 1.60% APY and closed it early one year from now, the effective yield after the penalty would be 0.93%. When the EWP was only 60 days, the effective yield would have been 1.33%. You can see more examples of effective yields of CDs when closed early by using our CD Early Withdrawal Penalty calculator.

DETAILSINSTITUTIONAPYMINMAXPRODUCT
Ally Bank1.60%--High Yield 5 Year CD
Start SavingSponsored Note: No Minimum Deposit to Open. Consistently competitive rates. Member FDIC.
Ally Bank1.30%--Raise Your Rate 4-Year CD
Start SavingSponsored Note: No Minimum Deposit to Open. Consistently competitive rates. Member FDIC.
Accounts mentioned in this post. Rates as of April 24, 2014

Ally Bank’s standard CD rates are currently well below its competitors. For example, EverBank is currently offering a 2.12% APY 5-year CD. That’s 52 bps higher than Ally Bank’s 1.60% APY. EverBank’s CD rate is even low when compared to PenFed’s 3.04% APY. Perhaps with these loyalty reward changes and the larger EWP, Ally will be more generous with its rates in the future.

  Tags: Ally Bank, CD rates

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Comments
5 comments.
Comment #1 by Robert (anonymous) posted on
Robert
I'm not happey with Ally.  First the increase in EWP, now the rates effectively going down because of a smaller loyalty bonus.

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Comment #2 by Anonymous posted on
Anonymous
I agree with the previous post (#1).  I pulled all of my liquid money out of Ally and switched to Barclays.  Have been very happy there.  I still have a 5 year CD with Ally, but do not plan to renew with them.

7
Comment #3 by Anonymous posted on
Anonymous
You're absolutely right.  I have over 100K in 4 five yr. cd's maturing in June 2015.  I expect the rate to be copetitively worse and the loyalty rewards to be so low as to be basically nonexistent.  I am looking for a better place for these funds now before they raise the early withdrawal penalty again.

I was hoping to invest in this company when they they became public.  At the rate that they are going, they will be worth diddlysquat with their IPO. 

4
Comment #4 by Anonymous posted on
Anonymous
Ally is trying to buy back the shares that the gov't owns, legal problems and now is having competition from GM Financial.  They aren't tax exempt like Penfed .

4
Comment #5 by Shane (anonymous) posted on
Shane
Ally is great - and the loyalty bonus was and remains unique to them.  I give them credit for coming up with it and keeping it for so long.

4