With the apparent slowdown of rate increases at online banks, Ally Bank bucked that trend with rate increases on several of its CDs on Friday. Ally’s 13-month Select CD and its 11-month No Penalty CD had the largest rate gains, with increases of 40 bps and 35 bps, respectively. These increases may be an attempt by Ally to encourage its customers who participated in last year’s cash bonus promotion to keep their money at Ally. If that were the case, you would think Ally would have also increased the rate of its Online Savings account, but that did not happen. The Ally Online Savings rate remains at 3.30% APY, which matches the rate at several other major online banks, but it’s far below many small online banks which now offer 4% APY and above.
The new APYs of these CDs with rate increases are listed below. The new APYs are shown in bold and are effective as of 1/13/2023. The previous APYs are noted inside parentheses.
- 11 mo NP - 3.85% (3.50%)
- 12 mo HY - 4.25% (4.15%)
- 13 mo Sel - 4.60% (4.20%)
- 20 mo Sel - 4.35% (4.25%)
- 3y HY - 4.35% (4.25%)
- 5y HY - 4.35% (4.25%)
There is no minimum deposit to open a CD. Ally used to have tiered rates, with higher rates for larger balances, but currently, none of its CDs have balance tiers. Ally’s CDs (with the exception of the No Penalty CD) are also available as an IRA (Traditional and Roth) earning the same APYs, with the same funding requirements. For the full list of Ally Bank deposit rates, please refer to the rates section of our Ally Bank page.
Thanks to DA reader, RichardW, for posting on these rate hikes in the DA Forum.
11-Month No Penalty CD
The No Penalty CD (3.85% APY) now has a 55-bp rate advantage over the Ally Online Savings account (3.30% APY). So this is an easy way for Ally customers to get an extra 55 bps on their liquid savings. There are just a few minor downsides to consider. First, when you open the No Penalty CD, you can’t withdraw the funds for the first six days following the date you funded the CD. After that date, you can access the funds (principal and all accrued interest) without penalty. However, you can’t make a partial withdrawal. To access the principal, the CD must be closed. This can be done quickly and easily by using Ally’s online CD management system. If you close the CD and transfer the funds back to your Ally savings, the closure and transfer are immediate. The last downside to consider is the risk you might miss out on a higher online savings account rate in the future. It’s possible that the Ally Online Savings Account rate will rise above 3.85% in the next couple of months. If that does occur, you’ll want to close the No Penalty CD. It’ll also make sense to close the CD if Ally increases the rate of the No Penalty CD. In that case, you’ll want to close the CD, move the funds to the Ally savings, money market or checking account, and then open the new No Penalty CD with those funds.
13-Month and 20-Month Select CDs
The new 13-month Select CD rate is not only noteworthy due to its competitiveness, but it’s also noteworthy in that it marks the first time that an Ally short-term CD rate exceeds all of Ally’s long-term CD rates. This follows the trend that we’re seeing at several banks. It also follows the trend that we’ve been seeing with Treasury yields and brokered CD rates.
The 13-month Select CD details are listed in this Ally 13-month Select CD promotional page as of 1/14/2023. The following is a list of the important details:
- 4.60% APY
- 13-month term
- Promotional term available through 2/8/2023
- No minimum deposit to open.
- Interest compounded daily
- Automatically renews into a 12-month High Yield CD
The 20-month Select CD details are listed in this Ally 20-month Select CD promotional page as of 1/14/2023. The following is a list of the important details:
- 4.35% APY
- 20-month term
- Promotional term available through 1/31/2023
- No minimum deposit to open.
- Interest compounded daily
- Automatically renews into a 18-month High Yield CD
Note, these promotional pages are needed to open these Select CDs. I was not able to find the Select CDs when logging into Ally the standard way and selecting the “open account” option.
High Yield CDs
The three High Yield CDs (1-, 3- and 5-year terms) all increased 10 bps. There’s little reason to choose the 1-year CD (4.25% APY) over the 13-month CD (4.60% APY). And from a cursory view, it may look like the 13-month CD has a big advantage over the 3- and 5-year CDs (4.35% APY). However, there’s a significant possibility that rates may fall in 2024 and 2025. If rates do fall, you may regret not choosing any long-term CDs this year. With several banks and credit unions lowering their long-term CD rates and with long-dated Treasury yields continuing to fall, it may not be wise to keep waiting for long-term CDs with rates of 5%+. You can currently get slightly higher rates on 5-year CDs at a few banks and credit unions, but there aren’t any nationally available 5% long-term CDs. Based on the advantages of Ally Bank and its CD features, this may be a reasonable time to put some funds into an Ally 5- or 3-year CD.
Ally Bank’s Early Withdrawal Penalty and Early Withdrawal Process
Ally rarely has the highest CD rates, but it has two significant advantages: 1) mild early withdrawal penalties, and 2) an easy and quick process to request an early closure and to receive the funds.
Ally has the following description of its early withdrawal penalties on its website for its CDs:
- 24 months or less: 60 days of interest
- 25 months – 36 months: 90 days of interest
- 37 months – 48 months: 120 days of interest
- 49 months or longer: 150 days of interest
One downside with Ally’s CDs is that they don’t allow partial early withdrawals. If you need some of your CD principal before maturity, your only option is to close the CD and withdraw the entire amount.
There was a long period of time when Ally disabled the capability to request online an early closure of a CD. It instructed the customer to call to request an early closure. I’m happy to report that the online CD closure capability is back at Ally and it’s still active as of 1/13/2023. When you log in, go to the “Early Withdrawal” section of “Manage CDs”. At this page, you can see your CD’s current balance that includes accrued interest. It also displays the early withdrawal penalty and the “after penalty” balance. This allows you to confirm exactly how much interest you will lose before you request an early closure. To receive the funds, it offers two choices: 1) online transfer, or 2) check. If you choose “online transfer”, you can select the destination account. Any of your Ally liquid accounts are options. Also, any of your external linked accounts are options. If you choose an Ally account, it informs you that “funds should post to your account immediately.” If you choose an external linked account, it informs you that “funds should post to your account within 3 business days.” I can confirm that the funds from a closed Ally CD are immediately transferred and made available in your Ally liquid account that you selected.
Other Ally Bank CD Features
Few online banks offer the features that Ally offers for online CD management. When you log into your account, you can change things like how interest is disbursed. Ally allows you to have the interest paid monthly, quarterly, semi-annually or annually. You can also change how interest is paid. You can choose for the interest to be credited back to the CD, paid out to your account or paid as a check. The software can also be used to change renewal options and to request an early withdrawal.
Loyalty Reward of an Extra 0.05%
Ally Bank continues to offer a 0.05% loyalty reward when you renew your CDs. There’s an easy way to use this loyalty reward to get an extra 5 bps on all of your Ally CDs.
Beneficiary Designations and Extending FDIC Insurance
Another nice aspect of all of Ally’s accounts is the ability to designate beneficiaries. You can choose up to ten beneficiaries for each of your non-IRA accounts, and you can choose the designation of either “In Trust For” or “Payable On Death”. Beneficiaries can be individuals or non-profits/charities. You can also specify how to distribute the funds (either equally among beneficiaries or by specific percentages.)
Beneficiary designations can be done online in account management software after the account has been opened. These features make it easy to maintain FDIC insurance on deposits in excess of $1 million. I described how this can be done in this blog post.
Ally now requires that you provide beneficiary identification. According to Ally, the FDIC added regulatory requirements for recordkeeping which required Ally to maintain “complete and accurate beneficiary information.” The beneficiary’s Social Security number or Tax ID isn’t the only option. Other options listed by Ally include, Alien Identification Card, Driver’s License, Valid Passport and Military ID.
Ally also allows customers to open an account in the name of a Trust.
Deciding to Break an Old Ally CD
If you have any old Ally CDs, it might be worth closing them and moving those funds to new CDs. With today’s “high” rates, it won’t take too many months before the interest from the new high-rate account offsets the loss of the early withdrawal penalty. The more time left on your existing CD, the more likely that you’ll benefit from breaking the CD.
To help with this decision, please refer to the DA When to Break a CD Calculator. Enter the APY, balance, early withdrawal penalty, and remaining months of your current CD. Then enter the APY of the new CD. The Calculator will tell you if you should or should not break your CD.
Availability and Account Opening
Ally Bank offers its services and product line to individuals 18 years or older, who have a valid Social Security number or Tax ID and a U.S. residential street address.
In the online application, Ally asks “have you placed a security freeze on your credit?” According to Ally:
If you have a freeze on your credit as a feature of credit security monitoring, you'll need to request a "federal lift" before you submit your application. Once your application is processed you can re-instate the freeze. If you are already an Ally Bank customer, you can complete the application, and we'll contact you to verify your identity.
We'll use your credit information to verify your identity, protect you from identity fraud and comply with federal regulations. Your credit score won't be affected.
Applying for an Ally account can be done using Ally Bank’s online application or by calling Ally (877-247-2559). You can fund your new account in a few different ways:
- Transfer from an Ally or non-Ally account
- Check (by mail or Ally eCheck Deposit)
- Wire transfer
As I mentioned above, to open one of the Select CDs, you’ll have to start at one of the Select CD promotional pages (either the 20-month page or the 13-month page.) This is for both existing customers and new customers.
Ally Bank (FDIC Certificate # 57803) has an overall health grade of "B+" at DepositAccounts.com, with a Texas Ratio of 7.47% (excellent) based on June 30, 2022 data. In the past year, Ally has increased its non-brokered deposits by $1.13 billion, an above average annual growth rate of 0.84%. Please refer to our financial overview of Ally Bank for more details.
Ally Bank has a long history as an online-only bank. The name used to be GMAC Bank. The name change to Ally Bank was completed in late 2009. My first posts on GMAC Bank were in early 2006. Back then it only offered money market accounts and CDs. The Online Savings account was launched in 2008, and the Interest Checking account was launched in 2010.
How the 13-Month Select CD Compares
When compared to similar length-of-term CDs tracked by DepositAccounts.com that are available nationally and have minimum deposit requirements of $10k or less, seven banks and no credit unions have higher rates than the rate offered on the Ally Bank Select 13-month CD. The following table compares the Ally Bank 13-month Select CD to the two highest-rate CDs from small banks, the two highest-rate CDs from major online banks, and the two highest-rate CDs from credit unions.
|APY||CD Term (Early Withdrawal Penalty)||Credit Union/Bank|
|4.85%||12-Month CD, $2.5k min (EWP=180 days)||INSBANK Online|
|4.76%||13-Month CD Special, $5k min (EWP=180 days)||NASB|
|4.65%||13-Month Term CD, $1k min (EWP=180 days)||CIT Bank|
|4.60%||13-Month Select CD, no min (EWP=60 days)||Ally Bank|
|4.60%||14-Month CD, no min (EWP=180 days)||Synchrony Bank|
|4.60%||12-Month Share CD, $1k min (EWP=lesser of 90 days or all dividends earned)||Alliant Credit Union|
|4.55%||11-Month CD Special, $250 min (EWP=60 days)||Consumers Credit Union (IL)|
How the 11-Month No Penalty CD Compares
When compared to other no-penalty CDs tracked by DepositAccounts.com that are available nationally and have minimum deposit requirements of $10k or less, two banks and one credit union have higher rates than the rate offered on the Ally Bank 11-month No Penalty CD. The following table compares the Ally Bank 11-month No Penalty CD to the three highest-rate CDs from other banks and the highest-rate CD from a credit union.
|APY||CD Term (Withdrawal lock)||Credit Union/Bank|
|4.40%||14-Month No Penalty CD, no min (30 days)||Sallie Mae Bank via SaveBetter|
|4.25%||10-Month No Penalty CD, no min (30 days)||Sallie Mae Bank via SaveBetter|
|4.10%||11-Month No Penalty CD, $1k min (6 days)||CIT Bank|
|4.00%||11-Month No Penalty CD, $500 min (6 days)||USALLIANCE Financial Credit Union|
|3.85%||11-Month No Penalty CD, no min (6 days)||Ally Bank|
|3.50%||13-Month No Penalty CD, $500 min (6 days)||Marcus by Goldman Sachs|
How the 5-Year High Yield CD Compares
When compared to similar length-of-term CDs tracked by DepositAccounts.com that are available nationally and have minimum deposit requirements of $10k or less, eight banks and two credit unions have higher rates than the rate offered on the Ally Bank 5-year High Yield CD. The following table compares the Ally Bank 5-year High Yield CD to the two highest-rate CDs from small banks, the two highest-rate CDs from major online banks, and the two highest-rate CDs from credit unions.
|APY||CD Term (Early Withdrawal Penalty)||Credit Union/Bank|
|4.64%||60-Month Senior Citizens CD, $2.5k min (EWP=180 days)||State Bank of India (IL)|
|4.63%||5-Year Fixed CD, $500 min (EWP=600 days)||Lafayette FCU|
|4.60%||60-Month CD, $500 min (EWP=190 days)||CFG Bank|
|4.54%||5-Year Fixed CD, $500 min (EWP=180 days)||GTE Financial CU|
|4.40%||5-Year CD, $2.5k min (EWP=540 days)||Discover Bank|
|4.40%||5-Year 360 CD, no min (EWP=180 days)||Capital One|
|4.35%||5-Year High Yield CD, no min (EWP=150 days)||Ally Bank|
The above information and rates are accurate as of 1/14/2023.
To look for the best CD rates, both nationwide and state specific, please refer to our Best CD Rates Table page. For the best no-penalty CD rates, please refer to our No Penalty CD Rates Table of the liquid account summary.