Ally Bank Again Increases the Rate on Its 11-Month No Penalty CD

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Deal Summary: 11-month No Penalty CD: 1.50% APY, $25k minimum (increase of 15 bps).

Availability: Nationwide

For the second time in the last week, Ally Bank raised the rates of its 11-month No Penalty CD. This is an especially pleasant surprise since last week’s rate hike was such a good deal. You’ll need a minimum deposit of at least $5k to benefit from this rate increase. The top-tiered rate increased 15 basis points to 1.50% APY while the mid-tiered rate increased 20 basis points to 1.25% APY. There was no change to the bottom-tiered rate for balances under $5k. Below is a summary of the new tiered rates and how these rates have changed:

  • 1.50% APY, $25k min (was 1.35%)
  • 1.25% APY, $5k min (was 1.05%)
  • 1.00% APY, no min (no change)

This is the highest rate of the 11-month No Penalty CD since Ally changed the term of their No Penalty CD from 9 months to 11 months in March 2010. If you’re interested in this 1.50% APY, you may not want to wait too long. The 1.25% APY in December lasted less than three weeks. On January 4th, the rate fell back to 0.87%.

APYMINMAXINSTITUTIONPRODUCTDETAILS
1.50*%$25k-Ally BankNo Penalty 11-Month CD
OTHER TIERS: 1.00% Up to $5k | 1.25% $5k - $25k
Accounts mentioned in this post. Rates as of June 26, 2017.

As I mentioned last week, this might be a way Ally Bank intends to compete with other internet banks, four of which are currently offering savings accounts with a 1.30% APY. If you have a large balance in Ally’s savings account (which currently earns 1.05% APY on all balances), do you move your money to a higher-rate savings account at another bank or do you open one or more of these No Penalty CDs? It might be hard for many to justify opening an account at a new bank when you can get a much higher rate with this No Penalty CD.

If you had already opened the No Penalty CD last week, don’t forget Ally’s Ten Day Best Rate Guarantee. This guarantee says that if you fund a new CD within 10 days of opening the account, you’ll get the best rate Ally offers for your term and balance tier if Ally’s rate goes up during that time.

Another thing to consider with Ally Bank’s No Penalty CD is that there’s no reason to choose a shorter-term CD that has a lower rate. For example, there’s no reason to choose a 1.40% 6-month CD instead of Ally Bank’s 11-month No Penalty CD for a $25k+ deposit. With the no-penalty feature, you can make the No Penalty CD have a 6-month term by just closing it after six months.

Here are some issues and features of the No Penalty CD to consider before applying. These are the same ones that I mentioned last week.

  • The No Penalty feature allows you to withdraw all your money, including interest earned, without any penalties, any time after the first 6 days following the date you fund your account. The 6 day exception is due to Federal Regulation D.
  • You can only withdraw your full balance early - you cannot make a partial early withdrawal.
  • Be careful if you open multiple CDs with funds from your savings account. As DA reader slovokia warned in the Forum, “each withdrawal from your savings account used to fund an Ally CD counts as a transaction against your 6 transaction limit.” If you plan to opening many CDs, you should consider funding the CDs from your Ally Interest Checking account which does not have this withdrawal limitation. If you exceed six electronic withdrawals per statement period in your savings account, Ally charges a $10 fee per transaction over the six transaction limit.
  • Ally Bank does not offer an IRA version of this No Penalty CD. All other of its CDs do have IRA versions.
  • Using Ally Bank’s online CD management system, you can close a CD without help from a CSR. According to an Ally Bank CSR, “when you make the request online via the Manage CDs link, the account is normally closed and the funds transferred internally immediately.” You can still make the request by phone or secure chat, but that will take “up to 1-2 business days.”
  • Another potential concern of any CD is that you’ll lock into a rate right before the CD rate goes up. To relieve these fears, Ally Bank has long had its “Ten Day Best Rate Guarantee.” This guarantee says that if you fund a new CD within 10 days of opening the account, you’ll get the best rate Ally offers for your term and balance tier if Ally’s rate goes up during that time.
  • You have 60 days to fund a CD before it closes automatically. Be aware that the rate guarantee only last ten days. If the CD rate drops after 10 days, and you still don’t have the CD funded, you’ll get the new lower rate instead of the rate that was in effect when the CD was opened.

Thanks to DA reader, Maecl , who first posted news of this rate increase in the DA Forum.

Availability

Headquartered in Midvale, Utah, Ally Bank is currently the 21st largest bank in the country, with assets in excess of $122 billion and over 2.3 million customer accounts. Ally offers its services and product line to individuals 18 years or older, who have a valid Social Security number and a U.S. mailing address.

Applying for the 11-month No Penalty CD 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

Bank Overview

Ally Bank (FDIC Certificate # 57803) has an overall health grade of "A+" at DepositAccounts.com, with a Texas ratio of 1.70% (excellent) based on March 31, 2017 data. In the past year, Ally has increased its total non-brokered deposits by $11.03 billion, an excellent annual growth rate of 18.63%. Please refer to our financial overview of Ally Bank for more details.

How the CD Compares

As I described above, it’s not really fair to compare the No Penalty CD to other standard CDs. For simplicity, let’s compare it to standard 12-month CDs that are nationally available from other banks and credit unions. When compared to 212 12-month CDs tracked by DepositAccounts.com for a $25k deposit, Ally's No Penalty CD is on top tied with Connexus. A sample of the top 12-month CDs are shown below:

Interest RateCD Length of TermEarly Withdrawal PenaltyInternet Bank
1.50% APY11-month No Penalty CD ( $25k min)noneAlly Bank
1.50% APY12 Month Certificate ($5k min)90 daysConnexus Credit Union
1.48% APY12 Month Online Promo CD (New Money) ($5k min)90 daysM.Y. Safra Bank
1.46% APY1-year CD ($10k min)90 daysVirtual Bank
1.40% APY1-year CD ($2k min)90 daysSynchrony Bank

The above rates are accurate as of 6/20/2017.

To find the best CD rates, both nationwide and state specific, please refer to our CD rates table or our Rates Map page.

Related Pages: Salt Lake City CD rates, 1-year CD rates, nationwide deals, Internet banks

Comments
RJM
RJM   |     |   Comment #1
This is great. I just converted a couple last night so I think I will automatically get the higher rate.
More money will be flowing to them with this deal.
Tim
Tim   |     |   Comment #7
Hi,
How did you convert? Do you close the CD, move to savings and open again?
Thanks in advance for the help.
RJM
RJM   |     |   Comment #10
Yes. I did it over the phone because there didn't seem to be an easy way to do it online.

They really need to update their systems. They are still asking 4 security questions in addition to your account number. By contrast, when I call my broker, I enter my acct number, they automatically pick up my phone number and now have voice recognition so I just say my name and I'm good to go. That's only for Active Trader Pro. When I call after hours I still have to answer a couple questions but its lots faster than Ally.
rhutnik
rhutnik   |     |   Comment #2
A correction to the "How the CD Compares" section above... it currently shares the top spot at 1.50% APY with a few other 1 year CDs, with exception to a Junior certificate at 1.64%. Really great news to see this rate increase, I've been a fan of this CD since I got in at the 1.25% rate for all balances in late December.
RJM
RJM   |     |   Comment #3
When I called in early this morning, the rep was nice and helpful. The new accounts are opened showing zero balance. But none of the money has been transferred. She said it would be 2-3 days.

It shouldn't take that long for in bank transfers.

My first one was funded on 6/14 so it would seem that one will automatically get the higher rate too. But right now, its still showing 1.35%.

I believe this rate will cause me to go over the insured limit here shortly. I don't like doing that but where else can you get a totally liquid 1.5% rate ?
rhutnik
rhutnik   |     |   Comment #5
I agree completely. Not sure about transfer times since every time I opened these CDs I just transferred in from Ally savings, which is instantaneous.
RJM
RJM   |     |   Comment #9
I just now got an email that my 2 old accounts were closed. Logged in and the 3 new ones are open and showing 1.5% and they included the accrued interest. (Went with smaller accounts just in case I want to break one sooner, I won have to take out as much)

The one from the 14th is still showing 1.35% but I suspect that will increase in the next 4-5 days.

I asked about the .005% bonus and as expected, it didn't apply to early closed accounts.
topkapi56
topkapi56   |     |   Comment #39
I opened mine last night transferring money from my Ally savings account. The money transferred instantly and this morning I see one day's interest already posted.
Ken Tumin
Ken Tumin   |     |   Comment #11
Thanks. I just made the correction.
CapitalClimate
CapitalClimate   |     |   Comment #4
Note also that the interest payment option on this CD defaults to "at maturity" so the tax liability can be deferred to 2018 if held past December, unlike most CDs which pay monthly or quarterly. Monthly and quarterly options are also available, however.
Martin
Martin   |     |   Comment #22
Accrued interest can not be postponed on a CD, unless it was specifically designed for it.
We all gonna get 1099-I at the end of the year (pro rated for the previous year).
rateshopper
rateshopper   |     |   Comment #6
Does anyone know whether Ally Bank does a "hard" or "soft" credit pull on opening a new account?
rhutnik
rhutnik   |     |   Comment #13
Either soft or none to my knowledge. Didn't see any hard pull when I initially applied.
111
111   |     |   Comment #29
2 out of 2 CSRs told me verbally - opening 1 or more CDs and/or a savings account and/or a checking account, will generate only a soft (ChexSystem) pull, not a hard pull.
Ann
Ann   |     |   Comment #32
Chex isn't a credit pull at all, it's a different type of consumer report entirely.
111
111   |     |   Comment #38
It's standard vernacular in the industry to speak of ChexSystem inquiries as "soft pulls". This has been true for years.
DaveJ
DaveJ   |     |   Comment #8
Ken, Thanks for this update. Also, congratulations on the sale of the site and I hope it continues with the same high quality info you have provided for years.I have been an Ally customer for a little over 2 years with an online savings account and a MM account. After reading this I opened a 11 month no-penalty account online and it could not have been easier.I funded from my saving account with Ally and it was instantaneous. A no-brainier to raise my rate and still have quick access for no penalty. I did change the interest to pay monthly and pay into my Ally savings account instead of the default pay at maturity.
Att
Att   |     |   Comment #12
I filled in the on line form. Was advised I already have an on line login (Closed my CD a few years back). I added a joint owner and got a message will hear back in 3 -5 days.
mhk
mhk   |     |   Comment #14
i opened a CD last night with 1.35 for no penalty CD(one day before 1.50 rate). can i close it immediately and switch to 1.50 ?
rhutnik
rhutnik   |     |   Comment #15
According to the CSR I called it will update automatically by midnight tonight. If it doesn't update by tomorrow, I would call them.
Martin
Martin   |     |   Comment #23
rhutnik, it will update 10 days after the day opened (if it was open in the window 10 days prior the rate change), do not call or expect any sooner then that. Most CSRs have no idea of what you want or expect they to do. Some may close it and open another account if you insist for immediate update on the CD rate.
An Ally ally
An Ally ally   |     |   Comment #16
FWIW, I had just opened a No Penalty CD last week at 1.35%, and the CSR said that the CD would automatically upgrade to 1.50% at the end of the 10 day period. This new rate also applies retroactively!
Also, you can easily close any CD by clicking on the "More" tab on the menu, then "Manage CDs", the money can be dumped into any of your accounts or mailed to you.
rhutnik
rhutnik   |     |   Comment #17
Pretty disappointed after a phone call to Ally. I both opened and funded two of these No-Penalty CDs upon the rate increase for $25k+ to 1.35% on June 10. Turns out that June 19th counts as the 10th day so I was not eligible for the Ten Day Best Rate Guarantee. Upon hearing this, I asked to close out the accounts. The CSR was acting very odd, including telling me that I would lose the Loyalty Bonus upon renewal which I believe is currently 0.05%, paltry compared to the 0.15% I would get by just reopening the accounts now. She also wanted to make it seem like it wasn't worth my time to close down the CDs, but I will still get the bonus, just 11 or so days later since I planned to reopen them today. Unfortunately, after a long hold, she told me the CDs couldn't be closed down until June 27th, a full 18 days after opening it, not the 6 days as I expected. She told me the 10 days were a grace period for funding and did not count as part of the six days to close. I also realized that if it was indeed a 6 day mandatory hold for Federal Regulation D, I should be able to close them on Monday the 27th, the 7th day from June 20th, which they are telling me wasn't part of the 10 day grace period. Instead she makes it seem like I have to wait till the 28th. Not exactly sure what is going on here but I honestly don't like it. Very surprised to see this from Ally. In Ken's post above, it states you can close the accounts any time after the 6 days following funding. It seems like this is not true, it's any time following the 6 days after the grace period. I'm going to call again and talk to another CSR about this, I'll keep you guys posted.
EDIT: I called another CSR who was VERY helpful. There is no 10 day grace period, the account can be funded within 60 days of opening so it's not like you have to wait 66 days to close the account with no penalty. The CSR was wrong, I would have been able to close the account on the 26th by her logic, but fortunately, it is true it can be closed on the 7th day after FUNDING, which, if opened on June 10, would have been June 16. Accounts are being closed and reopened right now.
mix
mix   |     |   Comment #19
I am in the same boat as you rhutnik. Annoying.
Sperry8
Sperry8   |     |   Comment #25
I feel for you guys but what were you thinking opening a CD a few days before the FED meeting where most people felt they were going to raise rates again? Always better to wait until after that meeting if you're so close so you can figure out when is a good time to invest in a CD.
!!!
!!!   |     |   Comment #26
Speey8, I thinks it's a sign of desperation with some people and their money. That or an obsession to constantly chase after miniscule percentage point differences.
rhutnik
rhutnik   |     |   Comment #27
I mean... no harm done. I have the interest rate all adjusted now and two new CDs open. I took advantage of the deal in December where the rate went from 0.87% to 1.25% overnight, then they dropped it 3 weeks later. These banks can change rates on the fly so I didn't see the issue in opening it. I knew about the rate hike coming up the next Wednesday and I knew that if the fed rate hike changed rates, I would close and reopen the CDs. And that's exactly what I did. I'm at a point where I have some large expenses coming up so I need most of my money liquid and this is a great opportunity for that.
mix
mix   |     |   Comment #28
I guess you should re-read the article Sperry8. "For the second time in the last week, Ally Bank raised the rates of its 11-month No Penalty CD." What bank raises CD rates on a weekly basis then doesn't honor a 10 day guarantee because they made up their own definition of 10 days?
rhutnik
rhutnik   |     |   Comment #30
The definition of 10 days wasn't incorrect for you and I mix... they counted June 10th as part of Day 1. The first CSR I spoke with in this situation above seemed to have it confused for counting as well. The second CSR (who easily closed and reopened new accounts for me) said it's a common mistake of their CSR's in training to miscount the days.
Ann
Ann   |     |   Comment #33
Most account interest rates are very slow to react to Fed rate changes, if at all.

How Have the Recent Fed Hikes Affected Different Deposit Rates - https://www.depositaccounts.com/blog/fed-hikes-deposit-rates.html
Cracker
Cracker   |     |   Comment #18
I opened a CD on 6/12 so it seems like I'm going to get the automatic increase with their 10 day best rate guarantee. I was planning on closing and reopening the account, but it looks like I won't need to. Awesome!!!
hank
hank   |     |   Comment #20
yes, I also opened on 6/12 and expect it will automatically increase
rhutnik
rhutnik   |     |   Comment #21
It should have increased overnight for you guys I believe
dennis
dennis   |     |   Comment #24
This is what I've been waiting for. No more 5 year CDs for me.
I am all in..
RJM
RJM   |     |   Comment #31
My account from 6/14 that was showing 1.35% last night has now updated to the 1.5% rate. I did not have to wait the full 10 days. It did it on its own I guess overnight. I am now officially over the federal insurance limit. With most of it at the 1.5%. I do have an old CD at 1.5% that matures March 19 and a small 5 year.

I moved a lot of money out of Ally a few months ago when they were not competitive and wouldn't get competitive when asked. Maybe enough of us did the same and now Ally gets competitive.

It really is a smart way to keep from losing money for those of us who would take it out while still only paying 1.05% to those who don't pay attention. (Which I'm guessing is a lot of their deposit base)
DOA
DOA   |     |   Comment #34
A good deal, but this is nothing but a guaranteed savings rate for 11 months. I would prefer the higher rate on the regular savings account with a lot less hassle. If this no penalty cd rate goes south and the regular savings rate is still lower than some of the other competitors, good bye Ally.
rhutnik
rhutnik   |     |   Comment #36
The 11 month guarantee on the savings rate above $25k is great for now, but you're right. They need to increase their savings account rate as well, not just these CDs. Still better than nothing.
DaveJ
DaveJ   |     |   Comment #37
I'd bet the savings account will go up in the next weeks.
BIS
BIS   |     |   Comment #35
Excellent!!! Piece of cake to open since I already have an Ally account! Thanks, Ken!
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Deal Summary: 11-month No Penalty CD: 1.35% APY, $25k minimum (increase of 25 bps).

Availability: Nationwide

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  • 1.00% APY, no min (was 0.90%)

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