Ally Bank Cuts CD Rates - Will Other Banks Follow?

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It was only a matter of time after months of declines in Treasury yields and brokered CD rates that internet banks would follow with rate cuts on their online CDs. Earlier in the week, Barclays made cuts on its CD rates, and today, Ally Bank cut rates on several of its CDs.

The rates on Ally Bank’s three longer-term High Yield CDs (18-month, 3-year and 5-year) and its two Raise Your Rate CDs (2-year and 4-year) declined 10 bps. The same rate cuts also took effect to the IRA version of these CDs.

APYMINMAXINSTITUTIONPRODUCTDETAILS
3.00*%--Ally BankHigh Yield 5 Year CD
2.65*%$25k-Ally BankHigh Yield 3 Year CD
OTHER TIERS: 2.50% Up to $5k | 2.60% $5k - $25k
2.60*%$25k-Ally BankHigh Yield 18-Month CD
OTHER TIERS: 2.40% Up to $5k | 2.55% $5k - $25k
2.50*%--Ally BankRaise Your Rate 2-Year CD
2.50*%--Ally BankRaise Your Rate 4-Year CD
Rates as of May 23, 2019.

The rate cuts on the Raise Your Rate CDs are especially disappointing. The 4-year Raise Your Rate CD has a history of rates that have been well below the standard 4-year CD rates of other internet banks. With the Raise Your Rate CD rates now falling, there is even less reason to choose these.

The rates of the shorter-term CDs and the liquid accounts remained the same. That includes the special 15-month Select CD (2.80% APY). I was told that this 15-month Select CD rate was scheduled to last until May 31st. I wish we could get similar guarantees on the long-term CDs. If the Fed has to start cutting rates, many savers may regret missing out on today’s long-term CDs.

A Few Noteworthy Features of Ally CDs

For more details on Ally Bank’s 15-month Select CD, please refer to my previous Ally blog post.

Ally has the following description of its early withdrawal penalties on its website for CDs purchased or renewed after 12/07/13:

  • 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 withdrawal the entire amount.

Few internet 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. The software lets you see the current balance and the post-penalty balance before you make the decision to close the CD early. You have the choice to have the funds from the closed CD transferred online to your account or sent as a check. If it’s transferred to an Ally account, the funds will be available immediately.

FDIC Insurance for Over $250k

Another nice aspect of all of Ally’s accounts is the ability to designate beneficiaries. You can choose up to 10 beneficiaries for each of your non-IRA accounts, and you can choose the designation of either “In Trust For” or “Payable On Death”. No social security number is required. Beneficiary designations can be done online in the application or with the 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 also allows customers to open an account in the name of a Trust.

How To Boost Your Ally CD Rate

There is one reason why you may want an Ally 3-month CD (which currently has a rate of 0.75%). There’s an easy way to use these 3-month CDs to get an extra 5 bps on any of Ally’s CDs. DA reader Cumulus describes a useful CD strategy that uses 3-month CDs in this forum post.

Ally Bank’s Online Savings Account

Ally Bank’s Online Savings Account (OSA) rate remained unchanged today. Its last rate hike took place on January 17th when the rate increased 20 bps to 2.20% APY for all balances.

APYMINMAXINSTITUTIONPRODUCTDETAILS
2.20*%--Ally BankOnline Savings Account
Rates as of May 23, 2019.

For more review of Ally Bank’s OSA and its Interest Checking and Money Market Accounts, please refer to my previous blog post.

Availability

Headquartered in Midvale, Utah, Ally Bank is currently the 16th largest bank in the country, with assets in excess of $159 billion and just over 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 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

Bank Overview

Ally Bank (FDIC Certificate # 57803) has an overall health grade of "A" at DepositAccounts.com, with a Texas Ratio of 4.74% (excellent) based on December 31, 2018 data. In the past year, Ally has increased its non-brokered deposits by $11.44 billion, an excellent annual growth rate of 14.37%. Please refer to our financial overview of Ally Bank for more details.

The above rates are accurate as of 3/29/2019.

To review the best CD rates, both nationwide and state specific, please refer to our CD rates table.

Related Pages: Salt Lake City CD rates, 5-year CD rates, nationwide deals, Internet banks

Comments
gregk
gregk   |     |   Comment #1
Except for (likely) infusions to my MACU & GTE Financial add-on CD's in about 2 years (when anything next matures for me and rates almost certainly will be in the tank again), I'm out of the
CD game for an extended term. Missed out on the various 4% offers of months passed because of PenFed & Keesler commitments, but now set with Inova (3.80%), US Senate (3.69%) & Mountain America (3.51%) for 5 years running. Ally and the rest of only academic interest through the next recession, - I'm going fishing. Good luck to all.
road ahead
road ahead   |     |   Comment #2
Thank you Ken for keeping us updated. Rates are certainly fluid. And good luck to greg, sounds like a peaceful life ahead.

I'm flush with large amounts of savings and emergency funds. Retired, fairly comfortable, but thinking I better move some of that into a 5 year cd, somewhere, and pronto.
chuckf74
chuckf74   |     |   Comment #3
I concur on the Raise Your Rate CDs. I had been a fan, with interest rates on the rise, but now I'm not sure. May have to mix things up next time one matures. Although, if you read financial news, there are still plenty of stories about needing to raise rates "if" the economy strengthens, and others about cuts, so who knows.
#6 - This comment has been removed for violating our comment policy.
buckeye61
buckeye61   |     |   Comment #4
I'm sure the other large and well established online banks will soon follow Barclays and Ally's lead in reducing CD rates.....especially longer term rates. Also, I would not be surprised to see some additional cuts at both Ally and Barclays in the coming weeks.
road ahead
road ahead   |     |   Comment #5
Ally was good for a long while. Nice website and good acct managenent page. But times are changing again. Now days, I guess anything over 3 percent is a "best buy?" Get 'em while you can. I don't understand the economics, or the Fed, or the politics behind it all. I kind of tune it all out now, and just go fishin' like gregk.
#10 - This comment has been removed for violating our comment policy.
Scott
Scott   |     |   Comment #14
Glad I "raised" my last RYR CD the other day. Was really hoping 2.6% wasn't the peak for them, but turns out it was.
Scott
Scott   |     |   Comment #16
And thanks to this site and Ken's rate forecasts for helping me decide to raise them.
Scott
Scott   |     |   Comment #15
Now for long term, good old purepoint should still be there for the weekend, but how much longer until they also fall. Decisions to make.
QED
QED   |     |   Comment #18
Spot on. If the pivotal PurePoint NPCD at 2.6% APY survives month's end it will be a happy and joyous Monday next indeed. Fingers are crossed and crisscrossed.

But realistically am unable now to conjure how they will be able to make it happen.
111
111   |     |   Comment #19
Yep. I'm tossing some funds at Navy (3%, 6 month CD, 90-day EWP that does not eat into principal) simply because since it is 1) big and 2) has restricted membership, which maybe will reduce applicant volume. This is like December 1941 in the Pacific - everything is being attacked.
Bill Barr
Bill Barr   |     |   Comment #23
You can thank Trump for that.
Smiling
Smiling   |     |   Comment #21
Shhhhhh..... let's keep that quiet. Love PP NPCD. I guess just be thankful we are locked in for 13 months. if they lower rates, maybe they will leave the NP's alone.
QED
QED   |     |   Comment #17
Ally Bank was not a serious, competitive, player even before this.

Ever since their great $1000 promotion last fall, ending in January, it has been:

Ally Bank: PU
summer
summer   |     |   Comment #20
The rate cut is disappointing but understandable under the current situation. What makes me even more disappointed is their customer service which seems getting worse recently. I had quite a lot of interactions with them in the recent month because they either delayed the processing of my requests or even worse made a mistake. The waiting time for talking to a rep is getting longer, and they don't even train their reps well enough to deal with my simple questions - in my most recent contact with them, I had to be held a few times for the rep to ask someone before she could confirm the answer. I was a loyal customer but now I am losing trust in them.
TCK
TCK   |     |   Comment #22
I have noticed the wait times reported in the upper corner of the website have been getting longer.
RRR
RRR   |     |   Comment #24
The rate cuts are disappointing for savers. But two points of consolation.

First some perspective, on a $100,000 deposit, the difference between 3% and 3.5% is $500 a year. I'm not diminishing the value of $500. But over the course of a year is it really going to make any significant difference in your lifestyle?

Next the bigger perspective. If current economic policy is the correct way to grow the economy, then increasing interest rates would be a drag on that growth. To the extent that the FED does not support increasing rates, it helps mitigate that drag. Remember that the nominal return that you get on your bank deposits is only part of the story. There are all kinds of benefits that you get from a growing economy and low inflation that increase your real return. Those benefits may well more than offset the lower interest rate.

I'm not suggesting it's better to get a lower interest rate on your deposit. It's always best to get the best deal you can. I'm merely pointing out that the lower interest rates have other implications which may, under the right conditions, more than compensate you for the difference in the rates.
gig words
gig words   |     |   Comment #25
Wow, a good dose of reality!!
DCGuy
DCGuy   |     |   Comment #26
Point taken. However, the biggest "drag" on the budget is insurance costs and real estate taxes. Not easy to reduce and save on those costs. I guess I will have to target other costs, like auto repair costs, home repair costs, and saving on food/utilities/health care.
RRR
RRR   |     |   Comment #27
Indeed, it's hard to pay real taxes with nominal dollars (humor intended).

With respect to the real estate taxes I think Ronald Reagan said it best in his many quotes on the topic of taxes... One of them being “The American people are not undertaxed, the government in Washington is overfed.”

Unfortunately this applies equally well to state and local governments from whom you receive your property tax bills.

It's an immutable law of all government. Government is always inefficient, wasteful and corrupt. The only way to minimize these negatives is to minimize the size and scope of government, a task that becomes increasingly difficult as the larger and more powerful it gets the more it resists constraint.

In any event it's great to have a website like this, that ties together political and economic views and bundles them into a practical and useful tool to help people maximize their interest bearing investments.
Att
Att   |     |   Comment #28
#24 I agree $500 over the course of a year dosen't amount to much but when you have a set and forget 5 year CD that adds up to to $2500 on your example. I opened a large 4% CD with Connexus for 5 years. That would be an extra $5000 after 5 years compared to a 3% CD.
Pizzaboy
Pizzaboy   |     |   Comment #32
$500 is 16.5 full tanks of gasoline in my car , so yes it is a significant difference for me.
MNfarmer
MNfarmer   |     |   Comment #29
I deposited $100,000 in new money into my account, never received my $1,000
joe The Perv biden
joe The Perv biden   |     |   Comment #30
MNfarmer Did you withdraw any funds during that time?
Pipelake
Pipelake   |     |   Comment #31
The “complaint” “the downside of Ally,s cds is that they don’t allow for partial withdrawals” can easily be avoided by splitting a cd investment into 2 or more cds - i.e instead of buying a $30,000 cd to buy 3 $10,000 cds, so if it is necessary to make an early withdrawal you can cash out one without affecting the other.
SusieQ
SusieQ   |     |   Comment #33
I just checked & the 2.80% 15-month CD is still showing as available when you sign in for a cd.
Ally Bank Offers Another Select CD - EXPIRED
UPDATE 5/7/19: The 15-month Select CD ended early and is no longer available.

Deal Summary: Select CD, 2.80% APY, 15-month term, no minimum balance.

Availability: Internet Bank

Ally Bank is again offering a Select CD which features a limited-time promotional rate and term (2.80% APY 15-month). This is a small downgrade from Ally’s last Select CD that ended in February (2.85%, 14-month). The new Select CD rate is just 5 bps above the current rate of Ally’s 12-month High Yield CD. Also, it’s higher than...

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Ally Ups Savings Account Rate & Emails Customers of Payback Earnings
Deal Summary: Rate increase: Online Savings (2.20% APY on all balances as of 1/17/2019)

Availability: Nationwide (internet bank)

This morning, Ally Bank increased the rate of its Online Savings Account (OSA) by 20 basis points to 2.20% APY. Ally’s IRA Online Savings Account also had this same rate hike. The 2.20% APY is effective as of 1/17/2019. These were the only rate hikes at Ally Bank today.

Payback Time Promotion Earnings Emails

Yesterday, Ally Bank notified customers who participated in the Payback Time promotion of the bonus they earned. Here’s...

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Ally Bank Ups Rates on 11-Month, 12-Month and 14-Month CDs
Deal Summary: CD Rate Hikes: 11-month No Penalty (2.30% APY, $25k+), 1-Year High Yield CD (2.75% APY, all balances). 14-month Select CD (2.85% APY, all balances)

Availability: Nationwide (internet bank)

This morning, Ally Bank increased the rates on three of its CDs, but the Online Savings Account rate remains the same (2.00% APY). With a 2.85% APY, the promotional 14-month Select CD now has the highest rate of all of Ally’s CDs except for the 5-year. This Select CD is only listed on this Ally promotional page. According to this...

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Ally Bank Online Savings Account APY Increased
Deal Summary: Rate increase: Online Savings (2.00% APY on all balances)

Availability: Nationwide (internet bank)

This morning, Ally Bank increased the rate of its Online Savings Account (OSA) by 10 basis points to 2.00% APY. Ally’s IRA Online Savings Account also had this same rate hike. These were the only rate hikes at Ally Bank today.

Ally Bank is the latest internet bank to raise its savings account yield to 2%. A few of Ally’s competitors have already increased their savings account yields to 2.05%. These include Barclays, Synchrony...

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Ally Ups Rates On No Penalty CD, Raise Your Rate CDs & High Yield CDs
Deal Summary: CD Rate Hikes: Noteworthy increases: 11-month No Penalty (2.20% APY, $25k+), 1-Year High Yield CD (2.65% APY, all balances). New 14-month Select CD (2.75% APY, all balances)

Availability: Nationwide (internet bank)

This morning, Ally Bank increased the rates on several of its CDs, but the Online Savings Account rate remains the same (1.90% APY). It also introduced a new limited-time 14-month Select CD (2.75% APY). This Select CD has no minimum deposit, and it’s available through 1/16/2019. It’s only listed at Ally’s website in this promotional page.

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