Deal Summary: 11-Month No Penalty CD: 1.60% APY, $25k minimum (increase of 10 bps).
For the second time this week, Ally Bank raised the rates on some of its CDs. Today it increased the rates of its 11-month No Penalty CD and its 18-month CD. The 11-month No Penalty CD rate hike is the most noteworthy. All three rate tiers went up. Below is the summary of the new rates and how these rates have changed:
11-Month No Penalty CD
- 1.60% APY, $25k min (was 1.50%)
- 1.35% APY, $5k min (was 1.25%)
- 1.15% APY, no min (was 1.00%)
- 1.75% APY, $25k min (was 1.70%)
- 1.60% APY, $5k min (no change)
- 1.50% APY, no min (no change)
The above rates are effective as of 12/8/17.
The 18-Month CD is also available as IRAs (Traditional, Roth or SEP), earning the same APYs with the same minimum deposit requirements. However, the 11-month No Penalty CD is not available as an IRA.
|1.75*%||$25k||-||Ally Bank||High Yield 18-Month CD|
|OTHER TIERS: 1.50% → Up to $5k | 1.60% → $5k - $25k|
|1.60*%||$25k||-||Ally Bank||No Penalty 11-Month CD|
|OTHER TIERS: 1.15% → Up to $5k | 1.35% → $5k - $25k|
The last time Ally increased the No Penalty CD rates was in June when the top APY first reached 1.50%. When that occurred, I discussed the possibility that this may be a way Ally Bank intends to compete with other internet banks that offer higher savings account rates. If you have a large balance in Ally’s savings account (which currently earns 1.25% 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.
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 1.50% 6-month CD (at another bank) 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.
There is one reason why you may want an Ally 3-month CD (which currently has rates that range from 0.30% to 0.39%). DA reader Cumulus describes a useful CD strategy that uses 3-month CDs in this forum post.
Here are some issues and features of the No Penalty CD to consider before applying. These are the same ones that I mentioned in June.
- 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.
Headquartered in Midvale, Utah, Ally Bank is currently the 19th largest bank in the country, with assets in excess of $130 billion and over 2.6 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
Ally Bank (FDIC Certificate # 57803) has an overall health grade of "A+" at DepositAccounts.com, with a Texas Ratio of 2.08% (excellent) based on September 30, 2017 data. In the past year, Ally has increased its non-brokered deposits by $12.69 billion, an excellent annual growth rate of 19.8%. Please refer to our financial overview of Ally Bank for more details.
How the 11-Month No Penalty CD Compares
Ally Bank now has competition on its No Penalty CD. CIT Bank recently started to offer an 11-month no-penalty CD. Bethpage Federal Credit Union was also offering a similar no-penalty 11-month CD as a promotion, but Bethpage recently ended this promotion.
The other alternative to these no-penalty CDs is a savings or money market account. The highest rate is 1.65% APY at Colorado Federal Savings Bank, but this requires a $50k minimum balance. The next highest is 1.55% APY at Incredible Bank with a $25k minimum balance. The savings accounts provide more deposit and withdrawal flexibility, but the rate isn’t guaranteed to last.
The table below compares Ally’s 11-month No Penalty CD with CIT Bank’s 11-month no-penalty CD and with the two top savings accounts.
|Interest Rate||Account (Minimum balance)||Bank|
|1.65% APY||Premier Savings Account ($50k min)||Colorado Federal Savings Bank|
|1.60% APY||11-Month No Penalty CD ($25k min)||Ally Bank|
|1.55% APY||11-Month No-Penalty CD ($1k min)||CIT Bank|
|1.55% APY||Incredible Savings Account ($25k min)||Incredible Bank|
The above rates are accurate as of 12/8/2017.
To review the top CD rates, both nationwide and state specific, please refer to our CD rates table.