Ally Bank Increases Rates on 12-Month and 18-Month High Yield CDs

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Deal Summary: Rate increases: 12-month CD (2.40% APY), 18-month CD (2.50% APY) - $25k minimum.

Availability: Nationwide (internet bank)

This morning, Ally Bank increased the rates of its 12-month and 18-month High Yield CDs. The largest rate gains were on the top tiers that require a $25k minimum deposit. The 12-month top tier rate increased 10 bps to 2.40% APY, and the 18-month top tier rate increased 15 bps to 2.50% APY. The new APYs for each tier are shown in bold and are effective as of 7/20/2018. The previous APYs are noted inside parentheses.

    12-month High Yield CD APYs

    $25k+: 2.40% (2.30%)

    $5k-$25k: 2.25% (2.20%)

    up to $5k: 2.10% (2.10%)

    18-month High Yield CD APYs

    $25k+: 2.50% (2.35%)

    $5k-$25k: 2.35% (2.25%)

    up to $5k: 2.15% (2.15%)

Ally Bank CDs are also available as IRAs (Traditional, Roth, SEP), earning the same tiered APYs with the same funding requirements. Please refer to our Ally Bank CD rates table for the full listing of CD and IRA CD rates.

APYMINMAXINSTITUTIONPRODUCTDETAILS
2.50*%$25k-Ally BankHigh Yield 18-Month CD
OTHER TIERS: 2.15% Up to $5k | 2.35% $5k - $25k
2.40*%$25k-Ally BankHigh Yield 12-Month CD
OTHER TIERS: 2.10% Up to $5k | 2.25% $5k - $25k
Rates as of July 20, 2018.

The last rate increase of the 12-month and 18-month CDs was on June 15th. At that time, a couple of internet banks had just came out with 1-year CDs with 2.50% APYs. There are now 12 internet banks offering 1-year CDs with yields of 2.50% to 2.60%. Ally’s 12-month CD isn’t a rate leader, but it remains competitive, especially with the large internet banks.

Decisions for Existing Ally Customers

For those who are already Ally customers, it may be worth moving money from an Ally No Penalty CD or from an Ally savings account into a 1-year CD. For $25k+ balances, the 1-year CD now has a 65 bps rate advantage over the savings account and a 55 bps rate advantage over the No Penalty CD. The downside with the 1-year CD is the early withdrawal penalty (EWP). However, Ally’s EWPs are smaller than average. The EWP of the 1-year and 18-month CDs is only 60 days of interest. If you need the money before 12 months, the EWP won’t hurt you too badly. For example, an early withdrawal after six months would result in an effective yield of 1.60%.

The rate increase of the 12-month and 18-month CDs make Ally Bank’s 5-year CD look less attractive. The top-tier rate of Ally’s 5-year CD remains at 2.75% which is only 35 bps above the 12-month rate. The 5-year CD also has a much larger EWP (150 days of interest). Thus, the effective yields of the 12-month CD when closed before maturity will exceed those of the 5-year CD. If the 5-year CD (with a $25k+ balance) is closed early after one year, the effective yield will only be 1.60% which is 80 bps under the yield of the 1-year CD that’s held to maturity.

You can see how Ally Bank’s 1-year, 18-month and 5-year CD yields compare with each other when they are closed early by using our CD Early Withdrawal Penalty Calculator.

A Few Noteworthy Ally CD Features

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”. 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.

Rate Bonus for CD Renewals

Ally Bank has a tradition of offering existing customers a 5-bps rate bonus when CDs are renewed. A 3-month CD ladder can be useful for this. DA reader Cumulus described his useful CD strategy that uses this rate bonus to get higher rates on all of his Ally CDs in this DA forum post.

Availability

Headquartered in Midvale, Utah, Ally Bank is currently the 16th largest bank in the country, with assets in excess of $143 billion and 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 3.10% (excellent) based on March 31, 2018 data. In the past year, Ally has increased its non-brokered deposits by $12.75 billion, an excellent annual growth rate of 18.16%. Please refer to our financial overview of Ally Bank for more details.

How the 1-Year CD Compares

When compared to the 223 similar length-of-term CDs tracked by DepositAccounts.com, which require a similar minimum deposit and are available nationally, 13 banks and two credit unions have higher rates than Ally Bank’s 1-year CD. In June, 10 banks and one credit union had higher rates.

Interest RateCD Length of TermCredit Union/Bank
2.60% APYJumbo 12-Month CDState Bank of Texas
2.55% APY12-Month CD SpecialCongressional Bank
2.51% APY12-Month CDColorado Federal Savings Bank
2.50% APY1-Year Term CDCIT Bank
2.40% APY12-Month High Yield CDAlly Bank

How the 18-Month CD Compares

When compared to the 174 similar length-of-term CDs tracked by DepositAccounts.com, which require a similar minimum deposit and are available nationally, seven banks and two credit unions have higher rates than Ally Bank’s 18-month CD.

Interest RateCD Length of TermCredit Union/Bank
2.75% APY18-Month CDUnion Bank
2.75% APY15-Month CD SpecialMainStreet Bank
2.70% APYJumbo 18-Month CDState Bank of Texas
2.60% APYOnline 18-Month CDCitizens Access
2.50% APY18-Month High Yield CDAlly Bank

The above rates are accurate as of 7/20/2018.

To look for the best CD rates, both nationwide and state specific, please refer to our CD Rates Table page.

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

Comments
buckeye61
buckeye61   |     |   Comment #1
The new 12 & 18-month CD rates a very competitive IF you have the 25K to invest! Unfortunately, the rate tiers punish the Customer with less money to deposit.....something Ally's main competitors(Synchrony, Barclays, Discover, etc)doesn't impose on their deposit accounts.
RJM
RJM   |     |   Comment #3
The tiers make sense because it costs the same to service a $200,000 CD as it does a $500 one.
buckeye61
buckeye61   |     |   Comment #4
Sure, it makes sense from a business perspective, but if you are a small investor they are not being your "Ally".
reality check
reality check   |     |   Comment #5
Less than $25K is a micro investor, not a small investor.
boston02116
boston02116   |     |   Comment #2
Ally is good for an online bank and that's about it. Didn't they raise the rates in June only to lower them shorty after. Now they raise them 10 pts? Whoop- tee-doo!
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