Ally Bank Increases Rates of Online Savings Account and Five CDs

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Deal Summary: Ally Bank CD rate increases - Online Savings Account (1.00% APY), 20-month Select CD (2.35% APY), 60-month High Yield CD (2.75% APY), no minimum balance.

Availability: Nationwide (online bank)

On Friday, Ally Bank increased the rate of its Online Savings account for the second time this month. The 10-bp rate hike increased the APY from 0.90% to 1.00%. For June, the APY has increased 25 bps. This follows 25 bps of rate increases in May. Before May 10th, the Ally Online Savings account rate was stuck at its bottom of 0.50% that had lasted since December 2020. The rate hikes are nice to see, but it should be noted that other online banks have been faster in raising their online savings account rates.

Ally Bank’s Money Market also had the same rate increase. Since December 2020, Ally Bank has kept the rates of the Money Market and the Online Savings the same. Before that time, the Online Savings had higher rates, with the largest difference occurring in 2018 and 2019 when the Online Savings reached 2.20% APY while the Money Market never exceeded 1.00% APY. The primary difference in features between the two accounts is that the Money Market includes debit cards and paper checks. Neither is available for the Online Savings.

APYMINMAXINSTITUTIONPRODUCTDETAILS
2.10%--Ally BankMoney Market Account
2.10%--Ally BankOnline Savings Account
Rates as of October 1, 2022.

Ally Bank, like most online banks, continues to focus more on CD rate hikes than savings and money market rate hikes. Rates of five CDs were also increased on Friday. The APYs of these CDs along with the savings and money market accounts are listed below. The new APYs are shown in bold and are effective as of 6/27/2022. The previous APYs are noted inside parentheses.

  • OSA & MMA - 1.00% (0.90%)
  • 12 mo HY- 1.75% (1.50%)
  • 14 mo Sel - 2.00% (1.75%)
  • 18 mo HY - 2.00% (1.75%)
  • 20 mo Sel - 2.35% (2.00%)
  • 5y HY - 2.75% (2.50%)

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. The following table provides the current yields of the above CDs that had rate increases. Click on the “details” arrow to display the CD rate history and other details. For the full list of Ally Bank deposit rates, please refer to the rates section of our Ally Bank page.

APYMINMAXINSTITUTIONPRODUCTDETAILS
3.15%--Ally Bank5 Year High Yield CD
3.05%--Ally Bank20 Month Select CD
3.00%--Ally Bank18 Month High Yield CD
3.00%--Ally Bank12 Month High Yield CD
Rates as of September 29, 2022.

Thanks to DA reader, RichardW, who posted news of these rate increases in the DA Forum.

Deciding Between Ally CDs

One thing to consider is Ally Bank’s mild early withdrawal penalties. The EWP of the 14-month and 20-month CDs is 60 days of interest, the EWP of the 36-month CD is 90 days of interest, and the EWP of the 60-month CD is 150 days of interest. I populated our CD EWP Calculator with these four CDs so you can see the effective yields when these CDs are closed early.

There is no reason to choose the 14-month CD over the 20-month CD. If you close the 20-month CD early at 14 months, the effective yield will be higher than the 14-month CD held to maturity. Both have the same EWP. Thus, the effective yields are the same for closures before 14 months.

When comparing the 36-month and the 60-month CDs, the 60-month CD has a higher effective yield if closed at 36 months than the 36-month CD held to maturity. The 36-month CD has an advantage for some early closures due to its smaller EWP. If closed before 14 months, the 36-month CD will have a higher effective yield than the 60-month CD.

The only reason to choose the 60-month over the 20-month would be to benefit from the longer term. The yield of the 20-month held to maturity exceeds the 60-month closed at 20 months. Due to the smaller EWP, the effective yield of the 20-month closed early exceeds that of the 60-month.

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.

Ally Bank Select CD Features

Below are the details of this 20-month Select CD that are listed in this Ally 20-month Select CD promotional page as of 6/27/2022:

  • 2.35% APY
  • 20-month term
  • Promotional term available through 7/31/2022
  • No minimum deposit to open.
  • Automatically renews into a 18-month High Yield CD

There’s also a 14-month Select CD, with details listed in this Ally 14-month Select CD promotional page as of 6/27/2022:

  • 2.00% APY
  • 14-month term
  • Promotional term available through 6/28/2022
  • No minimum deposit to open.
  • Automatically renews into a 12-month High Yield 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. 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 “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 also options. If you choose an Ally account, it informs you that “Transfers to Ally Bank accounts should post immediately.” If you choose an external linked account, it informs you that “Transfers to non-Ally Bank accounts usually take 3 business days.”

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.

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.

Availability

Headquartered in Sandy, Utah, 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

Bank Overview

Ally Bank (FDIC Certificate # 57803) has an overall health grade of "A" at DepositAccounts.com, with a Texas Ratio of 7.14% (excellent) based on March 31, 2022 data. In the past year, Ally has increased its non-brokered deposits by $10.28 billion, an excellent annual growth rate of 7.86%. 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 was 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 20-Month Select CD Compares

The 20-Month Select CD continues to be Ally Bank’s most competitive product. Thus, I’ll limit comparisons to this CD. 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, only one bank and one credit union have a higher rate than the rate offered on the Ally Bank Select 20-month CD. The following table compares the 20-month Select CD to the two highest-rate CDs from other banks, the two highest-rate CDs from other major online banks and the two highest-rate CDs from credit unions.

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

How the Ally Online Savings Account Compares

When compared to nationally available Money Market Accounts and Savings Accounts tracked by DepositAccounts.com, that do not require large balances or direct deposit, and do not have small balance caps, the Ally Online Savings APY ranks well below the rate leaders. The following table compares the Ally Online Savings APY to the two highest-rate savings accounts from other banks and the two highest-rate savings accounts from other major online banks.

To look for the best rates on liquid bank accounts, both nationwide and state specific, please refer to our Money Market Accounts Table and Savings Accounts Table.

The above information and rates are accurate as of 6/27/2022.

Related Pages: savings accounts, money market accounts, 1-year CD rates, 5-year CD rates, nationwide deals, Internet banks

Comments
bronzehawk
  |     |   Comment #1
Alas.....no more Ally.
P_D
  |     |   Comment #2
They were one of the pioneers of Internet banking. It's natural that they were competitive when there was so little competition. But now everybody's in the game, so they are just another fish in the sea.  
Kjwbmw
  |     |   Comment #6
What are you trying to say?
amanda1130
  |     |   Comment #3
Thanks for the great information. Really helped me save money and made me more aware of closing an extremely low interest cd and reopen to a higher yield cd with no money lost.
Burrows
  |     |   Comment #7
Indeed, local rates are embarrassing with long terms.
Kaight
  |     |   Comment #4
One whole percent. Big whoop.
jofr4646
  |     |   Comment #8
Better than my cu, I think they are asleep, making money on their coin machines.
Buckeyes
  |     |   Comment #5
I'm not even sure i'd call 10bp a "raise". How about an insult instead?
Cracker
  |     |   Comment #9
There's no point in opening a long term CD right now. Interest rates are rising, and rising quickly. For now, just keep your money in a savings account or no penalty CD. Once rates stop rising, then and only then should you lock in money for the long term.
deplorable_1
  |     |   Comment #11
@#9: Yes exactly right the Next FED move will force the banks to hike rates big time and those who lock in too early will end up regretting it. Plus liquid savings account are moving up so fast you won't be losing much by holding off. The rates seem to change almost daily now.
Shelby
  |     |   Comment #10
If the 10yr stays at or below 3.25% we may be seeing the peak in interest rates right now.If the 10yr moves up to 3.50% as it recently did or beyond then we will see those higher long term rates rates ...but the 10 yr needs to shoot up first.What new ball will drop in the next 6 months to make that happen? Its anybody's guess right now if we move past 3.50..the markets obviously don't want to see it.
If one has significant assets avail. now to invest in fixed income the 3 yr looks attractive @ 3.4% with brokered cd's.When other locked in personal CD assets become avail. later in the year lock in additional 3/5 yr cd rates at that time. However, if you feel 3yr rates will increase significantly from here then wait...or are they close to the peak at this moment? And if you wait will you be losing more money now sitting in a lower rate money market acct. waiting for a higher rate that may/may not go higher?
chuckf74
  |     |   Comment #12
When will we see the next increases to the No Penalty or Raise Your Rate CD? Just about all of the rates at Synchrony Bank look better and I hope Ally catches up soon.
jack12
  |     |   Comment #13
Update:
Your Online Savings and Money Market Account rates are increasing from 1.00% to 1.15% APY on all balance tiers. Your new APYs go into effect on 07/08/2022, and will appear in your account on 07/09/2022.
Ally Bank Increases Rates of Online Savings Account and Seven CDs
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Availability: Nationwide (online bank)

Just 17 days after the last rate hike, Ally Bank increased the rate again of its Online Savings account. This time, it’s a 15-bp rate hike, which increased the rate from 0.60% to 0.75%. Before May 10th, the Ally Online Savings account rate was stuck at its bottom of 0.50% since December...

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Ally Bank Hikes CD Rates Again, 20-Month Select CD Rises to New High
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Availability: Nationwide (online bank)

This has been a busy week at Ally Bank. On Wednesday, Ally Bank finally increased the rate of its Online Savings Account. It was just a 10-bp rate hike that increased the rate to 0.60%, but it finally moved the rate above the rate bottom that the account had been stuck at since December 2020. Ally Bank’s Money Market also...

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Availability: Nationwide (internet bank)

Only one week after the last CD rate hikes, Ally Bank has increased rates again on its two most competitive CDs: 14-month Select CD (1.00% → 1.15% APY) and 18-month High Yield CD (1.10% → 1.25% APY). The 18-month CD is now Ally's highest-rate CD (5 bps above Ally’s 5-year CD yield.) These rate increases move these CDs close to the rate leaders for nationally available...

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Availability: Nationwide (internet bank)

Ally Bank has joined its competitors with a few noteworthy CD rate increases. The new rates are not quite as high as the others, but the rates may be close enough to keep customers, especially when you consider Ally’s CD features. The other banks aren’t the only competitor for Ally. It’s also Ally Bank itself. Ally Bank is listing brokered CDs with rates higher than Ally’s...

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Review of Ally Bank’s Savings Accounts and CD Rates

Ally Bank is an award-winning online-only bank. Minimal fees and no minimum balance requirements across its deposit accounts make it an ideal option for a streamlined and flexible banking experience. 

Ally Bank’s checking, savings, CD and money market account rates are competitive with both conventional brick-and-mortar banks and other online banks. Though you won’t be able to access any assistance in a physical branch, the accounts and all of their perks are supported by 24/7 customer care.

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