As I was writing this post early this morning, I was wondering how rapidly banks and credit unions will react to yesterday’s emergency Fed rate cut and cut their own rates. Let me state the obvious: CD rates will likely be unstable this week. Any rates should be verified at the financial institution’s website, since rates will probably fall quickly this week. I will be writing posts like this one to help DA readers lock into CDs before rates fall.
It was just two weeks ago when I wrote about Ally Bank’s 13-month Select CD, emphasizing the need to lock into a CD rate sooner, rather than later. Given that the Fed rate is at or near zero, it appears that later will be arriving shortly.
One important consideration when applying for CDs in this current environment is how the rate will lock. According to Ally’s CD FAQs page,
What if the interest rate on my CD increases or decreases after I open my account?
High Yield and No Penalty CDs: These qualify for our Ten Day Best Rate Guarantee. When you fund your CD within 10 days of your opening date, you’ll get the highest interest rate we offer for your term and balance tier during that period. If you fund after the ten day period is over, you get the current interest rate for the day we receive the funds, whether it’s higher or lower than it was during the ten day period.
While the 13-month promotional term is available through March 31, 2020, there is no rate guarantee attached: two weeks ago the rate was 2.10% APY; as of 2 am EDT today, the rate was 1.90% APY. Details about the 13-month Select CD can be found on its promotional page.
Other Ally CDs that have competitive rates (as of this morning) are the 12-month High Yield CD, the No Penalty 11-month CD, and the 18-month High Yield CD. One downside with Ally’s CDs is that partial early withdrawals aren’t allowed. If you need to access some of a CD’s principal before maturity, the only option is to close the CD and withdraw the entire amount. The early withdrawal penalties are as follows:
- 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
For more general information about Ally’s CDs (beneficiary, account management, etc.), please refer to my March 2, 2020 blog post.
How To Boost Your Ally CD Rate
There is one reason why you may want an Ally 3-month CD (currently 0.75% APY): 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.
Headquartered in Midvale, Utah, Ally Bank is currently the 16th largest bank in the country, with assets in excess of $167 billion and just over 4 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 has an overall health grade of "A" at DepositAccounts.com, with a Texas Ratio of 4.72% (excellent) based on December 31, 2019 data. In the past year, Ally has increased its non-brokered deposits by $15.02 billion, an excellent annual growth rate of 16.5%. Please refer to our financial overview of Ally Bank (FDIC Certificate # 57803) for more details.
To review the best CD rates, both nationwide and state specific, please refer to our CD rates table.