Ally Bank Again Increases the Rate on Its 11-Month No Penalty CD
Deal Summary: 11-month No Penalty CD: 1.50% APY, $25k minimum (increase of 15 bps).
For the second time in the last week, Ally Bank raised the rates of its 11-month No Penalty CD. This is an especially pleasant surprise since last week’s rate hike was such a good deal. You’ll need a minimum deposit of at least $5k to benefit from this rate increase. The top-tiered rate increased 15 basis points to 1.50% APY while the mid-tiered rate increased 20 basis points to 1.25% APY. There was no change to the bottom-tiered rate for balances under $5k. Below is a summary of the new tiered rates and how these rates have changed:
- 1.50% APY, $25k min (was 1.35%)
- 1.25% APY, $5k min (was 1.05%)
- 1.00% APY, no min (no change)
This is the highest rate of the 11-month No Penalty CD since Ally changed the term of their No Penalty CD from 9 months to 11 months in March 2010. If you’re interested in this 1.50% APY, you may not want to wait too long. The 1.25% APY in December lasted less than three weeks. On January 4th, the rate fell back to 0.87%.
| APY | MIN | MAX | INSTITUTION | PRODUCT | DETAILS |
|---|---|---|---|---|---|
| 1.50*% | $25k | - | Ally Bank | No Penalty 11-Month CD | |
| OTHER TIERS: 1.00% → Up to $5k | 1.25% → $5k - $25k | |||||
As I mentioned last week, this might be a way Ally Bank intends to compete with other internet banks, four of which are currently offering savings accounts with a 1.30% APY. If you have a large balance in Ally’s savings account (which currently earns 1.05% 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.
If you had already opened the No Penalty CD last week, don’t forget Ally’s 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.
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 1.40% 6-month CD 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.
Here are some issues and features of the No Penalty CD to consider before applying. These are the same ones that I mentioned last week.
- 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.
Thanks to DA reader, Maecl , who first posted news of this rate increase in the DA Forum.
Availability
Headquartered in Midvale, Utah, Ally Bank is currently the 21st largest bank in the country, with assets in excess of $122 billion and over 2.3 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 the 11-month No Penalty CD 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 1.70% (excellent) based on March 31, 2017 data. In the past year, Ally has increased its total non-brokered deposits by $11.03 billion, an excellent annual growth rate of 18.63%. Please refer to our financial overview of Ally Bank for more details.
How the CD Compares
As I described above, it’s not really fair to compare the No Penalty CD to other standard CDs. For simplicity, let’s compare it to standard 12-month CDs that are nationally available from other banks and credit unions. When compared to 212 12-month CDs tracked by DepositAccounts.com for a $25k deposit, Ally's No Penalty CD is on top tied with Connexus. A sample of the top 12-month CDs are shown below:
| Interest Rate | CD Length of Term | Early Withdrawal Penalty | Internet Bank |
|---|---|---|---|
| 1.50% APY | 11-month No Penalty CD ( $25k min) | none | Ally Bank |
| 1.50% APY | 12 Month Certificate ($5k min) | 90 days | Connexus Credit Union |
| 1.48% APY | 12 Month Online Promo CD (New Money) ($5k min) | 90 days | M.Y. Safra Bank |
| 1.46% APY | 1-year CD ($10k min) | 90 days | Virtual Bank |
| 1.40% APY | 1-year CD ($2k min) | 90 days | Synchrony Bank |
The above rates are accurate as of 6/20/2017.
To find the best CD rates, both nationwide and state specific, please refer to our CD rates table or our Rates Map page.
More money will be flowing to them with this deal.
How did you convert? Do you close the CD, move to savings and open again?
Thanks in advance for the help.
They really need to update their systems. They are still asking 4 security questions in addition to your account number. By contrast, when I call my broker, I enter my acct number, they automatically pick up my phone number and now have voice recognition so I just say my name and I'm good to go. That's only for Active Trader Pro. When I call after hours I still have to answer a couple questions but its lots faster than Ally.
It shouldn't take that long for in bank transfers.
My first one was funded on 6/14 so it would seem that one will automatically get the higher rate too. But right now, its still showing 1.35%.
I believe this rate will cause me to go over the insured limit here shortly. I don't like doing that but where else can you get a totally liquid 1.5% rate ?
The one from the 14th is still showing 1.35% but I suspect that will increase in the next 4-5 days.
I asked about the .005% bonus and as expected, it didn't apply to early closed accounts.
We all gonna get 1099-I at the end of the year (pro rated for the previous year).
Also, you can easily close any CD by clicking on the "More" tab on the menu, then "Manage CDs", the money can be dumped into any of your accounts or mailed to you.
EDIT: I called another CSR who was VERY helpful. There is no 10 day grace period, the account can be funded within 60 days of opening so it's not like you have to wait 66 days to close the account with no penalty. The CSR was wrong, I would have been able to close the account on the 26th by her logic, but fortunately, it is true it can be closed on the 7th day after FUNDING, which, if opened on June 10, would have been June 16. Accounts are being closed and reopened right now.
How Have the Recent Fed Hikes Affected Different Deposit Rates - https://www.depositaccounts.com/blog/fed-hikes-deposit-rates.html
I am all in..
I moved a lot of money out of Ally a few months ago when they were not competitive and wouldn't get competitive when asked. Maybe enough of us did the same and now Ally gets competitive.
It really is a smart way to keep from losing money for those of us who would take it out while still only paying 1.05% to those who don't pay attention. (Which I'm guessing is a lot of their deposit base)