CD Deals Summary
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Update on Ally Bank's 9-Month No-Penalty CD
POSTED
ON BY Ken Tumin
Ally Bank (formerly GMAC Bank) continues to offer a good deal on its new no-penalty CD with a 2.50% APY for a term of 9 months. Ally Bank allows you to close the CD and withdraw your money without a penalty 6 days after funding, and anytime thereafter. One detail that the website doesn't describe is the options for receiving the funds. A reader and I were initially told that the only option to receive the funds is to have them mail you a check. However, after following up with the CSR, I was told the following:
The regular CDs can be closed in the above 3 ways, but you also have the ACH option that allows you to request an ACH transfer to an external checking or savings account. I don't consider the lack of the ACH transfer a big deal as long as they allow you to transfer the funds into your Ally savings account or money market account. If a mailed check was the only option, that would be a major issue. I was also told that to close a CD account you would have to call and speak to a CSR. They cannot close any account by secure messaging. They used to allow you to close CD accounts via their secure message system. I'm not sure why they changed this, but since their customer service is available 24/7, it's only a minor inconvenience. After you give them instructions by phone, I would recommend checking up on them to confirm the CD has been closed properly.
For more details on Ally Bank, please refer to my May 15th Ally Bank post. I also have an update on the ABA issue. The CEO of GMAC Financial Services has responded to ABA's FDIC letter .
The 9 Month No-Penalty CD can be closed in 3 different ways. Check by mail, Federal Wire or internal transfer to your Ally Bank Money Market or Online Savings account. You will need to allow 24-72 hours to process the closure once the request has been made.
The only method not allowed is by ACH transfer.
The regular CDs can be closed in the above 3 ways, but you also have the ACH option that allows you to request an ACH transfer to an external checking or savings account. I don't consider the lack of the ACH transfer a big deal as long as they allow you to transfer the funds into your Ally savings account or money market account. If a mailed check was the only option, that would be a major issue. I was also told that to close a CD account you would have to call and speak to a CSR. They cannot close any account by secure messaging. They used to allow you to close CD accounts via their secure message system. I'm not sure why they changed this, but since their customer service is available 24/7, it's only a minor inconvenience. After you give them instructions by phone, I would recommend checking up on them to confirm the CD has been closed properly.
For more details on Ally Bank, please refer to my May 15th Ally Bank post. I also have an update on the ABA issue. The CEO of GMAC Financial Services has responded to ABA's FDIC letter .
The penalties are fair -- I don't know why they hide them.
"If you make a withdrawal from your Classic Certificate of Deposit before it matures, you will also be charged an early withdrawal fee. The fee is calculated based on the term and size of your certificate of deposit:
if the term is one year or less, the fee will equal 90 days worth of interest;
if the term is greater than one year, the feel will equal 180 days worth of interest.
This fee is calculated using the interest method detailed in your Deposit Agreement, and is first deducted from the interest and then — if necessary — the principal.
http://www.ally.com/help/faqs/classic-cd.html
If you factor in real inflation, you will note that 2.5% is highway robbery.
They have now added two lines to that page with the actual penalties. Good.
They said it would take 4-5 days (or can be earlier) for them to be closed but would be available in the MMA as soon as they are closed. A customer rep is supposed to call when the CDs have been closed and transfered.