Ally Bank's New 2-Year Bump-Up CD - How It Compares to Other Flex CDs?
Ally Bank has just given its 2-year CD a bump-up feature. Here's how it's explained at Ally Bank's CD page
And as a special feature of our 2 Year CD, you’ll have the flexibility to raise your rate once if you see we have a better rate during the term of that CD.
Ally's 2-year CD yield is currently 2.15% APY so this compares favorably with the competition. You can still get a little higher rate on a regular 2-year CD at Hudson City Savings Bank (2.30% APY as of 1/28/2010).
Is the bump-up feature worth a lower interest rate? It could be if Ally Bank continues to keep this 2-year CD competitive in the future. In that case, it'll provide some protection against rising interest rates.
You already have some protection against rising rates with Ally's very lenient early withdrawal penalty (only 60 days of interest). I reviewed this feature in this recent post.
Ally's other flexible CD, its 9-month no-penalty CD, has lost its appeal in the last few months due to its low rates. It's currently only paying 1.24% APY.
Other Flex Certificates of Deposit
Ally Bank isn't the only ones offering flexible CDs. Northwest FCU offers a 2-year add-on CD that pays 2.17% APY as of 1/28/2010. Minimum deposit is only $500, and it allows unlimited additional deposits. This is a useful CD to hedge against rates staying low (see review).
Wilshire State Bank also offers a Flex CD. It's a one-year CD that allows both penalty-free early withdrawal and additional deposits (see review). Unfortunately, the rate has recently been cut from 1.75% to 1.40% APY.