CD Rates Summary November 19, 2019
Federal Reserve, the Economy and CD Rate Forecast - Nov 19, 2019
Banking 101: Why You Need an Emergency Fund and How to Build It
Banking 101: Understanding the Different Types of Savings Accounts
Update on Ally Bank: CD Policies and New Commercials
I finally saw the new Ally Bank commercials last night while watching 60 Minutes. These came out just over a week ago and continue to feature kids having to deal with the "unfair" bankers. It's a good ad campaign in my opinion.
Closing an Ally CD?
I hope Ally Bank lives up to their "a different kind of bank" claim. Readers have mentioned a few issues that have me a little worried. One reader sent me an exchange he had with Ally concerning instructions to close his Ally CD. He wanted Ally to close the CD at maturity and transfer the funds to his Ally savings account. Here is how the Ally CSR replied:
Thank you for contacting Ally Bank. I am sorry to hear that you have decided to close your account. Unfortunately for security reasons Ally Bank can no longer process account closures via this email function.
It should be noted that this isn't normal email. It's the message system that you access when you log into your account. So I'm not sure why the CSR claims there's a security issue. Here is what the CSR instructed him to do:
To close your account and provide closure instructions, please contact our customer care department at the number listed below or via our new online click to chat option. You may also send in a signed written request to close your account.
I wonder if there's another reason for not allowing closure instructions via the secure email. Making it harder to close a CD increases the chance the customer will let the CD automatically renew. Also, if the customer has to call or use the online chat, the CSR may be able to convince the customer to renew the CD instead of closing it.
I should note that I asked about this in an online chat with an Ally CSR. My CD was not near maturity, but I was asking as if I was about to open a CD. In my question about closing a CD via the secure message system, the CSR replied "depending on the request, usually." So it appears "your miles may vary" on this issue.
Loyalty Bonus for CD Renewals?
Note, if you do have an Ally CD that matures, it may be to your advantage to speak with an Ally CSR. There are still reports that CSRs can give you a loyalty renewal bonus. However, reports are that this bonus amount is now only 0.25% above the posted rates. It had been 0.50%. On the plus side, Ally is still allowing customers to change terms and add money to the account. It should be noted that not all customers are receiving the loyalty bonus, so "your miles may vary."
Ally's 5-Year CD Is Still a Good Deal
This issue of not accepting closure instructions via their secure message system is a little worrisome, but it's not stopping me from opening Ally's 5-year CDs. I was able to open a small CD last night in about 3 minutes. It was very easy, and I just used the money in my Ally savings account to fund it. The rate is not the best, but it does have the best early withdrawal penalty that I've seen (only 60 days of interest). As I described in my Ally CD review, this is a huge advantage when there's a risk of much higher interest rates in a couple of years.
CD Early Withdrawal Penalty?
Some readers have reported being told by Ally CSRs that Ally could increase the penalty on existing CDs or refuse an early withdrawal request. I was told this was not the case in my contact with an Ally CSR. When I asked in an online chat if Ally could increase the penalty on existing CDs, the CSR replied:
No, our policy is 60 days of interest.
When I asked about their right to refuse an early withdrawal request, the CSR responded:
Once the account is funded, and the funds are available, if you choose to close the account before maturity, the only penalty is the 60 days of interest.
Also, I can't find anything in Ally's account disclosure that would lead me to believe what I was told by the CSR is not correct. If you find something in the disclosure that could allow Ally to refuse an early withdrawal request or make changes to the penalty on existing CDs, please leave a comment.
If Ally did refuse an early withdrawal or increase the penalty on existing CDs, this would clearly put them on the side of the "unfair bankers" that are mocked by their commercials. In my opinion, I don't think Ally Bank will do this. So I'm taking my chances with some of my money.
We reserve the right to limit access to your accounts and/or close your accounts without prior notice
to you. We do not bear liability for such actions
>> As I described in my Ally CD review, this is a huge advantage
>> when there's a risk of much higher interest rates in a couple of years.
Risk? ... Hmm ... I'd call it an opportunity, rather than risk!
.
Furthermore, I would think if they raised the penalty for early withdrawl from 60 days to 6 months they should allow you to withdrawl without any penalty because they changed the terms of service. But I have nothing to base this on.
>>Risk? ... Hmm ... I'd call it an opportunity, rather than risk!
I liked doing all of this on chat because I printed out the conversation and now I have written proof of what was told to me. If their CSR made a mistake, I hope that Ally would honor what I was told. They have been a very good bank to work with.
I personally still think ALLY is a great bank.
It is funny/sad for me to think back 19 months ago. I was afraid to tie up my money in a 19 month CD at 5% (not with Ally). At the time I wanted a shorter term and reluctantly did the 19 months. Now as my CD is set to expire I hate to see it go :-(
I was also told that the penalty could change any time during the term, but that I'd receive written notification in advance and have the opportunity to close the account with the 60 day penalty. That part is ok with me, especially since I expect rates to rise over the next 5 years and I may need to break the CD at some point anyway.
Also maybe they are only extending the Loyalty Bonus to people with big/small accounts or big/small cd values?
Judging by BankingGuy's initial post in this thread, they *still* seem to have odd process problems with CD closure -- months later.
FYI, I also asked if they would match Discover Bank's 1.49% money market rate (http://www.discoverbank.com/money-market.html) on deposits over $100K (Ally's rates are not tiered but is 1.39% flat today) but they would not.
1. Redeemed one CD outright.
2. Renewed 10, pulling out the interest, for the 5 year term with the 0.5% loyalty bonus.
3. Took one large CD, split it into five 5-year CDs without the loyalty bonus plus took the remainder from the large CD, added the interest from the other CDs, and opened a 6th 5-year CD for the same term as the other five. I split the large CD into smaller CDs in case I need to break any of them for some reason, thus I wasn't too concerned about not getting the renewal bonus.
I have a few more CDs that mature this week and will call Ally today or tomorrow to renew them for the 5-year term with the 0.5% loyalty bonus.
When it gets closer, I'll have to see if I can get the 0.5%.
Where's my pony??
On the date of maturity, I called them back but only after checking online first. I've learned that Ally does their processing between the hours of 11 - 1 AM Eastern Time. When I went online, I learned that someone had moved all the money out of the CD and put it into the Savings acct....like I told them NOT to do.
I immediately called them and asked them to pull the records up of my last phone call, and they verified my instructions. Realizing the mistake was on their end, I asked if the money could be put back in the CD, which had a much higher interest rate than the Savings, but the CSR said no. After being on hold, she checked with the Banking Operations Manager, and because the error was on their end, they credited me the amount of interest I would have received if the money were in the CD until the time I closed the CD in good faith.
I really like Ally and this was my first negative experience, but they tried to remedy the situation. I continue to do my banking there and enjoy the ability to call them 24/7 and use the chat as well.
Not only does Ally falsely claim advantage for incoming ACH deposits, but Ally's ACH service for withdrawals is actually inferior to many better banks. Although Ally will debit your Ally account immediately, they do not process the transfer to the external account that night. They keep the account holders funds for a day or 2 for their own use and pay no interest on it. Better banks also debit you account immediately but process the ACH that night and the funds are in your external account the next morning.
I finally called again and spoke to a supervisor. She also confirmed that new terms and conditions would apply if they were to change them. She said she will let at least one of the CSRs who told me otherwise that they are giving out wrong information (they were both in the same call center).
So, as far as I am concerned, unlike the CD rates, the early-withdrawal-penalty is NOT guaranteed.