About Ken Tumin

Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

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Update on Ally Bank's CD Deal and ACH Links


Ally Bank's 5-year CD remains one of the best deals in the nation. The 5-year rate has been going down slowly since I first posted on this deal in January when the yield was 3.15%. The APY is now 2.94% as of 7/2/2010. Ally isn't alone with rate cuts. There are now only a very few internet banks with 5-year yields of 3% or higher. If you want higher yields, you'll have to go with a credit union.

What makes this such a good deal is Ally's very mild early withdrawal penalty of only 60 days of interest. As you can see in my survey of early withdrawal penalties, 5-year CDs at most banks and credit unions have a penalty of 6 months of interest. A few institutions like EverBank and Melrose Credit Union have larger penalties.

With a 2.94% APY, here are the effective annualized yields if you did an early closure of Ally's 5-year CD at year 1, 2, 3 and 4:

  • 2.46% at 1 year
  • 2.70% at 2 years
  • 2.78% at 3 years
  • 2.82% at 4 years

As you can see, the rates for 1, 2 and 3 years are far better than 1-year, 2-year and 3-year CDs at any bank or credit union. A long-term CD with a small early withdrawal penalty protects you from two potential cases:

  1. Interest rates continue like the have been over the last year. For example, last year you could have opened a 1-year CD with a 2.60% APY. If you wanted to keep with a 1-year CD, the best you could do now is under 2% APY. If you opened a 5-year CD last year at Ally Bank, you would still be earning 3.50% APY.
  2. Interest rates start to rise. In this case the small early withdrawal penalty will be useful. You'll lose 60 days of interest, but if rates rise enough, a new CD with a much higher interest rate will quickly make up for this loss.

There have been concerns that Ally Bank could change the early withdrawal penalty during your existing CD. There should be no chance of this. This is based both on the account disclosure and based on the information from Ally's public relations director (see post).

I had a little problem finding Ally Bank's account disclosure this morning. The link that I had used before (and that's mentioned in Ally's FAQs) was broken. However, the CSR led me this one with a July 1, 2010 date:

  • Ally Bank account disclosure, effective 7/1/2010

Here's what it states about the early withdrawal penalty:

If you withdraw funds from your CD prior to the maturity date (except in the case of death or legal incapacity of any owner), you will be assessed a 60-day interest penalty except for the Ally No-Penalty CD

I recently opened another 5-year Ally CD, and I had a few problems. During the application, Ally's system wrongly informed me that I didn't have sufficient funds in my Ally savings account to fund the CD and that I needed to mail in the deposit. At first I was worried that I had entered too many zeros for the CD amount, but it turned out that I had correctly entered the amount. Ally did transfer correctly the funds from my Ally savings account into the CD. I checked with the CSR after the application, and she said others have reported a similar problem. It appears to be a glitch in their system.

Ally's Bank-to-Bank ACH Links

This glitch with the CD application doesn't appear to be the only problem with their online banking system. There's also a problem with the links for external ACH transfers. There continues to be a limit on the number of links a customer can add. I first reported on this last month when I was told that an unknown limit exists. Readers received information that Ally was working to fix an issue with adding the external accounts. Based on my online chat today, it appears they are still trying to fix this issue. Here's an excerpt from the online chat:

CSR: There is not supposed to be a limit for external accounts. However, since the latest update, there has been an issue with how many external accounts our customers can have.

CSR: We are working on the problem but have not received an expected fix date.

I'm glad to see this limitation should just be temporary.

Related Pages: Ally Bank, CD rates

Related Posts

  |     |   Comment #1
Not that it makes a great difference, but I was about to open a 5 yr CD yesterday, but figured that Ally would not changed on 2nd of the Month or yet WRONG...I guess the poor Fin. news was not yet factored in their rates. 

On the good side, I did opend another CD just 2 days ago... I calculate that on a 50K /5yr cd, I lost (by being lazy) about $105 per year.  FUDGE!


Happy 4th to all
  |     |   Comment #2
with nuts ?
  |     |   Comment #3
should double check your math on the annualied yields because they're much too high. e.g. a year is at most 2.95% / 12 * 9 or 2.21%. the value you listed requires an 18 month term.
  |     |   Comment #4
my bad on #3. I keep think it's 3 month rather than 2 month penalty.
  |     |   Comment #5
At this time I have given up on CDs and rely totally on RCA or Alliant as long as they last,

After all a CD also mature some time and is no less a gamble.
  |     |   Comment #6
I opened a CD for my elderly husband who does not like to open accounts on line.  Upon maturity I thought I would be able to close it for him.  However Ally made it extremely difficult in that when I prompted him with the passwords etc. they told me he had to quote these without my help.  He then inadvertently transposed the numbers in his SS number and that really threw them for a loop.  They told us to call back and start all over again.  It was an extremely frustrating experience and I would not go within a mile of Ally again.  Their interests rates are not worth a tinker's cuss either.  They would make it much easier if they would let you close a CD on line.
  |     |   Comment #7
 Not sure what #1 is talking about. The 5 year rate hardly moved at all from 6/30 till today.   .01%


sweet molly malone
  |     |   Comment #9
come on georgia you can do better in bank failures that florida
  |     |   Comment #10
maybe lower rates won't seem so bad after this.


Twenty New Taxes Coming In 6 Months To Make Life.. Hell

- The 10% bracket rises to an expanded 15%
- The 25% bracket rises to 28%
- The 28% bracket rises to 31%
- The 33% bracket rises to 36%
- The 35% bracket rises to 39.6%

Higher taxes on marriage and family.  The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of income.  The child tax credit will be cut in half from $1000 to $500 per child.  The standard deduction will no longer be doubled for married couples relative to the single level.  The dependent care and adoption tax credits will be cut.

The return of the Death Tax.  This year, there is no death tax.  For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million.  A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.

Higher tax rates on savers and investors.  The capital gains tax will rise from 15 percent this year to 20 percent in 2011.  The dividends tax will rise from 15 percent this year to 39.6 percent in 2011.  These rates will rise another 3.8 percent in 2013.

  |     |   Comment #11
In response to Anymos' post:

It's gotten so that the lawmakers in D.C. continue to beat the dead horse (i.e. the middle class). Our income, such as it is, isn't keeping up with inflation! At tax filing time, we will now be unable to get back barely anything in tax credits....of course, this is a reason yet again to make it that much more difficult to save using CDs for whatever reason.

This is why so many of the rich and the corporations keep their profit earnings in accounts overseas in the Cayman Islands and Bermuda....for starters. There's probably less going on in Switzerland since  they had their feet held to the fire regarding fraudulent issues.

So who gets to pick up the tab? WE do, yet again. I am not one to give in to hystrionics, but for the love of "Mike" go after those who are truly ripping off the system. Or perhaps, they're too difficult to go after, needing to take up more man hours, so they go after the little people who have a lot to lose.....like the shirt off their backs!

Crikey, already!!  :-(
  |     |   Comment #13
In regards to Anymous comment regarding the estate or "Death Tax"

The "Death Tax" is in reality 100%, it always has and will always be 100% As the old saying goes, "You can't take it with you." So unless you plan on being buried with your millions, the discussion revolves around taxes on your Estate and it's stepped up value


Nationwide, only about 80 small farms and businesses owed estate taxes last year, according to the Tax Policy Center in Washington. The first $3.5 million of an estate's value was untaxed. Family farms got an additional $1 million exemption.


In reality, despite the largest deficits ever, our Do-Nothing Congress allowed the Estate Tax to lapse this year.
  |     |   Comment #14
How did you calculate the 60 day penalty on order to determine the APY for closing after 1,2,3,4 years? Did you take the first 60 days of interest starting when the CD was first opened or the last 60 days prior to the withdrawal or the average over the period? That makes quite a difference in APY especially toward the longer terms.


Thank You
  |     |   Comment #15
The "DEATH TAX" show not bother anyone like the person said, "you can't take it with you." UNLESS you do not want to give 55% of what you earned and paid taxes on to the government just because you died and create a burden on the people that you leave your estate to.  What did the government do to earn this additional tax?  Nothing.  It just hurts the middle income who did not protect their "nest egg".  

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