Ally Bank announced in a press release yesterday that it’s the "first bank to complete implementation of The Pew Charitable Trusts' clear and concise disclosure format for key fees, terms and conditions across its entire portfolio of deposit products." Last month Ally Bank first announced it had released these simple disclosures for its checking, savings and money market accounts. It said that it was still working on the simple disclosures for CDs and IRAs, and Ally expected to have them ready by the first quarter of 2014. It’s nice to see Ally was able to release these early in the quarter.
Here’s a link to Ally Bank’s "Straight Talk Product Guide" for its standard CDs (what they call High Yield CD). It has a few useful details. These include:
- trust availability (can be opened at Ally for a revocable or irrevocable Trust)
- how account can be funded
- early withdrawal penalties
- information on partial withdrawals (not allowed at Ally)
- Wire transfer fee
Here’s a link to the Straight Talk Product Guide for IRA High Yield CDs. Two important differences with the standard CDs are that Ally doesn’t allow for trust accounts in IRAs and a penalty-free partial early withdrawal is allowed for the amount up to the IRA Required Minimum Distribution (RMD).
Here are links to all of the Straight Talk Product Guides. These links were in Ally’s press releases. I can’t find these links on Ally’s website. Hopefully, that will change soon. Update: With help from Ally, I was able to find these guides. Links to these guides are located in the "fees" tab for each product page. The link is under the fees table.
- Interest Checking Account
- Online Savings Account
- Money Market Account
- High Yield Certificate of Deposit
- IRA High Yield Certificate of Deposit
- No Penalty CD
- Raise Your Rate Certificate of Deposit
- IRA Raise Your Rate Certificate of Deposit
In my opinion, the CD guides should have included a few more details.
One important detail overlooked is how the CD funds can be withdrawn. It should be similar to the section on how an account can be funded. There are many banks that don’t want to make it easy and clear how customers can withdraw their money. Savers don’t want banks that make it difficult to withdraw money from CDs. They don’t want to have to mail written closure instructions, and they want more options than just receiving a check in the mail or a wire transfer. I’m surprised Ally didn’t include this information since it does make it fairly easy to close a CD and transfer out the money.
Another important detail overlooked is a statement of what terms are fixed for the duration of the CD. It’s assumed that the CD rate and maturity date are fixed and won’t change. That should be stated in the disclosure. Callable CDs are common and that can shorten the maturity date. As we all know well, this is also a risk for the early withdrawal penalty. Should customers assume the EWP listed in this disclosure will remain in effect until their CD matures? The answer should be stated in the disclosure. There have been cases when institutions have increased the EWP on existing CDs.
Are there other important details missing in these simplified disclosures? Please give your opinion in the comments.
These simplified disclosures are a step in the right direction in my opinion. I hope Ally will continue to improve them to include all the essential details that savers care about.