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Higher CD Rates at Ally Bank

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Ally Bank increased the rates on three of its CDs yesterday. The rate increases were small, and the new rates are not the best, but it’s always nice to see CD rate increases at one of the major internet banks. It’s a step in the right direction. We may see more CD rate hikes like this if it starts to look more likely that the Fed is planning to hike rates in 2015.

The largest rate increase was on the 2-year Raise Your Rate CD. The APY went up 9 basis points to 1.19%. The 1-year CD APY increased 5 basis points to 1.00% APY and the 18-month CD APY increased 4 basis points to 1.04% APY. Thanks to DA member cumulus for posting on these rate hikes in the forum.

By looking at the history of Ally’s CD rate changes, it appears we may finally be past the bottom. The 18-month and 2-year CD rates have been slowly going up over the last year. The 1-year CD doesn’t follow this trend. Its rates have been fluctuating for the last year. Below is the rate history over the last year for these three CDs. Since I had room, I also included the rate history of the 5-year CD even though it has been almost a year since we’ve seen a rate change in the 5-year CD. Ally’s 5-year CD rate has significantly lagged the 5-year CD rates at other internet banks for more than a year.

APYMINMAXINSTITUTIONPRODUCTDETAILS
1.75*%$25k-Ally BankHigh Yield 5 Year CD
1.35*%$25k-Ally BankHigh Yield 18-Month CD
Accounts mentioned in this post. Rates as of December 1, 2016.

2-Year Raise Your Rate CD History:

  • 1.19% APY 8/13/2014
  • 1.10% APY 12/13/2013
  • 1.05% APY 10/05/2013
  • 1.00% APY 9/09/2013

18-Month CD History:

  • 1.04% APY 8/13/2014
  • 1.00% APY 5/16/2014
  • 0.94% APY 2/18/2013

1-Year CD History:

  • 1.00% APY 8/13/2014
  • 0.95% APY 5/02/2014
  • 0.99% APY 1/10/2014
  • 0.95% APY 12/11/2013

5-Year CD History:

  • 1.60% APY 10/20/2013
  • 1.50% APY 6/10/2013
  • 1.51% APY 5/31/2013

If you currently have a 2-year Raise Your Rate CD, you may want to consider using your raise-your-rate option. Not only should you consider the amount of the rate increase, but also the remaining time before maturity.

One nice benefit that Ally Bank used to offer is a sizeable renewal rate bonus on CDs (loyalty rewards renewal bonus). However, the size of this bonus has gone down. Readers have reported that that this renewal bonus is only 0.05%. It had been 0.25% for quite awhile.

Even though Ally’s CD rates are not the best, they do have many nice features such as no minimum deposit requirements and below-average early withdrawal penalties. In addition, Ally does a good job at listing important fees, terms and conditions in its "Straight Talk Product Guide". I have more details on these guides in this post.

Bank Overview

Ally Bank continues to have strong growth. Over the last year its deposits have grown by over $5 billion (10%) to almost $56 billion. It has assets of almost $100 billion. Its strong deposit growth may be the primary reason we’re not seeing very competitive rates. There have been unofficial reports for the last several years that the FDIC has required Ally Bank to keep the rates on deposits low enough so the bank wasn't one of the nation's top five rate payers. Most of Ally Bank’s rates are below the top five so I don’t think this is an important reason for the lackluster rates.

Ally Bank continues to be financially strong with an overall health grade of an A+ with a Texas ratio of 1.50% (excellent) based on March 2014 data. Please refer to our financial overview of Ally Bank for more details. The bank has been a FDIC member since 2004 (FDIC Certificate # 57803).

Related Pages: Ally Bank, Salt Lake City, CD rates

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Comments
Alskar
Alskar   |     |   Comment #1
Call me cynical, but I think this 9 bps increase on a bump CD is just Ally's way of protecting themselves from future rate increases by suckering people into using their bump option now. 
CapitalClimate
CapitalClimate   |     |   Comment #2
The Raise Your Rate is not a good deal unless rates are rising substantially.  A 2-yr CD opened 2 years ago with a 1.40% rate (when the loyalty bonus was 0.25%) will be maturing in 2 months having never had an increase.
Robert
Robert (anonymous)   |     |   Comment #3
Ally told me that they re-evaluate the loyalty bonus every three months.  The 0.05% is for July through September.  I'll find out at the beginning of September (when I get a letter saying one of my CD's is maturing on October 1) what Ally's loyalty bonus will be for October through December.  I have a feeling they will leave it at 0.05%.