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Ally Bank Increases Rates on Savings Account and Two CDs

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Ally Bank increased the rate of its Online Savings Account today by 5 basis points to 0.95%. Ally Bank also raised the rates of two of its CDs by 5 basis points. Its 1-year CD rate increased to 1.05% APY, and its 2-year Raise Your Rate CD rate increased to 1.25% APY. The same rate increases also took effect on the IRA versions of the savings account and CDs. Thanks to DA members Larkin and OldGuy for posting on this news in the DA forum.

Ally’s savings account rate is inching toward 1%. Hopefully, Ally will be in the 1% club before too long. The 1% club has been growing, and perhaps that competition spurred Ally Bank to make this change. The last savings account rate hike at Ally was in September when the rate increased from 0.87% to 0.90%. I have more of the rate history of this account in my September Ally Bank post.

Unfortunately, Ally’s money market account rate remained the same at 0.85%. For quite awhile Ally’s savings and money market rates were the same. That changed when Ally increased its savings account rate from 0.85% to 0.87% last January. It does make sense that the savings account would have a higher rate. Unlike the savings account, the money market account has limited checking writing privileges with free checks. That has some extra expenses for Ally.

Now that the savings account rate is 10 basis points above the money market rate, those who just have an Ally money market account may want to consider opening the savings account and moving most of the liquid money into that account.

Time To Raise the Rate of Your Raise Your Rate CD?

Like the new savings account rate, the new 1-year and 2-year CDs aren’t rate leaders. There are several internet banks with higher rates. The 2-year CD is a Raise Your Rate CD. That does offer the customer the opportunity to bump up the rate once during the term. Those who already have this 2-year Raise Your Rate CD should consider increasing the rate to 1.25% APY. The rate of this CD had been as low as 1.00% APY back in September of 2013. If you had opened that CD at that time with a $100,000 balance, you’ll earn almost $190 more by bumping up today to the new rate. Of course that eliminates the opportunity for a future bump-up if rates continue to increase. However, even if the rate does increase, there may not be enough time before maturity in which the higher rate offsets the reduced time. As you can see, the Raise Your Rate feature doesn’t offer a big benefit. If a saver was going to invest in a 2-year CD back in September 2013, that saver would have been better off with Salem Five Direct which was offering a conventional 2-year CD with a 1.25% APY.

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 4.4 billion (8.39%) to $56.8 billion. It has assets of more than $100 billion. Its strong deposit growth may be the primary reason we’re not seeing deposit products that are rate leaders. 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 1.37% (excellent) based on September 30, 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, savings account

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Comments
I HATE ALLY BANK
I HATE ALLY BANK (anonymous)   |     |   Comment #1
Ally is a bureaucratic nightmare!  I am trying to transfer my IRA out of Ally, have sent them proper authorization forms from my new bank but ALLY keep coming up with new obstacles every week and draging their feet with BS excuses! 

I HATE ALLY!!!!
Anonymous
Anonymous   |     |   Comment #2
Not certain.  But it sounds as if you might be attempting a custodian to custodian (C to C) transfer.  That is a "NO-NO" at any financial institution in my view.  In all the years I've had money in IRA investments, I've never done a C to C transfer;  and I never will.

That said, if I ever did try a C to C it surely would not be at any internet bank.  That's just inviting trouble.  The word "suicide" comes to mind for what I'd anticipate such an experience to be like.   
I HATE ALLY
I HATE ALLY (anonymous)   |     |   Comment #3
Exactly!  Ally Bank keeps coming up with new requirements that would require a local brick & mortar bank, but they are a non-local internet bank.

The experience is more like a slow Chinese water torture - drip, drip, drip!
It is neverending and ever so slow.

Ally CSRs are realyy clueless and lack basic knowledge of their policies and procedures.  They are often off-shore csrs who barely speak English.

Any tiny issue becomes insurmountable.  In the past, they have botched up simple wire transfers into Ally and similar simple banking procedures.

And now that their rates are so uncompetitive, there is no reason to keep my money at Ally and endure this ongoing hell! 
lou
lou   |     |   Comment #5
Are you aware of the new rules for IRA rollovers starting Jan 1, 2015?
Anonymous
Anonymous   |     |   Comment #6
Starting in 2015, only one IRA rollover allowed per year total.  No limit on IRA transfers per year though.  I have never had any problems with IRA transfers.  Have not had any experience with transfers with Ally though. 
Inforay
Inforay   |     |   Comment #4
I have noticed that the representatives are Ally are becoming less knowledgeable and they have a hard time understanding simple requests.  Last year, I wanted to have the accumulated interest on my CDs transferred to my online savings account at year end.  It was no problem and the representative knew exactly what I meant. This year, it was a different story.  I had to explain several times what I wanted to do.  Perhaps they are not training their representatives as well or have a considerable turnover.
Robert
Robert (anonymous)   |     |   Comment #7
That's twice now that Ally has increased their online savings account without increasing either their money market account or their no-penalty CD.  The online savings account is now better than the no-penalty CD, even if you include the 0.05% loyalty bonus (0.95 for the online savings versus 0.92 for the no-penalty CD).




Yes, I've also noticed the online "chat" representatives seem to be slower than they used to be.  Fortunately I only have had simple transactions (renew or close CD's)
gregk
gregk   |     |   Comment #11
Telephone and online representatives (even at the supervisory level) are a dice roll everywhere.  In regards to semi-important information my typical practice is to call up to a half-dozen times and see if any consensus exists among them (only rarely is there unanimity, - and the less a rep knows the more adamant they are about having no doubt).  Concerning anything truly crucial one must get it in writing, of course.

The most incompetent representatives in my experience?

Undoubtedly at the IRS, - which is somehow strangely comforting.
DCGuy
DCGuy (anonymous)   |     |   Comment #12
In the Fiscal year 2015 Congressional budget, the IRS got cut by over $400 million.  Expect less customer service.
gregk
gregk (anonymous)   |     |   Comment #13
With them less is more.
Anonymous
Anonymous   |     |   Comment #14
But unless your name is Al Sharpton, don't try not paying your federal income tax.
gregk
gregk (anonymous)   |     |   Comment #15
I'll admit to having incidentally mentioned the IRS here, - but of what relevance to Ally Bank's deposit rates are Al Sharpton's federal income taxes?