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Ally Bank Announces New Rate Tiers - Will We See Higher Rates?


Ally Bank has notified customers by email and via its Straight Talk blog that it will be implementing new balance tiers on its savings accounts, money market accounts and CDs. The following balance tiers will take effect on November 7th, 2015:

Less than $5,000
$25,000 or more

Currently, only Ally’s Interest Checking account has a rate tier. All other accounts have rates that are not dependent on the balance. Each account has just one rate that’s the same for all balances.

The million-dollar question is if this will be good news for customers with large balances. For example, if your savings account balance is $5K, will you see a rate on November 7th that’s over 1% APY (1% APY is the current savings account rate for all balances). I have not been able to get confirmation of higher rates from Ally Bank. However, a DA reader commented that a CSR "said that although they don't have the new rates available yet, they are adding higher rates for higher balances, NOT lowering rates for lower balances." If that’s the case, this change will be good news for customers who have large balances.

I’m a little worried that rates for balances under $5K may eventually become disappointing. My opinion is based on Ally’s Interest Checking account which currently has a $15K balance tier. The current rate for balances under $15K is only 0.10%. The rate for balances of $15K+ is 0.60%. Compared to many other internet checking accounts, Ally’s bottom-tier rate is low.

We’ll have to wait for November 7th to see what the new rates look like, but don’t get too excited if only higher rates are introduced. If the bottom-tier rates remain the same as the current rates, that doesn’t mean they will stay competitive. If we finally see a rising rate environment, these bottom-tier rates may lag.

Even if the bottom-tier rates lag, that may help those with large balances. This change may allow Ally to be a rate leader for the $25K balance tier.

The change will be simple for the savings and money market accounts. However, it’s a little complicated for CDs. Ally Bank included the following chart in the email describing how this change will affect the different accounts:

Ally Bank’s New Rate Tiers Chart

It’s important to note that this change won’t affect any existing CDs except for the Raise Your Rate CDs. For those cases, the change can only help in that Raise Your Rate CD customers will have the opportunity to increase their rate if the rate Ally offers for the customer’s term and tier goes up.

Related Pages: Ally Bank
Previous Comments
  |     |   Comment #1
Higher rates? No. I don't like the sound of this and I know what's coming. I wont get ^%$# for lower balances. I really liked the accounts the way they were......no minimum and same interest rate. Of course.....like most idiotic corporations.....They feel the need to fix something that is not broken. If their rates go so low on small balances then I'm done. Bye Ally.
  |     |   Comment #17
An idiot corporation/bank do not make any attempt to attract higher deposit amounts.  A smart one will offer higher rates to encourage larger deposits which in turn boosts the banks ability to earn more.  I moved $1.5 million out earlier this year because there are better rates elsewhere.  I may consider moving back depending on how high they move the rates in November for high balances. 
  |     |   Comment #2
I have been with them since they were GMAC, and it sounds like they will pay much lower rates on amounts under 25K..25K will be reserved for 1% and all other get paid under 1%. The only way is to call them each and every person and let them know what we think. This bank was and is who they are because they had a niche of staright forward no games on deposits..now they seem to be going the way of all other banks, so much for the middle class, having any options... 
  |     |   Comment #5
Oooo, that's pretty much what I thought when I got the Ally notice in the mail. Ally is starting to play games.  And when that happens, chances are I won't win...
  |     |   Comment #3
we'll see what the new rates are in a month
  |     |   Comment #13
Exactly, but the sky is falling posts here are pretty amusing.
  |     |   Comment #4
I wonder if they will keep the CD renewal loyalty bonus? (only 0.05% APY bonus currently). 

If the rate tier for $5K+ and $25k+ are big enough, I can see myself combining my many smaller CD's into one larger CD. Likewise for combining my Ally savings accounts.
  |     |   Comment #16
Yes. I just got a renewal but taking the money out to replace savings used for 3% a nwfcu
  |     |   Comment #7
I've been an Ally customer for a decade, opened my GMAC savings account back in 2005.

I gave up on Ally after their horrible web site update earlier in the year.  I figured it was a harbinger of things to come.  Luckily all of my CD's have matured since then and I've closed down pretty much all my accounts.  At one point I had close to 30 accounts with Checking, Savings, IRA's and CD's, now I'm down to just 1 checking and 1 savings, with less then $10 between them.

We'll see what November 7th brings, but I doubt it will be very good for savers.
  |     |   Comment #9
Their website has improved. My only complaint now is I cant really edit transfers between Ally accounts. You can edit the amount but not the date. So you have to cancel & enter a new one if you want to change the date.
That bug doesnt extend to billpay.
I guess i should complain.
  |     |   Comment #14
As one who started with GMAC in 90s, and escaped from the demand notes before the Big R, think twice about this type of mindset!
  |     |   Comment #8
More than anything this just sets the stage for lower rates for lower balances. But they cant get much lower that their current checking rates.
Bigger doesnt mean better for customers. It just means they think we are "sticky".
I dont know what it costs them for me to have a checking account with an average balance of under $50.
Id be very surprised if this really means a new higher rate for large balances in the savings & money markets.
  |     |   Comment #10
It is a bad sign, discriminating against lower balances is a trick not to pay interest at all.
  |     |   Comment #11
One of Sam Walton's old sayings, "People Talk With Their Feet".  I think I may be walking to another bank that offers as good of rate for low balance amounts compared to the same rate that the higher tier bracket that Ally is fixing to introduce.
  |     |   Comment #15
I had 6 figures at ING way back when. Now I have 3 figures.  But the account is still open.
  |     |   Comment #18
The last statement in the article is incorrect: '...the change can only help in that Raise Your Rate CD customers will have the opportunity to increase their rate if the rate Ally offers for the customer’s term and tier goes up."  If the new tier rate is lower than the initial rate, it may never go up to the initial rate, thereby eliminating the benefit of being able to raise the rate.  I opened a 10K Raise Your Rate 2 YR CD at 1.29% just before this was announced.  That puts me in the 2nd Tier which may offer than 1.29% for new accounts and that means I may never see the opportunity to raise my rate effectively eliminating that benefit.   
  |     |   Comment #19
Here is the tier rate for Patelco
Guess we will wind up with something like this.

You earn… On your balance of:
$1 – $2,000  3.00% APY 
$2,000.01 – $5,000 2.00% APY 
$5,000.01 – $10,000  1.00% APY 
$10,000.01 – $50,000  0.50% APY 
$50,000.01 – $100,000  0.25% APY 
$100,000.01 – $9,999,999 0.20% APY  Each tier of your total balance adds up to a blended Annual Percentage Yield (APY). For example:
  • A $5,000 deposit will earn a blended APY of 2.40%
  • A $10,000 deposit will earn a blended APY of 1.70%
  • A $25,000 deposit will earn a blended APY of 0.98%
  |     |   Comment #20
Actually this is a money market
  |     |   Comment #21
I'm guessing the tiers will offer higher rates for larger deposits.  Patelco-like tiering makes sense for a credit union, which uses deposit accounts to develop customer relationships that can be made profitable with mortgage origination/servicing, credit cards, investments, etc.

Ally offers deposit accounts to generate funds to make car loans (at 2-3% for a short term loan).  Small accounts are expensive to service relative to the funds they provide--Ally probably loses money on them. I think Ally will try to stay competitive (maybe even market leading) for large deposits, and may be happy to shed some smaller customers.

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