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:
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.