bank rates

Ally Bank Introduces New Balance Tiers For CD Rates–And, So Far, It’s No Big Deal

In early November, Ally Bank revamped its website to establish tiers that could reward savers with higher rates when they deposited more money.

The bigger the balance, the higher the yield – or at least that was the theory.

But Ally didn’t put those tiers to use until yesterday, when it finally posted a range of returns for some of its certificates of deposit.

While all of the new rates are higher than the single rate they replaced, the increase isn’t much, and the bonus for big investors is less than spectacular.

Under the new tiered-rate structure, Ally provides for the posting of separate returns based on three balances:

  • Less than $5,000.
  • $5,000 to $24,999.99.
  • $25,000 or more.

For variable-rate products – savings and money market accounts – applicable rates are determined by end-of-day balances in the account.

For CDs, rates are determined by the opening deposit (or, if a renewal CD, by the balance at the time of renewal) and the rate for the term and balance tier.

This rate structure applies to both regular and IRA accounts.

After adopting the new balance tier structure, Ally initially posted the same rate for individual account products at each balance level.

And those rates were the same as Ally’s previously posted rates for the products.

Yesterday, it began posting different rates for different balance tiers for 3-, 6-, 9-, 18- and 36-month CDs. The higher the balance level, the higher the rate.

It’s not clear why Ally bothered to do this for 3-, 6- and 9-month CD rates, which, even with a $25,000 balance, pay far less than the 1% APY on its savings account.

For 18-month CDs, Ally is now posting an APY of 1.20% for opening deposits below $5,000, 1.25% for opening deposits between $5,000 and $24,999.99 and 1.30% for opening deposits of $25,000 or more.

Previously, the 18-month CD rate had been 1.19% APY for all balance levels.

For 3-year CDs, Ally is currently posting an APY of 1.50% for opening deposits under $5,000, 1.52% for opening deposits between $5,000 and $24,499.99 and 1.55% for opening deposits of $25,000 or more.

The prior 3-year CD rate had been 1.50% for all balance levels.

Ally has so far not applied tiered pricing to savings and money market accounts, No Penalty CDs, or Raise Your Rate CDs (although it did increase the single rate on 2-year CDs from 1.29% APY to 1.30% APY yesterday).

Unfortunately, even with its introduction of tiered rates, Ally’s posted yields still lag those of a great many of its competitors. None of its CDs rates, for example, qualify for inclusion on our CD Rates Leaderboard.

Hopefully, the online bank will make better – and more meaningful – use of its new rate structure in the future.

But it has to make the effort.

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