bank rates

How I Won Good CD Rates At Ally Bank — And So Can You

Last month, I had four CDs mature at Ally Bank.

Its loyalty reward and “10-day best rate guarantee” led me to keep my money there – and even add to it.

For some time now, Ally has offered customers a bump-up (currently 0.25%) to posted rates for renewing their maturing CDs.

Ally adds the quarter percentage point to the highest posted rate for the new term selected during the 10-day grace period following maturity.

Thus, if you renew a maturing 2-year CD into a 3-year term, and Ally’s highest posted rate for 3-year CDs during your grace period is 1.29% APY, your rate will be 1.54% APY.

This loyalty reward normally produces rates exceeding those for comparable maturities shown on our CD Rates Leaderboard.

Ally also permits CD customers to add or withdraw funds during the grace period and get the bumped-up rate on the resulting balance.

Ally CSRs assured me (by phone and email) that the rate guarantee gives customers the full 10 days to decide what to do.

Thus, if the posted 3-year rate on the maturity date is 1.29% APY, and it thereafter drops to 1.25% APY and remains there, a customer can still call Ally on the 10th day, select a 3-year CD and get 1.54%, not 1.50%, APY.

Moreover, the customer can increase or decrease the balance at any time through the 10th day.

Adding funds can be tricky, and I suggest contacting Ally beforehand about the specifics of what you’re planning.

For example, after Ally lowered its posted 5-year APY from 1.69% to 1.66%, I added funds to a CD assured of having at least the 1.69% as its highest grace period rate by closing, and transferred the balance of a later-maturing CD, then assured of only the 1.66%.

I also added to the balance by transferring available funds from my Ally checking account.

I couldn’t, however, establish a “ladder” by splitting the CD into multiple CDs.

That’s because the 0.25% bonus only applies to the maturing account, not to any new accounts required to complete a ladder.

Since Ally began the loyalty reward program, it has regularly extended its expiration date. It’s now Dec. 31, 2012.

I’ll probably keep renewing Ally CDs as long as the loyalty reward and rate guarantee remain in effect.

I like these programs – and the rates they produce.

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Comments (1)
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One Existing Comment
  1. Charles Rechlin said:
    on November 1st at 08:11 am

    I may like Ally’s rates, but I don’t appreciate the way it adopted, without prior notice, a Sept. 27 amendment to its deposit agreement.

    The amendment, while retaining the bank’s long-standing 60-days’ interest penalty for early CD withdrawals, in effect says Ally reserves the right to veto such withdrawals.

    I was totally blindsided, learning of the change only after the grace periods on two of my maturing CDs had expired and I’d renewed them for 5-year terms, at 1.94% APY.

    Another CD was still in its grace period and could have been closed without penalty. Nevertheless, I decided to renew it for five years as well, also at 1.94% APY.

    Faced with deposit contracts allowing institutions to change terms and conditions after-the-fact, I’m no longer giving any credence to early withdrawal rights in establishing (or not establishing) CDs.

    They simply can’t be relied on.