bank rates

Loyalty Bump Gives Ally Top U.S. CD Rates

ally logoLast year, I expressed enthusiasm for Ally Bank’s loyalty reward and 10-day best rate guarantee policies for maturing CDs.

Having an Ally CD maturing this month, my views haven’t changed.

Ally has long offered customers a 0.25% bump-up over posted rates to renew CDs.

(This offer expires Dec. 31, but Ally has routinely extended expiration dates before.)

Moreover, it guarantees the renewal rate will be based on its highest rate posted on the term you select during the maturing CD’s 10-day grace period.

Say you have a 1-year CD maturing Day 1.

Say also that the Day 1 posted 3-year rate is 1.20% APY, that on Day 5 the rate peaks at 1.23% and that on Day 10 it’s back to 1.20%.

If, on Day 10, you tell Ally to renew your CD for three years, you’ll get 1.48% APY – the Day 5 posted rate plus 0.25%.

Furthermore, you can add or withdraw funds until Day 10 and get the bumped-up rate on the full resulting balance.

The 0.25% bonus, though, is only available for a single selected maturity. Laddering your CDs won’t work.

These policies have enabled Ally to compete to retain and augment funds while keeping posted CD rates below the top nationwide levels.

Thus, an Ally customer electing a 1-year renewal today would be entitled to 1.23% APY, 0.18% more than the highest 1-year rate on our CD Rates Leaderboard.

A renewal into a 2-year Raise Your Rate CD would fetch 1.30% APY, 0.10% above the Leaderboard’s top 2-year rate.

But what if you believe, as I do, that Janet Yellen’s upcoming enthronement as Fed chair, plus Wall Street’s addiction to cheap money, will likely produce low CD rates indefinitely, and therefore you’re looking for a longer renewal term?

Based on currently posted rates, a customer would get 1.45% APY on a 3-year renewal (the Leaderboard’s top rate is 1.50%) or 1.85% APY on a 5-year renewal (the Leaderboard’s top rate is 2.05%).

Yet Ally provides an alternative for customers willing to wait for a better offer – the 11-month No Penalty CD.

You can park your funds in this CD today, earn 1.12% APY (the 0.87% posted rate plus 0.25% – still higher than the Leaderboard’s 1-year rate!) and then close it in whole, without penalty, when a favorable deal appears elsewhere.

Of course, another alternative is simply to close your maturing CD and move to another institution.

This is what I’ll probably do, reinvesting most or all of my balance in longer-term CDs somewhere else.

Believe me, it isn’t an easy decision with all the options Ally offers.

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