Ally Bank offers three CD accounts: the High Yield CD, the Raise Your Rate CD and the No Penalty CD. Each Ally Bank CD compounds interest daily which essentially means your interest earns interest. You also benefit from the Ally Ten Day Best Rate Guarantee. When you fund your new CD within 10 days after its open date, you’re guaranteed the most favorable rate for your term and balance tier if the rate changes during that time. This is also true when you renew a CD.
High Yield CD
When you open an Ally Bank High Yield CD, you’ll have access to seven term lengths. Your interest rate will depend on the account’s term length, with rates increasing as the terms do. Your exact rate will also depend on your initial deposit, since each term has three balance tiers. This means a higher balance can get you a higher rate.
|High Yield CD||APY: < $5,000 Minimum Deposit||APY: $5,000 Minimum Deposit||APY: $25,000 Minimum Deposit|
|3 Month||0.75%||0.75%||0.75%||Compare CDs|
|6 Month||1.00%||1.00%||1.00%||Compare CDs|
|9 Month||1.25%||1.25%||1.25%||Compare CDs|
|12 Month||2.10%||2.25%||2.40%||Compare CDs|
|18 Month||2.15%||2.35%||2.50%||Compare CDs|
|3 Year||2.50%||2.55%||2.55%||Compare CDs|
|5 Year||2.75%||2.90%||3.00%||Compare CDs|
Raise Your Rate CD
The Ally Raise Your Rate CD comes as either a two-year or four-year term. Both accounts have the same APY. There are no balance tiers here, so a higher deposit won’t earn you a higher rate. This means that both accounts will have earned the same amount of interest on the same size deposit after two years.
However, as the name suggests, you are able to raise your account’s interest rate over the course of its term. When interest rates go up, Ally will let you know with a message at the top of your Account Details page and/or with custom alerts. All you need to do is request a rate increase through your account, online chat or by calling the bank.
|Raise Your Rate CD||Minimum Deposit||APY|
|2 Year||$0||2.50%||Compare CDs|
|4 Year||$0||2.50%||Compare CDs|
No Penalty CD
The No Penalty CD comes only as an 11-month term. This CD earns according to three balance tiers. Again, that means higher balances can earn you more favorable interest rates. This CD account offers more flexibility when it comes to accessing your funds because there is no penalty charge for withdrawing your money early. It allows you to withdraw your full balance and interest at any time after the first six days you have the account.
|No Penalty CD||APY: < $5,000 Minimum Deposit||APY: $5,000 Minimum Deposit||APY: $25,000 Minimum Deposit|
|11 Month||1.50%||1.90%||2.00%||Compare CDs|
Overview of Ally Bank CDs
Ally not only offers a wide variety of bank accounts, but a variety of certificate of deposit options as well. Having a number of choices allows you to save toward any savings goals, from college tuition to an emergency fund. You can choose from the bank’s High Yield CDs, Raise Your Rate CDs or No Penalty CD. You can access these accounts (and all other Ally Bank accounts) at any time online, on mobile or over the phone.
No Ally CD accounts charge a monthly maintenance fee. You can face penalty fees for early withdrawals with the High Yield CDs and the Raise Your Rate CDs, however. If you want to make a withdrawal, you’ll have to wait for the account’s maturity date, following that there’s a 10-day grace period during which you can withdraw your money without incurring charges. Should you desperately need to make an early withdrawal, you’ll lose much of the interest the account earned. For terms lasting three, six, nine, 12 or 18 months or two years, you’ll lose 60 days of interest if you withdraw funds early. Three-year terms lose 90 days of interest, four-year terms lose 120 days of interest and for five or more years you’ll be penalized with the loss of 150 days of interest. Of course, the exception here is the 11-month No Penalty CD, which won’t penalize you for early withdrawals.
How Much You Earn With Ally Bank Certificate of Deposits Over Time
With some of the best rates out of the dozens of banks we’ve reviewed, Ally Bank CDs earn well across the board. The High Yield CDs and No Penalty CDs earn according to balance tiers, which means you stand to earn at a higher rate with a higher deposit.
Longer CD terms typically carry higher interest rates. For example, the longest term, 60-month CD earns at an APY of 2.75% while the shortest term of three months earns at 0.75% APY. However, there are other factors besides interest rates to consider. It’s important to open CDs according to your savings goals. If you have both short-term and long-term goals or need continuing income, it can help to ladder your CDs. This means opening up multiple CDs at a time, each with a different term length. That way, you can grow your money and then withdraw the funds at different times.
Ally Bank compounds interest daily, meaning the interest you earn then earns interest in turn. Essentially, the interest you earn today will earn interest tomorrow, that combined interest will earn more the next day and so on. Many other banks compound interest on their savings accounts monthly or quarterly, which slows your money’s growth from daily to every month or every three months.
The table below outlines what your earnings could look like according to specific accounts and interest rates. The amounts given would be your final balances, not how much extra interest you would earn. For accounts that earn on balance tiers, the lowest tier rate was used.
|Initial Deposit||3-Month CD||12-Month CD||60-Month CD||4-Year Raise Your Rate CD||11-Month No Penalty CD|
How Ally Bank CDs Rates Compare to Other Banks
Ally Bank offers some of the highest rates when it comes to savings accounts, including CDs. As you can see in the following table, its rates aren’t the very highest, although they compete with some big names in the financial world like Capital One and Marcus by Goldman Sachs.
What Ally offers that these competitors don’t is the ability to earn according to balance tiers on certain accounts. The rates you see below for Capital One and Marcus apply to all balances, while Ally offers more favorable rates to those with larger amounts of money.
Ally also compounds interest daily, as does Marcus.
|CD Account||Ally Bank||Capital One||Marcus by Goldman Sachs|
Should You Get an Ally Bank CD Account?
All signs point to an Ally Bank CD being an excellent account option. You can earn at some of the best CD interest rates in the industry with interest compounded daily. This means you get to boost your savings a little bit more than with a competitor. Plus, this is true no matter which CD you choose to open.
Ally Bank CDs can help you save toward both short-term and long-term savings goals with its variety of term lengths. Its three account types also give you differing savings opportunities. If you want to stick to the typical CD structure, you can open a High Yield CD (or two or three, etc). If you’re holding out hope for an interest rate raise, you can open a Raise Your Rate CD which gives you the opportunity to change your rates during your term. Or if you want to open a CD but you’re worried about early withdrawal penalties, you can choose a No Penalty CD so you can more freely make withdrawals.
Just remember that Ally Bank doesn’t have any physical branches you can visit to open or manage an account. You’ll have to be comfortable managing your money virtually to take advantage of Ally’s excellent rates.