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Ally Bank CD loyalty bonus
Old 07-22-2015, 04:43 PM   #1
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Ally Bank CD loyalty bonus

I had a five year CD at Ally Bank which matured this week. Since their new rates are not as competitive as other banks, I called them to instruct them not to renew my CD. The woman on the phone informed me that I'm entitled to a "loyalty bonus" if I agree to renew my CD. Their current rate on a 5 year CD is only 2%, and other banks are offering 2.31%, so no reason to renew there, but I asked the woman what the loyalty bonus would be if I stayed.

She responded, it would be .005%. As in, instead of 2%, I would get 2.005%. So if I had $100K invested at 2%, I would get $2,000 per year. At 2.005%, I would get $2,005 if I'm doing the math correctly?

I responded, is that a joke? I didn't know banks even worked with decimals so small! She didn't know how to respond to my rhetorical questions, so she just said "no" and politely finished up the call.

I don't know why this bugged me so much, but what is the point in referring to .005% as a loyalty bonus? I just found it downright insulting. Am I being out of line here?
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Old 07-22-2015, 05:14 PM   #2
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Not out of line, I would have laughed at it too.
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Old 07-22-2015, 05:15 PM   #3
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That is quite rediculous. BTW, may I ask where are you getting 2.31% on a 5 yr CD?
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Old 07-22-2015, 05:28 PM   #4
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Originally Posted by freedomatlast View Post
That is quite rediculous. BTW, may I ask where are you getting 2.31% on a 5 yr CD?
If you go to bankrate.com you can search for best 5 yr CD rates. It is showing that:
- E-Loan and Everbank have 2.31%
- Synchrony Bank and Capital One 360 have 2.25%
I am not sure of any other 2.31% - anyone else know any others?
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Old 07-22-2015, 07:00 PM   #5
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Originally Posted by Earl E Retyre View Post
If you go to bankrate.com you can search for best 5 yr CD rates. It is showing that:
- E-Loan and Everbank have 2.31%
- Synchrony Bank and Capital One 360 have 2.25%
I am not sure of any other 2.31% - anyone else know any others?
Correct - that is where I look when I'm in the market for CDs. I've been going with Barclays, because their 5 year CD only has a 6 month early withdrawal penalty. So if interest rates ever go up, it's relatively painless to exit out and reinvest at the higher rates.
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Old 07-22-2015, 07:08 PM   #6
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Some CDs at Ally are "raise your rate" products that allow present CD customers to call and get the new higher rate if Ally offers a higher rate on te same term int he future. So, I was pretty sure their CD rates would stay low some of their products (mostly 2 and 4 year CDs.)
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The woman on the phone informed me that I'm entitled to a "loyalty bonus" if I agree to renew my CD. . . . She responded, it would be .005%. As in, instead of 2%, I would get 2.005%.
Dang, maybe ask her if you could instead have one of the toasters that banks used to give their customers.
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Old 07-22-2015, 07:17 PM   #7
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I think the "bonus" premium is good on most if not all their CD products. Personally, the 2 year with raise your rate option is all the further duration I am interested in.


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Old 07-22-2015, 08:06 PM   #8
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My bank had a tiered savings rate for a while. If I put enough in to get the next tier the rate went up from 0.01% to 0.02% annually. That's from one hundredth of a percent to 2 hundredths of a percent. The tellers must have had a sales contest so I got a pitch to put more money in there and I was so surprised at the ridiculous bonus that I laughed. Sorry, teller, just trying to do your job.

I went to a drugstore once that had candy bars, normally 3 for a dollar, on sale for only 33 cents each. They had lots of BIG signs for the BIG candy sale. I asked if there were other items on sale. Nope, just these. But they did say sales were up quite a bit.
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Old 07-23-2015, 06:33 AM   #9
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I was offered a 0.05% Ally Bank bonus, similar to this person and this person. That would have been an extra $50 per year on $100k. I ultimately went with a secondary market brokered CD with 4 years remaining on the term.
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Old 07-23-2015, 07:07 AM   #10
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The three month Treasury was sold at 99.996208, which means you earn 37.92 cents on $10,000 for three months, wow, don't spend it all in one place.
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Old 07-23-2015, 07:30 AM   #11
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I'm going to throw this out there as a possibility seeing that Ally's offer on the face of it seems so ridiculous. The mathematical expression of two percent is .02, or in other words a $10,000 CD earning two percent annually earns $10,000 x.02 = $200.00. So increasing that percentage rate according Ally's offer would be the current .02 + .005 for a total of .025, which we can all agree equals two and a half percent and in actuality beats the competing 2.31%. Did anyone ask the bank that question? I mean I could be wrong but it would explain why the loyalty bonus would actually make sense and entice current customers to remain loyal. Could the customer service rep have misrepresented the offer?
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Old 07-23-2015, 07:40 AM   #12
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I was offered a 0.05% Ally Bank bonus, similar to this person and this person. That would have been an extra $50 per year on $100k. I ultimately went with a secondary market brokered CD with 4 years remaining on the term.
.05 times $100,000 is actually $5,000. If you mean you were offered .005%, like the OP, then that equals $500.00, not $50.00.
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Old 07-23-2015, 07:41 AM   #13
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I'm going to throw this out there as a possibility seeing that Ally's offer on the face of it seems so ridiculous. The mathematical expression of two percent is .02, or in other words a $10,000 CD earning two percent annually earns $10,000 x.02 = $200.00. So increasing that percentage rate according Ally's offer would be the current .02 + .005 for a total of .025, which we can all agree equals two and a half percent and in actuality beats the competing 2.31%. Did anyone ask the bank that question? I mean I could be wrong but it would explain why the loyalty bonus would actually make sense and entice current customers to remain loyal. Could the customer service rep have misrepresented the offer?

I remember a old phone call online of a guy talking with a company trying to get them to understand the difference between .02 dollars and .02 cents. Multiple escalations and they just didn't get it.


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Old 07-23-2015, 07:42 AM   #14
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Remember most people (non-ER.org members) can't do "higher math" in their head. If they are told they are getting a bonus they may jump on it..

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Old 07-23-2015, 07:48 AM   #15
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Remember most people (non-ER.org members) can't do "higher math" in their head. If they are told they are getting a bonus they may jump on it.. -gauss
I understand but is .005 x $100,000, not $500.00 rather than $50.00?
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Old 07-23-2015, 08:01 AM   #16
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Ready is right. (Sorry to imply otherwise ready). I checked the Ally webpage for its loyalty bonus program. Their bonus is .05 which when converted to its proper mathematical expression equals .005. There are articles on Ally's loyalty program and its changes. Pre 2014 their bonus used to be .25, or a quarter of a percent, a relatively meaningful bonus in this low interest world. In 2014 that bonus was changed to .15. In 2015 that bonus was lowered again to .05. As gauss suggested they may be hoping that old customers won't compute the actual dollars and assume that the old loyalty program is still competitive. Or not. Internet articles express the point that Ally's previous generous program has been gutted.
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Old 07-23-2015, 08:54 AM   #17
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Ready is right. (Sorry to imply otherwise ready). I checked the Ally webpage for its loyalty bonus program. Their bonus is .05 which when converted to its proper mathematical expression equals .005.
Umm, 0.05% = 0.0005, not 0.005.

0.005 is 0.5%.
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Old 07-23-2015, 09:12 AM   #18
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".005% as a loyalty bonus? I just found it downright insulting"

I would also
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Old 07-23-2015, 09:57 AM   #19
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Thanks for following up Golden.

Agreed that 0.5% bonus would have been worth something more than the insult which is .005%
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Old 07-23-2015, 10:33 AM   #20
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Many big corporations seem to offer their best bonuses to new customers and not the loyal old customers. Recently, I have seen cable and satellite offers for new customers that are far better than the deals offered to existing customers. My credit card company will give tens of thousands of points to new customers while waving a year's fee, but nothing extra to me as a long time customer.

Does anybody at the top ever ask "What is the lesson we are teaching our customers?"
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