Ally no-penalty 11 month CD now at 1.5%

[JohnnyBGoode]

I was just checking the ally.com site and it looks like their 11 month "no-penalty" CD is now paying 1.5% for deposits over $25,000.

And it looks like the only restriction to avoid an early withdrawal penalty is you have to wait at 6 days after you fund the CD before you can take your money (plus any interest earned) out.

Seems like a no brainer and a good alternative for money just sitting in a savings account (even the $1.05% high yield ally savings account).

Am I missing something?

 

[audreyh1]

Yep!

 

[marko]

Yep!

"Yep!" a no brainer or "Yep!" OP is missing something?

 

[aja8888]

I looked it over on Ally and see no issues. Looks like a good deal.

 

[jetpack]

Ok, thanks for pointing that out! I certainly have some savings cash I can move into that.

 

[CountingDown2014]

Thanks Johnny for the tip - I am on the phone now converting a bunch of Ally No Penalty CDs I have at a lower prior rate (1.25%).

 

[freedomatlast]

Thank you, JohnnyB! I just converted the entire balance of my 1.05% online savings account to the 1.5% 11 month, no penalty CD.

 

[audreyh1]

"Yep!" a no brainer or "Yep!" OP is missing something?

It was yep to the first three paragraphs.

Missed the last sentence.

 

[audreyh1]

Yeah, I've got some sitting there I can buy CDs with.

 

[GalaxyBoy]

I noticed that yesterday as well. I have some cash I just put into an Ally 1.05% savings account that will be moving to the CD, as well as my late father's estate money that has to sit for a year before it can be disbursed to the heirs.

Who would have ever believed a few decades ago that 1.5% would be considered an incredibly high rate?

 

[audreyh1]

An important note for Ally Bank CDs:

I've decided to only buy their no penalty CD. Why? Because their other CDs require permission front Ally Bank to withdraw funds early. They may have clear penalties established, but permission is also required. Their No Penalty CD is the only one without this constraint.

https://thefinancebuff.com/ally-ban...fore-allowing-early-withdrawal-from-a-cd.html

They are not the only bank, but it is uncommon.

 

[jetpack]

I guess the only downside is that you can't treat it like a savings account. If you want to withdraw, you have to take out the full balance. If you're putting in more than $25k, you may want to open multiple.

 

[kaneohe]

An important note for Ally Bank CDs:

I've decided to only buy their no penalty CD. Why? Because their other CDs require permission front Ally Bank to withdraw funds early. They may have clear penalties established, but permission is also required. Their No Penalty CD is the only one without this constraint.

https://thefinancebuff.com/ally-ban...fore-allowing-early-withdrawal-from-a-cd.html

They are not the only bank, but it is uncommon.

audrey........do you know that the "If we consent...." clause does not apply also to the no penalty CD? It is not clear to me reading the Deposit Agreement & Disclosures that the no penalty CD is any different. Surely they would get a lot of negative reaction if they did impose the "We must consent" clause and they obviously do not intend to if they don't have to but in some rare emergency situation, I could see them doing that .

Perhaps it is wise to have some liquid assets elsewhere just in case.

 

[Chuckanut]

Thanks. Another benefit of this site.

Several years ago I took advantage of another tip - 3% Penfed 5 year CD's.

A few more tips like these and I won't be able to spend my kid's inheritance in one place.

 

[audreyh1]

audrey........do you know that the "If we consent...." clause does not apply also to the no penalty CD? It is not clear to me reading the Deposit Agreement & Disclosures that the no penalty CD is any different. Surely they would get a lot of negative reaction if they did impose the "We must consent" clause and they obviously do not intend to if they don't have to but in some rare emergency situation, I could see them doing that .

Perhaps it is wise to have some liquid assets elsewhere just in case.

Yes. If you look at the agreement on the No Penalty CD, the clause explicitly excepts that particular CD.

OK - here is the language from recent no penalty CD (from the Ally Bank Deposit Agreement Effective January 7, 2017):

Certificate of Deposit (CD) — This account allows you to make your account-opening deposit by check, ACH transfer, transfer from another Ally deposit account or wire transfer. By opening a CD, you have contracted to keep the deposited funds on deposit until the maturity date of the CD. A partial withdrawal of principal before maturity is not permitted on any CD. While an actual certificate is not issued, you will receive a funding letter with all the pertinent information about the CD. Except for the Ally No Penalty CD, a withdrawal of the entire principal before maturity will be permitted only with Ally’s consent and an interest penalty that is described in More About Certificates of Deposit and IRA CDs, Section I.B.6, will apply.

 

[kaneohe]

Yes. If you look at the agreement on the No Penalty CD, the clause explicitly excepts that particular CD.

OK - here is the language from recent no penalty CD (from the Ally Bank Deposit Agreement Effective January 7, 2017):

Thanks....missed that part was looking at 1.B.6. I guess that's as close as it's gonna get. The language is a bit nebulous tho........they could have said:
For the no penalty CD, no Ally consent is needed to terminate the CD early.
Instead they say for other than no-penalty CDs, you need Ally consent and EWP will apply. This suggests that the no-penalty CD is treated differently....but that could mean either no EWP or no consent needed or both. Guess I'm being cynical ...........have no doubt they mean well but wonder what they will do in a crunch.

 

[audreyh1]

Thanks....missed that part was looking at 1.B.6. I guess that's as close as it's gonna get. The language is a bit nebulous tho........they could have said:
For the no penalty CD, no Ally consent is needed to terminate the CD early.
Instead they say for other than no-penalty CDs, you need Ally consent and EWP will apply. This suggests that the no-penalty CD is treated differently....but that could mean either no EWP or no consent needed or both. Guess I'm being cynical ...........have no doubt they mean well but wonder what they will do in a crunch.

I thought it was pretty clear that the No Penalty CD did not require Ally Bank approval for early withdrawal.

 

[kaneohe]

Often meaning is in the eyes/brain of the beholder,not in the weasel words of the discloser.

 

[audreyh1]

Often meaning is in the eyes/brain of the beholder,not in the weasel words of the discloser.

I really don't think they could get away with that. They do have to be somewhat customer responsive after all.

 

[calmloki]

Thanks! A nice 0.41% bump in interest for many of the dollars we have idling and waiting for the next hard money loan.

 

[Bikechuck]

I opened an Ally savings account about a year ago because it paid substantially more than what I could earn on cash stashed at my local brick and mortar bank.

After seeing this thread and another like it on Bogleheads I realized that I should convert most of the balance to these no penalty CDs. I purchased four of them rather than one big one which provides some flexibility for future withdrawals.

What surprised me was how easy this was to accomplish on their web site. I thought it might take me a half hour or more and instead I was done in 15 minutes or less. Everything was intuitive and easy and you could see that the funds had moved properly in virtual real time.

Good job Ally, you have a very satisfied customer! And while I'm at it thank you to the participants in this online community for making me aware of this opportunity.

 

[LARS]

Yes. If you look at the agreement on the No Penalty CD, the clause explicitly excepts that particular CD.

OK - here is the language from recent no penalty CD (from the Ally Bank Deposit Agreement Effective January 7, 2017):

Delete comment.

 

[ABQ2015]

Thanks, JohnnyB. Very timely advice. My $25.5K 1 year Ally CD matures tomorrow and I was thinking of putting it in my Ally MM since I may be using this money for home repairs over the next year. Instead I was able to roll it over to the no penalty CD in a few minutes. I also have excess money in my checking and savings accounts that I had planned to put in the MM but will now pursue a second and maybe third CD.

 

[kannon]

Just very EASILY moved money into the No Penalty CD - gained significant yearly interest - thanks for this forum!!!

 

[Sunset]

Just moved 25K from the daily interest to this great CD. Nice to get the extra earnings for 11 months.