Rates updated 9/24/18. Ally Bank raised the rate on their 11-month No Penalty CD. These have been an interesting new product in this rising rate environment. If you have older No-Penalty CDs, you may want to take advantage of this higher rate. Here are the new interest rates for the No Penalty CD under their tiered structure (as of 9/24/18):
- 2.10% APY at $25,000 minimum opening deposit
- 2.00% APY at $5,000 minimum deposit
- 1.75% APY at no minimum deposit.
The 11-month No Penalty CD is unique in that while the 2.10% APY rate is locked in at deposit, you can still withdraw your principal and interest without penalty at any time (well, you must wait at least 6 days from the deposit date). In other words, your interest rate can never go down, but you can still jump ship if rates rise or if there is a better promo elsewhere.
If you recently opened one of these, remember that Ally Bank offers a “Ten Day Best Rate Guarantee”:
When you fund your CD within 10 days of your open date, you’ll get the best rate we offer for your term and balance tier if our rate goes up within that time. The Ally Ten Day Best Rate Guarantee also applies at renewal.
If you have an existing No Penalty CD past the 10-day rate guarantee, this means you may consider closing it and then opening up a new one at a higher rate. You will have to withdraw everything at once – there are no partial withdrawals allowed on this type of CD. If you have an Ally savings or checking account, you can close the old CD, see the deposit in your savings/checking, and open up a new CD all in minutes online. (Note that savings accounts are limited to 6 withdrawals per month, so use your checking if possible.) You will be extending the term out another 11 months, but since you can always close it at any time it isn’t much of a concern.
Here’s a screenshot of my withdrawal showing no penalty and instant availability when withdrawn directly into an Ally account:
You can use my Ultimate Rate-Chaser Calculator to get an idea of how much additional interest you’d earn if you switched over.
- Ally Savings is now at 1.85% APY, while other online savings accounts rates are even higher. You gain liquidity, but rates can also change on you.
- Ally 12-month CD is now at 2.50% APY with no minimum deposit, and the 2-Year “Raise Your Rate” CD is at 2.50% APY with no minimum deposit. Both of these do have early withdrawal penalties..
- CIT Bank 11-Month No Penalty CD is a similar product, currently at 2.05% APY but with a lower $1,000 minimum deposit. This means you could open multiple, smaller CDs and only break out what you need later. These two banks both offer 11-month No-Penalty CDs, and I’ve opened (and closed early) CDs from both places.
Ally is my primary bank, due to various factors like user interface, Live Chat, you can link tons of accounts, 1-day bank transfers are available, and their innovative CD products. I use Ally Bank Online Savings, Interest Checking, and No Penalty CD accounts as my “hub” and then open additional bank CDs as temporary “spokes” when external rates are significantly higher.
Bottom line. The Ally No Penalty CD is unique in that you are always able to move out to a higher rate, but you’ll never get a lower one. This means you can even break the No Penalty CD simply to get another No Penalty CD if/when the rate rises again.
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