[November 2020 Update: Ally Bank’s CD rates remain unchanged over the last 30 days. The average rate for a one year CD as of November 2020 is 0.24% APY according to Bankrate. The average rate on a 5 year CD is 0.41% APY.]
Ally Bank is an acclaimed digital bank that offers a suite of competitive FDIC-insured online savings products including CDs, savings accounts, interest checking and money market accounts.
In this review we’ll focus on Ally Bank’s fixed-rate, certificates of deposit. They have seven standard term CDs ranging from 3 months to 5 years that can be opened as standard CDs or IRA CDs. They also have two promotional CDs – the “Raise Your Rate CD” and the “No Penalty CD.”
The Raise Your Rate CD is beneficial in an ascending interest rate environment. This product gives you the opportunity to increase your rate once over a 2-year term or twice over a 4-year term if their rate for your term and balance tier goes up while your CD is active.
The No Penalty CD, as the name implies, allows you to withdraw any amount at any time after the first six days of funding the account. You can keep the interest earned with no penalties.
For those that may not remember, Ally Bank is the rebrand of GMAC – the financial arm of General Motors. Following the financial collapse of 2008, GMAC fully rebranded to Ally Bank in 2009. Since then they’ve been recognized for numerous awards for online banking innovation, customer service, and their commitment to giving back to local communities.
Ally Bank CD Rates + Account Details
As mentioned, Ally Bank has seven standard term certificates of deposit that come with no minimum opening deposit requirements. The terms range from 3 months to 5 years and come with annual percentage yields that beat the current national average by considerable margins and regularly place among the top rates for online banks nationwide.
Ally Bank CDs are FDIC insured up to $250,000 per depositor or $500,000 for joint accounts.
Ally Bank CD Rates
| Term | APY |
| 3 months | 0.20% |
| 6 months | 0.40% |
| 9 months | 0.50% |
| 12 months | 0.65% |
| 18 months | 0.70% |
| 3 years | 0.75% |
| 5 years | 1.00% |
To give the yields above some context, the current national average for 12 month CDs and 5 year CDs sits at just 0.24% and 0.41% APY, respectively.
Ally Ten Day Best Rate Guarantee
All of Ally Bank’s CDs come with a “ten day best rate guarantee.” This means that if you fund your account within 10 days of opening it and rates go up during this time, you will get Ally’s best rate for that term and your balance tier during that time. This also applies with CD renewals.
Interest is compounded daily which gives your overall APY (annual percentage yield) a boost over bank deposits that compound less frequently like monthly or quarterly.
Tiered rates by deposit amount do exist in more favorable savings rate environments; however, Ally Bank CDs pay the same APY for each term regardless of your deposit amount currently.
Early Withdrawal Penalties
Early withdrawal penalties at Ally Bank vary by CD term. They are as follows:
- CD terms of 24 months or less will incur an early withdrawal penalty of 60 days’ interest.
- CD terms of 25 – 36 months will incur an early withdrawal penalty of 90 days’ interest.
- CD terms of 37 – 48 months will incur an early withdrawal penalty of 120 days’ interest.
- CD terms of 48 months or longer will incur an early withdrawal penalty of 150 days’ interest.
Grace Period
Ally Bank has a standard grace period of 10 days where you can withdraw, add or transfer funds without incurring a fee. If nothing is done during this period, the CD will renew under the same terms at the current APY.
Ally Bank Loyalty Rewards for CD Account Holders
Ally Bank has a little-known loyalty program for those that continue to open and/or renew certificates of deposit with them. Currently, they are giving a 0.05% APY bump when you renew any CD with them. Be sure to check back 30 days before your CD matures to see what the reward is at that time.
Ally Bank “Raise Your Rate CD” Rates + Details
The Raise Your Rate CD offered by Ally Bank is going to be best suited for a climbing interest rate environment. Given the fact that CD rates are generally fixed throughout their duration, an opportunity to give your CD rate a bump when interest rates are on the rise, can be a huge benefit. And one that many other banks do not offer.
Ally Raise Your Rate CDs
| Term | APY |
| 2 year | 0.70% |
| 4 year | 0.70% |
The 2 year Raise Your Rate CD will give you the opportunity to increase your rate once over the life of the deposit.
The 4 year Raise Your Rate CD will give you the opportunity to increase your rate twice over the life of the deposit.
Ally Bank “No Penalty CD” Rate + Details
The Ally Bank No Penalty CD comes with only one term at the moment. The term is 11 months. You can withdraw any or all of your money from this deposit at any time after six days from funding the account.
Ally Bank No Penalty CD Rate
| Term | APY |
| 11 months | 0.60% |
As with Ally Bank’s other certificate of deposit products this APY is the same regardless of your deposit amount. In the past Ally Bank has rewarded larger deposits with higher yields; however, rates today are the same across the board for all amounts.
Final Thoughts
Ally Bank keeps their CDs simple and rewarding with no monthly maintenance fees, no opening deposit requirements and even the opportunity to open a “no penalty CD” with fee-free access to your deposited funds.
The APYs on their IRA CDs and regular CDs beat the current national average(s) handily, but pay the same yields on all terms regardless of deposit amount. There are also no differences in rates whether the CD is opened in an IRA or not.
Ally Bank’s digital interface – both online and through their IOS and android apps – are very intuitive and allow for easy deposits and account monitoring as well.