Comments on: Ally Bank CD 60-Day Early Withdrawal Penalty

By: bob

bob — Mon, 20 Dec 2010 00:16:11 +0000

Was getting ready to dump over 100K into ally 5yr cd, but after what anonymous found, it is not entirely clear that the 60 day rule is locked in for the term…..if they change it up they could bury it in a massive “account change” notice, that you might miss….starting to sound too risky..

By: Charley

Charley — Mon, 11 Oct 2010 20:18:38 +0000

Because of the language of the Ally Deposit Agreement, cited in the Anonymous post, I’m not going to rely on the 60-day interest penalty provision in rolling over a number of CDs at Ally this month. I believe Ally has to give advance notice of redemption penalty changes under the FDIC’s Truth-in-Savings regulations, but it still seems to me that it can pull the rug out from you by raising the penalty after the CD is established, forcing you to “close” the account and pay the old penalty sooner than you wanted to. And, with the Fed printing money like there’s no tomorrow, who know what can happen, even a few months down the road.

By: Larry

Larry — Fri, 08 Oct 2010 04:17:07 +0000

I don’t know if anyone is still watching here, but…

I have a CD at Ally. On Ally’s Web site, my account shows a value called “Current Redemption Amount” which is the amount I would receive today if I closed the CD early.

Using that number, I can verify that the penalty is based on the *original* amount and 60 days simple interest as Jim says.

By: Larry

Larry — Wed, 06 Oct 2010 02:47:28 +0000

Regardless, the terms of a CD remain unchanged for the duration of the certificate. I don’t think the banking commission would allow them to change the penalty for established CDs!

By: Anonymous

Anonymous — Tue, 05 Oct 2010 21:28:07 +0000

Here’s what ALLY Customer Care said today:

“Thank you for choosing ALLY Bank. Please be advised that ALLY Bank does reserve the right to delay, discontinue, or make changes to accounts or services which will effect your accounts. You may not get advanced notice of these changes when they are made. This includes changing the penalty on an account when closed early. These rules can be found on page 10 of your deposit agreement book number 34.”

By: Larry

Larry — Sat, 02 Oct 2010 18:49:24 +0000

Oh, one other comment. Line 69 (month 60) is wrong because there is no penalty once the CD is held to completion. At that point the APY will, obviously, be 2.99% rather than 2.90%.

By: Larry

Larry — Sat, 02 Oct 2010 18:35:05 +0000

Nice work on the spreadsheet, but you did a little more work than you needed to. You don’t need the TIP and MR columns to calculate APY.

You can use the following formula on line 11 (month 2) for APY:

=(D11/$B$5)^(12/A11)-1

..and copy down.

On an aside, comparing CDs is a pain for me because you can’t get conclusive answers to the precise penalty amounts, e.g:

1. Is the penalty simple or compound interest
2. Is it based on the original amount or calculated using most recent interest amounts that would have been earned.

Many agreements say simple interest but that doesn’t provide enough information. I’d be inclined to assume it is x-months of the most recent interest accruals unless I could find proof to the contrary. But that’s just me.

By: Ron Hruby

Ron Hruby — Tue, 20 Jul 2010 22:46:08 +0000

I don’t think that any of the statements are conclusive. Why can’d someone Ask Ally
if you deposited 1000 in a 5 year cd what would the penealty be if closed at the end of
month 12. I would hope the bank would respond
with a conclusive number. I just got off the
phone with them and they say that its 2 months
interest period. but on thier website it states.

However the link to Deposit Agreement does not
work.

Will I be penalized for an early withdrawal from my Certificate of Deposit (CD) before it reaches maturity?

For all Ally CDs, except the No Penalty CD, you will be charged an early withdrawal fee equal to 60 days’ interest if you withdraw your money before the CD matures. This fee is calculated using the interest method detailed in your Deposit Agreement, and is first deducted from the interest and then—if necessary—the principal. There are couple of exceptions: We will waive the early withdrawal fee if the depositor should pass away or be judged legally incompetent

By: bbk

bbk — Thu, 15 Jul 2010 03:28:40 +0000

you: i want to know the details about 60 month cd
you: specially how the penalty is calculated for early withdrawal?
CRS: Hello! The early CD closure penalty is 60 days worth of interest.
CRS: Once the CD is opened and funded, funds cannot be added to it until maturity.
you: the 60 days is first 60 days or the last 60 days?
CRS: It’s not a specific timeframe of days. We calculate how much interest you would earn each day and multiply it by 60.
you: so it’s compounded interest rate?
CSR: Yes, interest is compounded daily for all of our accounts.

By: Michael

Michael — Mon, 05 Jul 2010 14:26:07 +0000

The penalty of $4.78 per thousand is exactly 60 days worth of interest and should be fixed from day 1 to the day prior to maturity.

It’s also such a low amount compared to the $14.50 per thousand difference per year between a 1 year and 5 year CD, that this totally changes the idea of CD laddering, until penalties go back up or short term rates and long term rates get closer again.

By: Donna

Donna — Thu, 24 Jun 2010 19:19:47 +0000

I agree with Will’s (6/14) formula to correct column C, the Penalty. It should be based on per thousand of the opening balance. For example, on your spreadsheet, if you change the opening amount from $1000 to $100,000, the Penalty is still $4.92. To address Will’s second point, the value would indeed be the same for the whole column if you are using the “penalty based on opening balance” model, as per Bill’s comment (6/20).

Thanks for getting this spreadsheet started – very helpful!

By: Donna

Donna — Thu, 24 Jun 2010 18:18:49 +0000

I just spoke to a floor supervisor, Dawn S___klosky (sorry didn’t get the spelling), and she told me that the penalty is the last six months of interest.

By: Bill

Bill — Mon, 21 Jun 2010 02:42:09 +0000

I spent the last 3 days talking with Ally CSRs and supervisors to get them to confirm or deny the accuracy of your spreadsheet. The answers from CSRs were wildly inconsistent, and alarming. Two supervisors , in writing (e-mail) told me the penalty on a 5 year CD was fixed at $4.78 per thousand orinially invested, and would never change for the term of the CD. Supporting your spreadsheet. Another supervisor told me that her peers were wrong, and that the penalty is calculated in the balance at the time of early withdrawal. If she is correct, then my calculation is that the post penalty yield will be 2.43%, regardless of when you take your early withdrawal. The only way you get 2.91 is if you hold to maturity.

The ally Ally CSRs are very confused and inconsistent on the penalty calculation. Makes you wonder what will really happen when you request an early withdrawal!

By: jesse

jesse — Wed, 16 Jun 2010 19:42:47 +0000

ally penalty is the last 60 days of accumulated interest, which would make it different as days go by.

By: eric

eric — Wed, 16 Jun 2010 17:58:15 +0000

Yeah I think this is an advantage I hear a lot about with Ally Bank.