Bank Deals 
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Ally Bank Offers 0.25% CD Renewal Bonus

It seems that CD renewal bonuses are all the rage these days! Just the other day, I received an email from Ally Bank now that one of my CDs was nearing its expiration. Ally Bank will automatically renew your CDs unless you tell them otherwise (you have a ten day grace period from the renewal date to change your mind) and they have sweetened the offer by bumping up the rate by 0.25% from prevailing rates.

Here’s the email:
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 Personal Finance 
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A Money Rebuilding Year

Construction WorkerIn every professional sport, there’s a concept of a “rebuilding year.” These are the years where the team is working on drafting good prospects, building up their young talent, and crafting a competitive championship-caliber team piece by piece. It’s difficult to field a championship team every year for more than a few years, with free agency and everything, so it’s expected that after a few years of stellar performance, you’re bound to have a few leaner years where you’re rebuilding your talent. The good teams do this well, with strong performing rebuilding years, and others do it poorly.

How does this apply to you? It’s a little downside psychology. With the recent economic crisis, a lot of folks are forced into their rebuilding years. You may have lost your job. Your investments may have lost value. Your money doesn’t seem to get you as far as it used to… you’re down, but not out. So turn this year into a money rebuilding year.

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 Banking 
63
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Brick and Mortar Bank Myths

In the last few years, I’ve reviewed several online banks from the gray beard ING Direct to the more recent Ally Bank and Sallie Mae. With each review, there invariably are commenters who are totally against online banks and bring up reasons why it’s a mistake to put your money with an online bank.

They cite reason after reason that brick and mortar is better, failing to recognize that the last online bank to fail was Netbank in 2007 (and hundreds of brick and mortar banks have failed since) and that despite all their concerns, online banks are FDIC insured. Well today I’m going to tackle many of these myths head on and show why they are either wrong or grossly exaggerated.

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 Banking 
12
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Ally Bank Offers 2-Year Bump Up CDs

Until today, I don’t believe I’ve ever seen any online bank offer a bump up CD. A bump up CD is a certificate of deposit that gives you the option to increase the current rate of your CD to the published rate, “bumping” it up. If you remember my attempt at being cute with the Certificate of Deposit Zoo, it was the giraffe. :)

The biggest risk with long term CDs is inflation risk. If you open a two-year CD at 2% and inflation is 3% a year, you’ve effectively lost 1% of purchasing power on that money each year. While it’s better than being in a checking account earning 0%, thus losing 3% each year, your money is “stuck” unless you want to pay a penalty.

Bump up CDs take away some of that risk because they let you bump up the CD’s interest rate one time. Does that make a bump up CD a sure thing? No, but if you have the choice between two long term CDs with identical interest rates, it’s obvious that the CD with a bump up option is superior.

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 Banking 
9
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Ally Bank Ten Day CD Rate Guarantee

10 DaysOne of the most annoying things in personal finance is opening a bank account and then seeing the interest rate drop. This happened very often in the falling interest rate environment of the last year and a half. I remember opening an online savings account only to see the rate fall the next day! It’s not bait and switch, it’s not sneaky, and banks don’t do it on purpose because nothing stops you from leaving. Interest rates aren’t guaranteed. It’s just how it is.

There is only one thing more annoying than falling interest rates, it’s rising interest rates after you’ve opened a new certificate of deposit! With CDs, if you close one before it matures, you will pay a penalty of three to six months’ interest. Again, it’s not bait and switch, it’s just the nature of fluctuating interest rates.

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 Investing 
30
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Best High Yield Savings Accounts Rates

These days, the best way to help your savings grow is by saving it in an online high-yield savings account. With interest rates as low as they are, you simply can’t get anything by putting it in your neighborhood bank. Online banks, with lower overhead, are still the best place to earn a much higher yield with absolutely no risk. After years of managing this list manually, we’re now happy to offer up this table that is updated daily with the highest rates you can find anywhere. The table is powered by Bankrate, an industry leader, and hundreds of banks are surveyed each time to ensure that the highest rates are displayed. Lastly, all of the banks on this list are FDIC insured so you know your money is 100% protected.

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 Banking 
13
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Ally Bank Savings & CD Rates Confuse Me

Ally BankEvery week I get an email from Ally Bank informing me of how the rates will be changing (Ally Bank rates are adjusted on Fridays) and their rate structure has been confusing me as long as I’ve been getting these emails.

Ally Bank’s Savings & CD Rates

Rates are subject to change, here are the current Ally Bank CD rates.

Why Is This Weird?

Typically, your online savings account interest rate should be the lowest of the three (CD rates should be higher given restrictions). Next would be the 9 month no-penalty CD rate followed by the regular CD rate. You should get a lower interest rate on the account with the most flexibility. Since you withdraw money from a savings account at any time, you should be paid the least amount of interest in that account. Since you can withdraw your money from a no-penalty CD at any time without penalty, it should have a lower interest rate than a regular CD, where you would have to pay a penalty to access your funds.

Ally Bank has had this interest rate irregularity for a while now but recently it’s come back in line.

So What?

If you have money in Ally Bank’s online savings account, you should open a 9 month no-penalty CD immediately and transfer all your funds into that CD. Should the online savings account interest rate ever increase past the no-penalty CD, then you could liquidate the no-penalty CD without penalty. If you need the money, you can liquidate the no-penalty CD.

In fact, the best strategy would be to open up multiple no-penalty CDs so that if you do need the cash you don’t have to close out one big CD. Ally Bank does not have a minimum for CDs. For example, if you have $5,000 to save and you aren’t sure if you need the money. Open up five $1,000 no-penalty CDs. If you need $500, you can just close one of the CDs. If you opened up one single $5,000 CD, then you’d have to liquidate the whole to get access to just $500.

Am I missing something?


 Personal Finance 
15
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How to Hard Reset Your Financial Life

We have twelve bank accounts.

You read that correctly, we have twelve accounts.

Ally Bank, FNBO Direct, ING Direct, HSBC Direct, Bank of America, M&T Bank, … the list goes on.

We also have a dozen credit cards. Citi, Discover, Capital One, … again, the list goes on.

We have so many accounts because we’ve slowly acquired them over the course of the last ten years. Our financial network map is an intricated mess despite our best efforts to simplify our personal finances.

That’s why we need to hit the reset button on our financial life.

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