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?


Bank CD Rates

How much money do you have sitting in a savings account? $500? $1,000?

Do you have plans for that money? If not, it should be in a certificate of deposit at your bank. If your bank doesn’t offer good CD rates, then you should open a CD with an online bank and take advantage of their better interest rates. If you don’t think you have enough money, you’re wrong. You can open a CD at an online bank with a single dollar.

One dollar.

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Ally Bank Review

Ally BankIn mid-May, GMAC Bank changed its name to Ally Bank. With General Motors in the news every day for something negative, it’s hard to do business when everyone thinks you’re about to go out of business. The funny thing about it all is that GMAC Bank’s parent company, GMAC Financial, hasn’t been a part of General Motors for several years. When you have financial companies in distress and auto companies in distress, a bank that people think is inextricably linked to auto company is in some deep trouble.

So, they changed their name.

But are they a good bank to do business with? Let’s find out.

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 Personal Finance 

Bank Services More Important Than Interest Rate

A few weeks ago I asked for your opinion of the best high yield savings account and the one thing I learned something very interesting. With interest rates as low as they are, with many banks offering less than 2%, it’s the other services and amenities that dictate which bank you’ll work with.

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Top Online Banks: Savings or Checking Accounts

The key to finding the best online savings account at the best online bank comes down to interest rates. The bells and whistles are nice but ultimately it’s about the money and the bank with the highest interest rates will win. That’s why we’ve included a table of the best interest savings account rates followed by a review of some of the more popular online banks. The best online bank for you may depend on a lot of factors outside of the interest rate, which is why minimum balances, fee, and other details are included in the table. One thing is clear, online savings accounts always pay more than a regular brick and mortar.

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Best Money Market Account (MMA) Rates

(Updated 9/1) In the world of banking products, you are always trading off interest rate for flexibility. Typically the higher the interest rate, the less flexible the account. Take CD rates for example, they are often higher than savings accounts and they are less flexible. You decide how long you’re willing to keep your money locked up and then pick a bank that offers the best rate for that term. If you wish to get your money early, you pay penalty. On the other end are checking accounts. Checking accounts have the worst interest rates but offer the most flexibility. You can get your cash whenever you want it, write as many checks as you’d like, and visit your own ATM without penalty. For that flexibility, you earn very little, if any, interest.

Where does that leave money market accounts?

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 Your Take 

Your Best High Yield Savings Account?

High yield baby!I’ve been emailing back and forth with reader Tomas (he’s the impetus for the Bargaineering VideoCast that will be published on Sunday), and one question I struggled with was which online bank has the best high yield savings account offer now?

In the last few months, interest rates have plummeted. It was only a few short months ago that Dollar Savings Direct offered 4.00% APY on their savings account. Now the rate is half that, a mere 2.05% APY. FNBO Direct, a long-time favorite of mine, just lowered their rates yesterday to under 2%. ING Direct, HSBC Direct, and E*Trade Bank all have rates under 2.00% and have had rates that low for quite some time.

So which one is the best? For me, it’s any of them. The difference between 1.50% at ING Direct and 2.05% at Dollar savings is microscopic. Half a percent isn’t worth the hassle of opening up an account, to be honest, and my money is going to whatever account makes it easiest for me to work with them.

How about you? What do you consider the best high yield savings account nowadays?

(Photo: refractedmoments)


Clear Sky Online Savings Account 3.75% APY

Clear Sky Accounts by Chesapeake BankReader Jeff, which did a considerably amount of research on the FDIC insurance of Dollar Savings Direct, recently emailed me a brand new online savings account offering 3.75% APY – Clear Sky Accounts. With a $1 minimum and the top rate amongst online banks, it’s certainly going to be a hit amongst personal finance enthusiasts. I wouldn’t shift my online savings to Clear Sky from other high yield savings accounts, the transportation time reduces the effective rate tremendously, new funds might find a comfortable home there, especially since they will stand by that 3.75% APY rate through the end of March.

But, a high rate is not enough… is it a reputable bank?

Clear Sky Accounts is offered by Chesapeake Bank, a Kilmarnock, VA bank that is FDIC insured under FDIC Certificate #6862. According to the FDIC, Chesapeake Bank has been in business since January 1st, 1900 and insured since the start of FDIC insurance in 1934. They have a four star rating under Bankrate’s Safe & Sound rankings and their memorandum on the bank shows they are in solid financial standing (strong earnings, high asset quality, etc).

Jeff, in his research, did find one little “catch:”

A possible “catch” to some. I’ve heard – although I have yet to find it in the small print – that Clear Sky/ Chesapeake has posted a limit of $10,000 per day on external ACH transfers. When I telephoned the Bank (877-257-7594) to ask if this were true, the representative said in effect: “Yes, that is our posted policy, but if you telephone us and ask us to waive that limit for you on a given occasion, we’ll try to accommodate you.” Put otherwise, the Bank is reserving the right to limit its depositors to $10,000 a day, and it says, in a non-binding way, that it won’t necessarily insist on enforcing that policy.

They also have very competitive checking accounts (2.50% APY – 3.25% APY) and competitive certificate of deposit rates (3.30% APY on a 13 month CD would make it one of the “short-term” best CD rates available). If you haven’t opened an online bank account anywhere, give Clear Sky from Chesapeake Bank a look. Do your own due diligence and see if it’s a good choice for you.

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