Certificates of Deposit (CDs) are the ideal solution for those who wish to put some money aside for a future event. These funds are usually inaccessible for a period of time, and often has a fixed interest rate attached to the investment for the duration thereof.
These types of accounts are also ideal for those who wish to pledge their funds for a specific cause and require the funds to be fixed for the duration of the pledge. Furthermore, customers who wish to restrict themselves access to the account will find this account suitable. Ally Bank CD Account products offer clients a variety of options and terms for their own convenience.
A Brief History Of Ally Bank
The bank opened doors in 1919 but not as a traditional banking structure. It was a division of GM and provided customers with automobile finance. This was unheard of at the time and they set the benchmark where this was concerned. This couldn’t have happened at a better time, as WWI and the Great Depression soon followed, making it difficult for customers to fork out the extra funds needed to purchase their vehicles.
After this bleak period in the American history, the Germans retaliated on the French victory during the first World War, and WWII was the result. Another tumultuous period for the entire world, GM played a significant role in the support to the Allies. They provided components for armored vehicles and other war machines that helped stop the war. Furthermore, the GMAC division provided the railways with the required finance to remain afloat.
Towards the end of the century, the bank expanded its operations and introduced more products. It also became adept with the digital age and slowly migrated the majority of their functions to digital functions. In 2009, the bank was formally known as Ally Bank. The bank also formed Ally Financial, and Ally Bank became a subsidiary. This allowed Ally Financial to branch out into various ventures. Read the full review of Ally Bank.
The Benefits of Saving in a CD Account
This account is the ideal savings vehicle for those who wish to save their funds for a longer term than the normal savings account. The investment terms typically run anywhere from 3 months to 5 years. This allows customers to plan ahead and they will also know upfront what their potential earnings on the account are.
Furthermore, the longer terms usually attract higher interest rates. These accounts are also regarded as fairly safe investments and tend to be covered by the FDIC up to certain maximums.
CD Accounts generally don’t allow customers access to the funds for the duration of the term, as there are certain restrictions on the account. This is ideal for those who don’t want to have access to the funds before the stipulated timeframe. This is especially handy for those who are planning a big event or a personal project.
This type of account is also suitable for those who wish to create a legacy, as trusts have access to the accounts as well. Some of the CDs also provide tiered interest rates, which allow higher balances to earn even more interest. We recently did a review on the full range of Ally Bank Savings products as well.
Ally Bank CDs
High Yield CD
This type of CD is suitable for those wish to tie up their funds for a period of 3 months to 5 years. These accounts offer three different tiers of interest for each period. The tiers are for balances under $5,000, between $5,000 and $25,000, and over $25,000.
- Customers not only earn higher interest the longer the funds are invested for, they also receive higher rates for higher balances.
- Also, customers earn highly competitive interest rates.
- The interest is compounded daily, which allow customers to enjoy the effect it has on their funds.
- Furthermore, the FDIC insures funds up to a certain threshold.
- Trusts have access to this account as well.
- Customers have access to online and mobile banking.
- The Ally Ten Day Best Rate Guarantee ensures customers get the best rate.
- Only Capital One 360 seems to trump this investment with interest rates for the 18-month and 5-year options.
- Finally, customers have access to a real person when they phone in to support, which is available 24/7.
Raise Your Rate CD
This is an Ally Bank CD with a difference, as there are only two options available here. The first is a term of 2 years and the second a term of 4 years. During the 2-year period, customers have the option to increase their rate once. The 4-year option allows them to increase their rate twice over the period.
- With this account, customers will enjoy competitive interest rates.
- Furthermore, this type of investments allows the interest to compound daily, which provides customers with the effect of compounding interest.
- Customers are guaranteed the best rate with the Ally Ten Day Best Rate Guarantee.
- The FDIC insures deposits up to prescribed maximums.
- Customers can open the account for trusts, which protects their legacy.
- The only competitor who is able to beat the rates is Capital One 360.
No Penalty CD
Customers who are unsure whether they can commit to a long-term investment will find this option to be ideal. It combines the flexibility of short-term savings with the interest options of a CD.
- Customers enjoy a fixed rate for the duration of their term.
- Should customers need access to their funds, they can make a withdrawal without penalties.
- The term is for 11 months and provides customers with the opportunity to try to limit themselves to withdrawals.
- Furthermore, the account provides competitive interest rates.
- Also, the investment is favorable for those who wish to see their funds grow fast. This is because the interest compounds daily.
- The FDIC insures deposits up to a certain threshold.
- Finally, the account can be opened for trusts, which allows customers to protect their legacy.
Restrictions of an Ally Bank CD Account
The account is the ideal means for customers to save their funds for a pre-determined period of time, however, there are also a few restrictions or cons to consider.
Although the FDIC insures deposits, it only insures them up to a certain amount. All amounts over the specified threshold could be open to risk.
Unlike the Online Savings Account, there are accounts on the market that are currently on par with Ally Bank. Some of the competitor accounts even trump Ally Bank CD Accounts.
Customers who require access to their funds prior to the maturity date may have to pay penalty fees. These fees do not apply to the No Penalty CD, however. Also, customers never know when they may need access to their account as emergencies can happen at any time. There is always that underlying risk that they may need access to these funds. For those who need access to a transactional account, the Ally Bank Interest Checking Account may be a better option.
Many of the interest rates on the lower periods don’t compare well to the normal savings accounts currently on the market. The real benefit of the higher interest is only really felt when depositing the funds for much longer periods of time.
What We Like About the Ally Bank CD Account Offerings
There are a number of options for those who wish to put their funds away for a period of time. Furthermore, there are options that provide customers with access to tiered rates. The longer terms also tend to have very competitive rates.
This is the ideal account for those who don’t want to have access to their account for a specified period. The No Penalty CD is the exception, however, and allows customers to get used to not having access to their funds. When they do, there are no penalties on the account.
Customers can deposit their funds for anywhere between 3 months to 5 years, which allows them to plan their investments properly. The fixed rates and terms also allow customers to plan the outcome of their investments.
FDIC insurance is always a bonus, and the protection takes place up to a specified threshold. This allows customers peace of mind where their investments are concerned.
What We Don’t Like About the Ally Bank CD Account Offerings
Furthermore, CD accounts are meant to provide that access-free certainty for those who find it difficult to save. The No Penalty CD takes some of those benefits away, by providing customers with the option to withdraw without penalty charges.
Customers who want to benefit from higher interest on the CD accounts will have to put their funds away for long periods of time. This is because the interest rates on the accounts are not as competitive as the other accounts in the Ally Bank range. Also, the rates offered on some of the products are outdone by competitors on the market.
Critical Reviews Rating of Ally Bank CD Account Products – 8 of 10
There are some great options for the different groups of long-term savers. The various options also cover a range of different needs and some of the rates are choice rates. That being said, customers will have to put their funds away for a long time before it becomes more competitive than other savings accounts. Ally Bank also needs to ensure they review their rates compared to the market, in order to keep their edge, as with the Online Savings Account on their books.