Ally Bank - No Penalty CD - Resetting maturity

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123
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Ally Bank - No Penalty CD - Resetting maturity

Post by 123 » Tue Mar 10, 2020 12:28 pm

Due to the recent cut in interest rates by the Fed I got concerned that interest rates on CDs could decline as well. Even though the rate on our Ally Bank 11 month No Penalty CD has not changed I decided to close the CD and reopen an identical No Penalty CD to extend the maturity date (and the guaranteed interest rate). Just something to think about if you're in a similar situation.
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Thesaints
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Re: Ally Bank - No Penalty CD - Resetting maturity

Post by Thesaints » Tue Mar 10, 2020 12:31 pm

I guess in principle one may close and reopen a no-penalty CD every 7 days, as long as rates do not go down.
Maybe not really worth it within the FDIC limit.

MikeG62
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Re: Ally Bank - No Penalty CD - Resetting maturity

Post by MikeG62 » Tue Mar 10, 2020 1:50 pm

123 wrote:
Tue Mar 10, 2020 12:28 pm
Due to the recent cut in interest rates by the Fed I got concerned that interest rates on CDs could decline as well. Even though the rate on our Ally Bank 11 month No Penalty CD has not changed I decided to close the CD and reopen an identical No Penalty CD to extend the maturity date (and the guaranteed interest rate). Just something to think about if you're in a similar situation.
Yep this works as long as your existing NP CD’s are the same as the current offer. Mine were purchased in the summer of 2019 with a yield of 2.30% so it does not work for me :-)

I did do this when opening the 24 and 36 month CD’s at PSECU back in the fall. Opened my first two the first week of October. Then opened another two in late November (promotion rate was still in effect) to effectively extend the term by about 50 days.
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the way
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Re: Ally Bank - No Penalty CD - Resetting maturity

Post by the way » Tue Mar 10, 2020 2:35 pm

yeah, did this already except will wait till next week to close and fund the new CD, just to squeeze a few more days out of the old higher rate. :D

note, I checked and 4 years ago the NP CD was 0.87%, so Ally's rate could drop into that area again pretty soon.

MrsRoos
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Re: Ally Bank - No Penalty CD - Resetting maturity

Post by MrsRoos » Tue Mar 10, 2020 3:12 pm

Good idea for the future. Like MikeG62, I've got a couple of CDs at 2.30%. The rest are at 1.95% - these were renewed (from 1.90%) and Ally affords their customers a 0.05% loyalty interest if you automatically renew a CD.
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the way
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Re: Ally Bank - No Penalty CD - Resetting maturity

Post by the way » Tue Mar 10, 2020 6:57 pm

MikeG62 wrote:
Tue Mar 10, 2020 1:50 pm
Yep this works as long as your existing NP CD’s are the same as the current offer. Mine were purchased in the summer of 2019 with a yield of 2.30% so it does not work for me :-)
Mine are the same, but I still think it's worth it.

My 2.3% CD has about 3 months left, so closing early and switching to 1.9% now would give up 0.4% for 3 months.

But if I wait 3 months, it might renew at only 1% instead of 1.9%. That's a 0.9% loss for 8 months.

So the net gain is 0.5% more interest by switching now before rates drop a lot.

the way
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Re: Ally Bank - No Penalty CD - Resetting maturity

Post by the way » Mon Jun 29, 2020 10:37 am

Not sure if others did this, but rates played out as expected (maturity and renewal would have been now at 1% instead of 1.9% three months ago) so closing early kind of worked out.

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