Ally Bank 11 month [No-Penalty CD]

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MikeG62
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Re: Ally Bank 11 month [No-Penalty CD]

Post by MikeG62 » Mon Jan 01, 2018 9:14 am

MikeG62 wrote:
Fri Dec 29, 2017 11:27 am
marcopolo wrote:
Fri Dec 29, 2017 9:08 am
MikeG62 wrote:
Thu Dec 28, 2017 7:48 pm
marcopolo wrote:
Thu Dec 28, 2017 9:50 am
Anyone know if there is a way to directly convert these to the higher rate (prior to maturity) without round tripping them through another account?

I do not have a checking account at Ally, just a Savings.
Having problems opening new checking due to credit freeze.

I have 17 of these CDs at 1.5%. Round tripping them through Savings acct. will cost a few hundred dollars due to transaction limits.
MarcoPolo, try what I suggested in my post upthread. Although I have not actually done it, it appears the funds will simply move from the old to the new 11 month no-penalty (without stopping over in the savings account first). I intend to try to do that on January 1st with the nine CD’s I have.

Worst come to worse, you can always open a checking account (you do not need to order checks) and sweep the funds through that so as not to run afoul of the 6 Withdrawal limit in 30 days with the online savings account. As an aside, I opened an Ally checking account years ago when my first daughter went to college so she could access cash at an ATM transaction fee free. My youngest daughter now uses that same checking account for the same purpose.
I could be wrong, but it appears that process you described above only changes the instructions for what to do with the rollover once the CD matures. I was not able to make that process rollover an active CD that is months from maturity.

I went through the process to open a checking account but instead of opening it right away as i would have expected, i got a message that someone would be contacting me in 3-5 business days (other have reported similar response, possibly due to frozen credit). That was back on 12/22, still have not heard anything.

I believe you can open the new CDs and take up to 10 days to fund them and still get the locked in rate. So, i will plan to open them Jan 2, and hope my checking account gets opened by Jan 12, otherwise i will convert them paying the $10 for the extra transactions...
You may be right. I think you can do what you suggest - open the new CD's and fund in the 10 days that follow if you can't get the checking account open in time.

I'll just push all the money through my checking account.
Closed 10 no penalty CD's this morning and moved proceeds to my Ally checking account. Then immediately opened 10 new no penalty CD's and funded with cash sitting in my Ally Checking account. All was done online and without the need to speak to an Ally rep. BTW, my credit report with the 3 major CRA's are all frozen as is my account with ChexSystems. No issues encountered whatsoever. Took all of 10 minutes. Was surprised this could all be done on holiday, but it was. All transactions show effective date of 01/01/18.

One thing to note for those with many of these CD's. You can only open 5 accounts at one time. So this means you do the first 5 at one time, then once done with those (including funding) you just go back to the open new account screen and do the next 5 or however many more remain (if less than 6). If you've got more than I do, you may have to repeat this process several times.
Last edited by MikeG62 on Mon Jan 01, 2018 9:18 am, edited 1 time in total.
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runner9
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Re: Ally Bank 11 month [No-Penalty CD]

Post by runner9 » Mon Jan 01, 2018 9:17 am

They are open 24/7. You can call on New Yeses if you want!

MikeG62
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Re: Ally Bank 11 month [No-Penalty CD]

Post by MikeG62 » Mon Jan 01, 2018 9:19 am

runner9 wrote:
Mon Jan 01, 2018 9:17 am
They are open 24/7. You can call on New Yeses if you want!
...and wait on hold a good 25 minutes. Or you can do it yourself online in a fraction of the time.
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Re: Ally Bank 11 month [No-Penalty CD]

Post by jst » Mon Jan 01, 2018 9:22 am

AntsOnTheMarch wrote:
Mon Jan 01, 2018 7:05 am
On the plus side, I was able to close out 2 of these CDs and open them at the new rate even though it’s a holiday.

On the minus side, the ally website got confused several times, wouldn’t let me log in, asked for 2FA. I did get the second CD completed but then ally logged me out again and locked me out of my account, so I’ll have to call in tomorrow. :annoyed

Edit: I used another browser, was asked for 2FA again and was able to log in. Does not inspire confidence.
Really?

I'd rather a little too heavy security than too light.

Each time you open an account, you do have to login again. Who knows why it locked you out - if we knew why, so would hackers, and thus they'd have valuable info toward breaking into our accounts.

I'm OK with the occasional security lockout if it's done to decrease my chances of having a real problem.

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Re: Ally Bank 11 month [No-Penalty CD]

Post by AntsOnTheMarch » Mon Jan 01, 2018 10:26 am

jst wrote:
Mon Jan 01, 2018 9:22 am
AntsOnTheMarch wrote:
Mon Jan 01, 2018 7:05 am
On the plus side, I was able to close out 2 of these CDs and open them at the new rate even though it’s a holiday.

On the minus side, the ally website got confused several times, wouldn’t let me log in, asked for 2FA. I did get the second CD completed but then ally logged me out again and locked me out of my account, so I’ll have to call in tomorrow. :annoyed

Edit: I used another browser, was asked for 2FA again and was able to log in. Does not inspire confidence.
Really?

I'd rather a little too heavy security than too light.

Each time you open an account, you do have to login again. Who knows why it locked you out - if we knew why, so would hackers, and thus they'd have valuable info toward breaking into our accounts.

I'm OK with the occasional security lockout if it's done to decrease my chances of having a real problem.
I’m not complaining about the security lock out per se, except that it was a website glitch. It kept logging me out and eventually it wouldn’t let me log back in because it thought I was logged in another open browser tab (I wasn’t). Then it locked me out and said the only way to get back in was to call CS. But I got back in anyway without calling CS using another browser so clearly, that was another website glitch. I don’t find this comforting.

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Re: Ally Bank 11 month [No-Penalty CD]

Post by marcopolo » Mon Jan 01, 2018 12:16 pm

MikeG62 wrote:
Mon Jan 01, 2018 9:14 am
MikeG62 wrote:
Fri Dec 29, 2017 11:27 am
marcopolo wrote:
Fri Dec 29, 2017 9:08 am
MikeG62 wrote:
Thu Dec 28, 2017 7:48 pm
marcopolo wrote:
Thu Dec 28, 2017 9:50 am
Anyone know if there is a way to directly convert these to the higher rate (prior to maturity) without round tripping them through another account?

I do not have a checking account at Ally, just a Savings.
Having problems opening new checking due to credit freeze.

I have 17 of these CDs at 1.5%. Round tripping them through Savings acct. will cost a few hundred dollars due to transaction limits.
MarcoPolo, try what I suggested in my post upthread. Although I have not actually done it, it appears the funds will simply move from the old to the new 11 month no-penalty (without stopping over in the savings account first). I intend to try to do that on January 1st with the nine CD’s I have.

Worst come to worse, you can always open a checking account (you do not need to order checks) and sweep the funds through that so as not to run afoul of the 6 Withdrawal limit in 30 days with the online savings account. As an aside, I opened an Ally checking account years ago when my first daughter went to college so she could access cash at an ATM transaction fee free. My youngest daughter now uses that same checking account for the same purpose.
I could be wrong, but it appears that process you described above only changes the instructions for what to do with the rollover once the CD matures. I was not able to make that process rollover an active CD that is months from maturity.

I went through the process to open a checking account but instead of opening it right away as i would have expected, i got a message that someone would be contacting me in 3-5 business days (other have reported similar response, possibly due to frozen credit). That was back on 12/22, still have not heard anything.

I believe you can open the new CDs and take up to 10 days to fund them and still get the locked in rate. So, i will plan to open them Jan 2, and hope my checking account gets opened by Jan 12, otherwise i will convert them paying the $10 for the extra transactions...
You may be right. I think you can do what you suggest - open the new CD's and fund in the 10 days that follow if you can't get the checking account open in time.

I'll just push all the money through my checking account.
Closed 10 no penalty CD's this morning and moved proceeds to my Ally checking account. Then immediately opened 10 new no penalty CD's and funded with cash sitting in my Ally Checking account. All was done online and without the need to speak to an Ally rep. BTW, my credit report with the 3 major CRA's are all frozen as is my account with ChexSystems. No issues encountered whatsoever. Took all of 10 minutes. Was surprised this could all be done on holiday, but it was. All transactions show effective date of 01/01/18.

One thing to note for those with many of these CD's. You can only open 5 accounts at one time. So this means you do the first 5 at one time, then once done with those (including funding) you just go back to the open new account screen and do the next 5 or however many more remain (if less than 6). If you've got more than I do, you may have to repeat this process several times.
I can report a similar easy experience, just converted 15 CDs to higher rate. Opening new checking account a few days ago required lifting ChexSystem and TransUnion Freeze. But, once that was done, the transfer of CDs was a simple online procedure. Did have to repeat 3 times due to 5 CD at a time limit.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Econberkeley
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Re: Ally Bank 11 month [No-Penalty CD]

Post by Econberkeley » Mon Jan 01, 2018 1:53 pm

are you guys opening so many cds because of low $ limit for online transactions?

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Re: Ally Bank 11 month [No-Penalty CD]

Post by Blues » Mon Jan 01, 2018 2:01 pm

Econberkeley wrote:
Mon Jan 01, 2018 1:53 pm
are you guys opening so many cds because of low $ limit for online transactions?
I haven't done so but I think folks do it so that they can break one or two without having to liquidate one large CD in the event rates are lower at the time they need the funds. Perhaps there are other reasons I haven't considered.
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Re: Ally Bank 11 month [No-Penalty CD]

Post by Kevin M » Mon Jan 01, 2018 2:15 pm

Blues wrote:
Mon Jan 01, 2018 2:01 pm
Econberkeley wrote:
Mon Jan 01, 2018 1:53 pm
are you guys opening so many cds because of low $ limit for online transactions?
I haven't done so but I think folks do it so that they can break one or two without having to liquidate one large CD in the event rates are lower at the time they need the funds. Perhaps there are other reasons I haven't considered.
Yeah, that's it. You need a minimum of $25K to get the top rate, so you can use the no-penalty CDs kind of like a high-yield savings account with a minimum withdrawal of $25K by opening multiple $25K CDs.

For larger amounts, I've been opening a few larger ones and a few at $25K, so I don't have to hassle with opening so many.

Kevin
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Re: Ally Bank 11 month [No-Penalty CD]

Post by HueyLD » Mon Jan 01, 2018 2:18 pm

Econberkeley wrote:
Mon Jan 01, 2018 1:53 pm
are you guys opening so many cds because of low $ limit for online transactions?
No, because there is no partial withdrawal allowed. When you break a CD, you have to do a complete liquidation.

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Re: Ally Bank 11 month [No-Penalty CD]

Post by aj76er » Mon Jan 01, 2018 2:37 pm

Just rolled my 2 11mo no-penalty CDs into the new 1.75% rate. Thanks for the heads-up that this could be done today (I was planning on doing this tomorrow). Everything worked smoothly via the website by using my Ally savings account as the conduit. These no-penalty CDs are great products, and Ally continues to make me a happy customer :D


Just a reminder to set your beneficiaries on the new CD's. They default to no beneficiaries after opening the accounts.
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Re: Ally Bank 11 month [No-Penalty CD]

Post by marcopolo » Wed Jan 03, 2018 8:30 am

HueyLD wrote:
Sun Dec 31, 2017 4:21 pm
I think they could be more clear on their disclosure.

Yes, you need to fund your CD within 10 days to get the rate they offered on the date the CD was opened with a zero balance. If the funding occurs after 10 days, you will get the going rate, and it may be higher or lower.

Once a CD is funded, you will received an open date and a maturity date. And if the rate goes up within 10 days of funding, you can get the higher rate retroactively.

This may not be true.
I transferred a number of CDs to the higher rate on Jan 1. I also opened an additional one with a zero balance on Jan 1. Just funded it this morning. It shows a rate of 1.6% (the current rate), not the 1.75% promotional rate that was in effect on Jan 1, when i opened the CD. I sent them an e-mail asking for an explanation of the rules.
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Re: Ally Bank 11 month [No-Penalty CD]

Post by willift » Wed Jan 03, 2018 8:40 am

I just had a similar experience with the 12month 2% CDs. Opened on the 29th funded on the 3rd.Before I funded online they were identified as 2% CDs once funded they changed to 1.35%. Via a CHAT conversation my rep said that because of the "10Day" thing they do these should change beck to 2% CDs by Jan 8. I asked if she could assure me of that and her response was "If it doesn't happen call us".

Not the best response but I'll wait and see.

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Re: Ally Bank 11 month [No-Penalty CD]

Post by HueyLD » Wed Jan 03, 2018 9:11 am

I wonder if Ally’s 10-day guarantee rule is ambiguous by design.

Ally says: “When you fund your non-IRA CD within 10 days of your open date, you'll get the best rate we offer for your term and balance tier if our rate goes up within that time. The Ally Ten Day Best Rate Guarantee also applies at renewal.”

It doesn’t say anything about what the rate will be if the rate goes down between the open date and the funding date (if within 10 days). However, I had no problem getting the “best” rate offered between the open and funding dates.

I think a phone call can take care of many issues. And yes, their wait time has been longer than usual lately, but if you want the better rate, you have to put in some effort.

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Re: Ally Bank 11 month [No-Penalty CD]

Post by MikeG62 » Wed Jan 03, 2018 9:35 am

Blues wrote:
Mon Jan 01, 2018 2:01 pm
Econberkeley wrote:
Mon Jan 01, 2018 1:53 pm
are you guys opening so many cds because of low $ limit for online transactions?
I haven't done so but I think folks do it so that they can break one or two without having to liquidate one large CD in the event rates are lower at the time they need the funds. Perhaps there are other reasons I haven't considered.
Correct, it is because if I want to break one or a few early, I am not breaking one large CD and losing potentially a higher older rate.
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Re: Ally Bank 11 month [No-Penalty CD]

Post by MikeG62 » Wed Jan 03, 2018 9:38 am

Note that 1.75% promotional rate is no longer available on the 11 month no penalty CD. It is now 1.60%.

Same for the 2% 12 month CD. That promotion expired and the new rate is no 1.75%.

Sorry if this is not new information, but did not see this clearly mentioned in the posts above.
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Re: Ally Bank 11 month [No-Penalty CD]

Post by SlowMovingInvestor » Wed Jan 03, 2018 9:38 am

I was on hold for 2 hrs last night before getting them to close my old 1.5% CDs and reopen new CDs. Unfortunately, the 1.75% rate ended at midnight, and the hold took me beyond that time. The CSR promised to send her supervisor(s) a note about giving me the 1.75% rate instead, so let's see what happens.

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Re: Ally Bank 11 month [No-Penalty CD]

Post by Kevin M » Wed Jan 03, 2018 9:06 pm

marcopolo wrote:
Wed Jan 03, 2018 8:30 am
I transferred a number of CDs to the higher rate on Jan 1. I also opened an additional one with a zero balance on Jan 1. Just funded it this morning. It shows a rate of 1.6% (the current rate), not the 1.75% promotional rate that was in effect on Jan 1, when i opened the CD. I sent them an e-mail asking for an explanation of the rules.
Since you funded it within 10 days, I think you'll get the 1.75% rate. You just won't see it online until the 10th day after the CD was opened. Of course this assumes that you deposited at least $25K into the CD.

Kevin
Last edited by Kevin M on Wed Jan 03, 2018 9:15 pm, edited 1 time in total.
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Re: Ally Bank 11 month [No-Penalty CD]

Post by Kevin M » Wed Jan 03, 2018 9:14 pm

HueyLD wrote:
Wed Jan 03, 2018 9:11 am
I think a phone call can take care of many issues. And yes, their wait time has been longer than usual lately, but if you want the better rate, you have to put in some effort.
I don't think so. If you qualify for the 10-day rate guarantee (whatever it is exactly), you'll get the guaranteed rate, and you'll see that rate on the 10th day after the CD was opened. A phone call won't make any difference, except perhaps in unusual cases like the poster who missed the deadline because of a 2-hour hold time. So a phone call is probably just a waste of time in most cases. Just wait until day 10 and check then.

Kevin
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Re: Ally Bank 11 month [No-Penalty CD]

Post by marcopolo » Wed Jan 03, 2018 9:54 pm

Kevin M wrote:
Wed Jan 03, 2018 9:06 pm
marcopolo wrote:
Wed Jan 03, 2018 8:30 am
I transferred a number of CDs to the higher rate on Jan 1. I also opened an additional one with a zero balance on Jan 1. Just funded it this morning. It shows a rate of 1.6% (the current rate), not the 1.75% promotional rate that was in effect on Jan 1, when i opened the CD. I sent them an e-mail asking for an explanation of the rules.
Since you funded it within 10 days, I think you'll get the 1.75% rate. You just won't see it online until the 10th day after the CD was opened. Of course this assumes that you deposited at least $25K into the CD.

Kevin
Ok. I guess that makes sense as the rate may change more than once during the 10 day window. I did deposit more than $25k, so as you state, it should be the 1.75% once the 10 day period ends.

Thanks for the explanation.
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Re: Ally Bank 11 month [No-Penalty CD]

Post by Mr. Gatti » Wed Jan 03, 2018 10:55 pm

Anybody had any trouble with delay in getting the ACH transfer? I verified account on the 27th but the transfer has not gone through yet. I plan on calling them tomorrow but didn’t know if anybody else had experienced this.

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Re: Synchrony Bank 12 month 2% CD

Post by OneWorld111 » Fri Jan 05, 2018 7:33 pm

Anyone tried Synchrony bank 2% 12 month CD?

Regards,
HNY

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Re: Synchrony Bank 12 month 2% CD

Post by dollarsaver » Fri Jan 05, 2018 7:36 pm

OneWorld111 wrote:
Fri Jan 05, 2018 7:33 pm
Anyone tried Synchrony bank 2% 12 month CD?

Regards,
HNY
Or Navy Federal Credit Union's 2.25% 15 month CD?

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Re: Ally Bank 11 month [No-Penalty CD]

Post by Kevin M » Fri Jan 05, 2018 9:26 pm

The Vanguard municipal money market funds are now a better deal for me. I calculate my taxable equivalent yield (TEY) as 2.00% on the CA muni MM fund (7-day yield = 1.30%) and 1.97% on the national muni MM fund (7-day yield = 1.39%). And I calculate my TEY on the Limited-Term muni fund, with a duration of 2.7 years, as 2.49% (SEC yield = 1.76%). So I recently did early withdrawals from some of my no-penalty CDs to put money into the CA muni MM and Limited Term muni funds.

If you don't know how to calculate your TEYs, we can discuss that.

Kevin
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Re: Ally Bank 11 month [No-Penalty CD]

Post by Prudence » Fri Jan 05, 2018 10:34 pm

Kevin M wrote:
Fri Jan 05, 2018 9:26 pm
The Vanguard municipal money market funds are now a better deal for me. I calculate my taxable equivalent yield (TEY) as 2.00% on the CA muni MM fund (7-day yield = 1.30%) and 1.97% on the national muni MM fund (7-day yield = 1.39%). And I calculate my TEY on the Limited-Term muni fund, with a duration of 2.7 years, as 2.49% (SEC yield = 1.76%). So I recently did early withdrawals from some of my no-penalty CDs to put money into the CA muni MM and Limited Term muni funds.

If you don't know how to calculate your TEYs, we can discuss that.

Kevin
Kevin, with the national muni MM fund, what is the risk of loss due to rising market interest rates (assuming they do rise even if the slope is small)?

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Re: Ally Bank 11 month [No-Penalty CD]

Post by Kevin M » Sat Jan 06, 2018 12:46 pm

Prudence wrote:
Fri Jan 05, 2018 10:34 pm
Kevin, with the national muni MM fund, what is the risk of loss due to rising market interest rates (assuming they do rise even if the slope is small)?
A money market fund typically won't have any losses when rates rise, since the charter of a money market fund is to maintain a stable value of $1.00 per share. Although it's not guaranteed, I don't worry much about it. The default rate of rated municipal bonds is close to 0%, and since the fund invests in very short-term, high-quality munis, the risk is even less.

So, when short-term rates rise, your earnings increase in a MM fund (but the share price does not drop), which is exactly what's been happening since the Fed started increasing the federal funds rate (FFR), and very short-term bond rates also started increasing. So the duration of the fund is 0, and there is no term risk.

As long as the FFR was close to 0%, money market fund yields were close to 0%. Now that the FFR and short-term yields are above 1%, MM funds have once again become competitive with other short-term investments available to retail investors (like savings accounts and short-term CDs). And your marginal tax rates may make a municipal MM fund even more attractive, as in my case.

At a taxable-equivalent yield of about 2%, a muni MM fund provides yield close to the 3-year Treasury, more than a 1-year CD (now that the Ally deal is gone), and not that far below a 2-year CD, but without the term risk of those securities.

Although I expect to only be in the 12% federal tax bracket in 2018, my federal marginal tax rate will likely by 27%, since I expect to be in the range where a marginal dollar of income pushes qualified dividends from the 0% rate to the 15% rate, and 12% + 15% = 27%. I expect my CA state tax rate to be 8%, so I expect my combined marginal tax rate to be 35%. I just share these numbers so others can get a feel as to what it takes to get the taxable equivalent yield of a Vanguard muni money market fund into the 2% ballpark.

Kevin
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Re: Ally Bank 11 month [No-Penalty CD]

Post by dollarsaver » Sat Jan 06, 2018 1:36 pm

Kevin M wrote:
Sat Jan 06, 2018 12:46 pm
Prudence wrote:
Fri Jan 05, 2018 10:34 pm
Kevin, with the national muni MM fund, what is the risk of loss due to rising market interest rates (assuming they do rise even if the slope is small)?
A money market fund typically won't have any losses when rates rise, since the charter of a money market fund is to maintain a stable value of $1.00 per share. Although it's not guaranteed, I don't worry much about it. The default rate of rated municipal bonds is close to 0%, and since the fund invests in very short-term, high-quality munis, the risk is even less.

So, when short-term rates rise, your earnings increase in a MM fund (but the share price does not drop), which is exactly what's been happening since the Fed started increasing the federal funds rate (FFR), and very short-term bond rates also started increasing. So the duration of the fund is 0, and there is no term risk.

As long as the FFR was close to 0%, money market fund yields were close to 0%. Now that the FFR and short-term yields are above 1%, MM funds have once again become competitive with other short-term investments available to retail investors (like savings accounts and short-term CDs). And your marginal tax rates may make a municipal MM fund even more attractive, as in my case.

At a taxable-equivalent yield of about 2%, a muni MM fund provides yield close to the 3-year Treasury, more than a 1-year CD (now that the Ally deal is gone), and not that far below a 2-year CD, but without the term risk of those securities.

Although I expect to only be in the 12% federal tax bracket in 2018, my federal marginal tax rate will likely by 27%, since I expect to be in the range where a marginal dollar of income pushes qualified dividends from the 0% rate to the 15% rate, and 12% + 15% = 27%. I expect my CA state tax rate to be 8%, so I expect my combined marginal tax rate to be 35%. I just share these numbers so others can get a feel as to what it takes to get the taxable equivalent yield of a Vanguard muni money market fund into the 2% ballpark.

Kevin
Kevin, Don't understand if the the 12% Fed Tax bracket for '18, why will qualified dividends bump you from paying 0% to 15%? Will you go over the $77K in the 12% bracket? Please clarify what you mean by "marginal dollar of income". Is your 12% bracket based on filing status of single or married? Don't get the 12%+ 15% = 27%. Thanks

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Re: Ally Bank 11 month [No-Penalty CD]

Post by Longdog » Sat Jan 06, 2018 1:45 pm

dollarsaver wrote:
Sat Jan 06, 2018 1:36 pm
Kevin M wrote:
Sat Jan 06, 2018 12:46 pm
Prudence wrote:
Fri Jan 05, 2018 10:34 pm
Kevin, with the national muni MM fund, what is the risk of loss due to rising market interest rates (assuming they do rise even if the slope is small)?
A money market fund typically won't have any losses when rates rise, since the charter of a money market fund is to maintain a stable value of $1.00 per share. Although it's not guaranteed, I don't worry much about it. The default rate of rated municipal bonds is close to 0%, and since the fund invests in very short-term, high-quality munis, the risk is even less.

So, when short-term rates rise, your earnings increase in a MM fund (but the share price does not drop), which is exactly what's been happening since the Fed started increasing the federal funds rate (FFR), and very short-term bond rates also started increasing. So the duration of the fund is 0, and there is no term risk.

As long as the FFR was close to 0%, money market fund yields were close to 0%. Now that the FFR and short-term yields are above 1%, MM funds have once again become competitive with other short-term investments available to retail investors (like savings accounts and short-term CDs). And your marginal tax rates may make a municipal MM fund even more attractive, as in my case.

At a taxable-equivalent yield of about 2%, a muni MM fund provides yield close to the 3-year Treasury, more than a 1-year CD (now that the Ally deal is gone), and not that far below a 2-year CD, but without the term risk of those securities.

Although I expect to only be in the 12% federal tax bracket in 2018, my federal marginal tax rate will likely by 27%, since I expect to be in the range where a marginal dollar of income pushes qualified dividends from the 0% rate to the 15% rate, and 12% + 15% = 27%. I expect my CA state tax rate to be 8%, so I expect my combined marginal tax rate to be 35%. I just share these numbers so others can get a feel as to what it takes to get the taxable equivalent yield of a Vanguard muni money market fund into the 2% ballpark.

Kevin
Kevin, Don't understand if the the 12% Fed Tax bracket for '18, why will qualified dividends bump you from paying 0% to 15%? Will you go over the $77K in the 12% bracket? Please clarify what you mean by "marginal dollar of income". Is your 12% bracket based on filing status of single or married? Don't get the 12%+ 15% = 27%. Thanks
I think he’s saying that taxable interest, rather than muni interest, would start to push his qualified dividends into the next tax bracket and some of them would go from being taxed at 0 to taxed at 15%.
Steve

LSLover
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Re: Synchrony Bank 12 month 2% CD

Post by LSLover » Sat Jan 06, 2018 2:38 pm

OneWorld111 wrote:
Fri Jan 05, 2018 7:33 pm
Anyone tried Synchrony bank 2% 12 month CD?

Regards,
HNY
I did. Opened two CDs online without any issues in 5 min total. I have a savings account with Synchrony and funded the CDs thru this account.

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Kevin M
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Re: Ally Bank 11 month [No-Penalty CD]

Post by Kevin M » Sat Jan 06, 2018 3:36 pm

Longdog wrote:
Sat Jan 06, 2018 1:45 pm
dollarsaver wrote:
Sat Jan 06, 2018 1:36 pm
Kevin M wrote:
Sat Jan 06, 2018 12:46 pm
<snip>
Although I expect to only be in the 12% federal tax bracket in 2018, my federal marginal tax rate will likely by 27%, since I expect to be in the range where a marginal dollar of income pushes qualified dividends from the 0% rate to the 15% rate, and 12% + 15% = 27%. I expect my CA state tax rate to be 8%, so I expect my combined marginal tax rate to be 35%. I just share these numbers so others can get a feel as to what it takes to get the taxable equivalent yield of a Vanguard muni money market fund into the 2% ballpark.
Kevin, Don't understand if the the 12% Fed Tax bracket for '18, why will qualified dividends bump you from paying 0% to 15%? Will you go over the $77K in the 12% bracket? Please clarify what you mean by "marginal dollar of income". Is your 12% bracket based on filing status of single or married? Don't get the 12%+ 15% = 27%. Thanks
I think he’s saying that taxable interest, rather than muni interest, would start to push his qualified dividends into the next tax bracket and some of them would go from being taxed at 0 to taxed at 15%.
Yes, that's basically it. When your taxable income, including qualified dividends, exceeds the 12% bracket (previously 15%), the qualified dividends above that limit are taxed at 15% instead of 0%. So if you have $50,000 of ordinary income and $27,400 of qualified dividends (and net long-term capital gains) in 2018 (MFJ), you'll pay 0% on the qualified dividends. But if ordinary income plus QD/LTCG is higher than $77,400 (MFJ), you pay 15% on the QD/LTCG above that limit. So an extra dollar above that limit is taxed at 12% and 15%, for a total marginal rate of 27%.

We were barely above the limit in 2016 (75,300), so had a few hundred dollars of QD taxed at 15% (marginal rate = 30%). I am currently deploying a significant amount of cash from a real estate sale (so in taxable accounts) into fixed income, so I expect that my 2018 taxable income will be further above the top of the 12% bracket than 2016 was above the top of the 15% bracket. At current yields, this generally makes safe municipal bonds and money market funds more attractive than the best savings accounts and CDs in taxable accounts.

This is a big change from recent years, when MM funds were yielding close to 0% (so easily beat with a savings account earning 1%), and good CDs were yielding 100 basis points more than Treasuries of same maturities, so even on an after-tax basis, the risk-adjusted yields of the best CDs were attractive even in taxable accounts. Treasury yields (and muni yields) now have increased much more than the best CD yields, so the yield premiums are not nearly as attractive. I bought a 4-year AAA muni on Friday with a taxable-equivalent yield of about 2.8%, so with 5-year CD rates at about 2.6%, the muni is a better deal. I've been getting 1.5-2.0 year AAA munis with taxable equivalent yields in the 2.4-2.6% range.

Kevin
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libralibra
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Re: Ally Bank 11 month [No-Penalty CD]

Post by libralibra » Sat Jan 06, 2018 7:06 pm

Note, the LTCG brackets aren't tied to the new brackets anymore, and are offset a couple hundred dollars. E.g. the 15% bracket starts at $77,200 for joint returns and $38,600 for single.

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Re: Ally Bank 11 month [No-Penalty CD]

Post by radiowave » Sun Jan 07, 2018 9:33 am

libralibra wrote:
Sat Jan 06, 2018 7:06 pm
Note, the LTCG brackets aren't tied to the new brackets anymore, and are offset a couple hundred dollars. E.g. the 15% bracket starts at $77,200 for joint returns and $38,600 for single.
Is that $77,200 after the standard deduction (or itemized)?
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kaneohe
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Re: Ally Bank 11 month [No-Penalty CD]

Post by kaneohe » Sun Jan 07, 2018 9:58 am

radiowave wrote:
Sun Jan 07, 2018 9:33 am
libralibra wrote:
Sat Jan 06, 2018 7:06 pm
Note, the LTCG brackets aren't tied to the new brackets anymore, and are offset a couple hundred dollars. E.g. the 15% bracket starts at $77,200 for joint returns and $38,600 for single.
Is that $77,200 after the standard deduction (or itemized)?
brackets are tied to taxable income so take the exemptions out as well

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