Ally Bank savings interest rate dropping from 0.8% to 0.6%

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Kevin M
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by Kevin M »

atdharris wrote: Thu Sep 24, 2020 1:42 pm
sapphire96 wrote: Thu Sep 24, 2020 1:33 pm Wow, how low can it go? Mediocre environment for savers.

What’s worse is that we can expect this environment for at least a couple of years as the Fed plans to keep its interest rates at 0% for that time.

What does not make sense is that I remember Ally offering almost 1% on their savings account when the Fed interest rates are at zero before they were raising rates a few years ago. Do I dare ask why is it different this time?
Perhaps they are wanting to be more conservative during this economic downturn? I believe it dropped to 0.75% during the GFC and start moving up as the Fed began raising rates. So that pretty much means we're going to be at 0.6% or lower until 2023. Maybe we really do have no choice but to invest in equities.
According to DepositAccounts, the lowest Ally online savings APY dropped in the years following the GFC, when the federal funds rate was 0-0.25%, was 0.84%.

Image

So yeah, things are different this time.

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Explorer
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by Explorer »

TheDDC wrote: Thu Sep 24, 2020 3:15 pm Holding cash is increasingly more pointless. Not worth holding unless you you can get over 3% in a fixed investment vehicle anymore.

-TheDDC
This is exactly the desired behavior from us by the "powers that be," don't fall for that. Cash is still a very useful component of a (large) portfolio.
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by radiowave »

Just got my email today. Wish I would have got the 2.75% 5 year CD last year . . . oh well.
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by Kevin M »

With the 1-month Treasury yield at 0.08%, even 0.60% is a yield advantage of more than 50 basis points. Of course the 11-month NP CD at 0.75% is even better, but as others have said, that rate probably will drop soon too.

Moved most of what already hadn't been moved from savings into NP CDs in a couple of family accounts into them today. And although until now all of those CDs were opened in trust, just used POD for the ones today, since it takes an extra day or two to open up a CD in a trust, and I was worried the NP CD rate might drop before they were opened in the names of the trusts.

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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by Kevin M »

radiowave wrote: Thu Sep 24, 2020 8:15 pm Just got my email today. Wish I would have got the 2.75% 5 year CD last year . . . oh well.
Reinvestment risk showed up. Hindsight is 20/20.
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by anon_investor »

I have now moved the last of my money that is not needed for monthly cash flow to NP CDs.

For new money not going to VTSAX, I am strongly considering:
Vanguard Short-Term Federal Fund Investor Shares (VSGBX)
https://investor.vanguard.com/mutual-fu ... file/VSGBX

The 30 day SEC yield is around 1%. Anyone else use this fund?
happydaze412
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by happydaze412 »

With 0% interest rates and savers getting decimated now with interest rates earning .6%. Fed target inflation is 2% and they said they are okay running with a range of 2-3% inflation. With the money supply expanding. M2 money supply expanded from 15.5T to 18.4T. That is almost a 20% increase from February to today. Inflation is coming whether we like it or not.

https://www.statista.com/statistics/112 ... stock-usa/

Then again look at actual inflation vs how they gauge inflation since they changed how inflation is calculated.

http://www.shadowstats.com/alternate_da ... ion-charts

Also look at healthcare, housing, education. Those three alone are disproportionately more expensive and usually account for more of someone’s expenses.

Also

https://sdbullion.com/media/wysiwyg/blo ... ullion.png
nydoc
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by nydoc »

All this discussion looks interesting when using percentage. As soon as one calculates actual change in dollars all this seems pointless.
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by MathIsMyWayr »

cricket49 wrote: Thu Sep 24, 2020 5:47 pm Just opened a few No Penalty CD's @ .75

These rates keep dropping. 😡
Are you sure there is no early withdrawal penalty? According to Ally web site, there is a penalty of 60 days of interest for CDs of 24 months or less duration with an exception, "We'll waive the early withdrawal penalty if the depositor passes away or is judged legally incompetent."
https://www.ally.com/bank/high-yield-cd/

https://www.ally.com/bank/cd-rates/
High Yield CD (12 mo): 0.75%
No Penalty CD: 0.60%
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by shess »

MathIsMyWayr wrote: Thu Sep 24, 2020 11:38 pm
cricket49 wrote: Thu Sep 24, 2020 5:47 pm Just opened a few No Penalty CD's @ .75

These rates keep dropping. 😡
Are you sure there is no early withdrawal penalty? According to Ally web site, there is a penalty of 60 days of interest for CDs of 24 months or less duration with an exception, "We'll waive the early withdrawal penalty if the depositor passes away or is judged legally incompetent."
https://www.ally.com/bank/high-yield-cd/

https://www.ally.com/bank/cd-rates/
High Yield CD (12 mo): 0.75%
No Penalty CD: 0.60%
https://www.ally.com/bank/no-penalty-cd/

"Withdraw your full balance and interest any time after the first 6 days of funding your CD."

This is only for the 11-month no-penalty CDs, not for all Ally CDs.

They used to have pretty decent penalties for longer CDs, I think 60 days interest all the way up to 60-month CDs, but these days their penalties are more in line with other banks.
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by MathIsMyWayr »

shess wrote: Fri Sep 25, 2020 12:27 am
MathIsMyWayr wrote: Thu Sep 24, 2020 11:38 pm
cricket49 wrote: Thu Sep 24, 2020 5:47 pm Just opened a few No Penalty CD's @ .75

These rates keep dropping. 😡
Are you sure there is no early withdrawal penalty? According to Ally web site, there is a penalty of 60 days of interest for CDs of 24 months or less duration with an exception, "We'll waive the early withdrawal penalty if the depositor passes away or is judged legally incompetent."
https://www.ally.com/bank/high-yield-cd/

https://www.ally.com/bank/cd-rates/
High Yield CD (12 mo): 0.75%
No Penalty CD: 0.60%
https://www.ally.com/bank/no-penalty-cd/

"Withdraw your full balance and interest any time after the first 6 days of funding your CD."

This is only for the 11-month no-penalty CDs, not for all Ally CDs.

They used to have pretty decent penalties for longer CDs, I think 60 days interest all the way up to 60-month CDs, but these days their penalties are more in line with other banks.
No Penalty Certificate of Deposit (CD) easy money with an easy out.
0.60% Annual Percentage Yield with an 11-month term.
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by trigger08 »

nydoc wrote: Thu Sep 24, 2020 9:31 pm All this discussion looks interesting when using percentage. As soon as one calculates actual change in dollars all this seems pointless.
True, but I'll take an extra $20 or so for just a few mouse clicks. We had been thinking of moving some of Mrs. Trigger08's cash at Ally into one of the No-Penalty CDs anyway, glad I got the email and did it a few hours ago before they dropped the CD rate as well. If the Fed rate stays ~0 for as long as they are predicting, my guess is we'll see Ally go even lower eventually.
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by sunny_socal »

Our local credit union offers 1% on their money market accounts, up to $10k. Can open two accounts, one for you, one for spouse. Not bad compared to other options. (RBFCU)
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by anon_investor »

MathIsMyWayr wrote: Fri Sep 25, 2020 12:36 am
shess wrote: Fri Sep 25, 2020 12:27 am
MathIsMyWayr wrote: Thu Sep 24, 2020 11:38 pm
cricket49 wrote: Thu Sep 24, 2020 5:47 pm Just opened a few No Penalty CD's @ .75

These rates keep dropping. 😡
Are you sure there is no early withdrawal penalty? According to Ally web site, there is a penalty of 60 days of interest for CDs of 24 months or less duration with an exception, "We'll waive the early withdrawal penalty if the depositor passes away or is judged legally incompetent."
https://www.ally.com/bank/high-yield-cd/

https://www.ally.com/bank/cd-rates/
High Yield CD (12 mo): 0.75%
No Penalty CD: 0.60%
https://www.ally.com/bank/no-penalty-cd/

"Withdraw your full balance and interest any time after the first 6 days of funding your CD."

This is only for the 11-month no-penalty CDs, not for all Ally CDs.

They used to have pretty decent penalties for longer CDs, I think 60 days interest all the way up to 60-month CDs, but these days their penalties are more in line with other banks.
No Penalty Certificate of Deposit (CD) easy money with an easy out.
0.60% Annual Percentage Yield with an 11-month term.
As expected they dropped the rate on the no penalty CDs too. It was 0.75% yesterday.
MikeG62
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by MikeG62 »

happydaze412 wrote: Thu Sep 24, 2020 8:46 pm With 0% interest rates and savers getting decimated now with interest rates earning .6%. Fed target is inflation is 2% and they said they are okay running with a range of 2-3% inflation. With the money supply expanding. M2 money supply expanded from 15.5T to 18.4T. That is almost a 20% increase from February to today. Inflation is coming whether we like it or not.

https://www.statista.com/statistics/112 ... stock-usa/
Could be. Same prediction was made following the great financial crisis.

However, as you know, for the expanded money supply to drive inflation it needs to result in increased lending and spending. If it continues to sit idle in the banking system (which we know it is as evidenced by the ongoing dropping of rates by financial institutions, such as covered in this thread - they simply don't need the money so they don't need to incentivize people to place it with them on deposit), then it may well not.
Last edited by MikeG62 on Fri Sep 25, 2020 11:50 am, edited 1 time in total.
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by MikeG62 »

anon_investor wrote: Fri Sep 25, 2020 6:27 am
MathIsMyWayr wrote: Fri Sep 25, 2020 12:36 am
shess wrote: Fri Sep 25, 2020 12:27 am
MathIsMyWayr wrote: Thu Sep 24, 2020 11:38 pm
cricket49 wrote: Thu Sep 24, 2020 5:47 pm Just opened a few No Penalty CD's @ .75

These rates keep dropping. 😡
Are you sure there is no early withdrawal penalty? According to Ally web site, there is a penalty of 60 days of interest for CDs of 24 months or less duration with an exception, "We'll waive the early withdrawal penalty if the depositor passes away or is judged legally incompetent."
https://www.ally.com/bank/high-yield-cd/

https://www.ally.com/bank/cd-rates/
High Yield CD (12 mo): 0.75%
No Penalty CD: 0.60%
https://www.ally.com/bank/no-penalty-cd/

"Withdraw your full balance and interest any time after the first 6 days of funding your CD."

This is only for the 11-month no-penalty CDs, not for all Ally CDs.

They used to have pretty decent penalties for longer CDs, I think 60 days interest all the way up to 60-month CDs, but these days their penalties are more in line with other banks.
No Penalty Certificate of Deposit (CD) easy money with an easy out.
0.60% Annual Percentage Yield with an 11-month term.
As expected they dropped the rate on the no penalty CDs too. It was 0.75% yesterday.
Not that it is great shakes, but Marcus is still at 0.85% for AARP members (although term is only 7-months).
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by atdharris »

Kevin M wrote: Thu Sep 24, 2020 8:09 pm
atdharris wrote: Thu Sep 24, 2020 1:42 pm
sapphire96 wrote: Thu Sep 24, 2020 1:33 pm Wow, how low can it go? Mediocre environment for savers.

What’s worse is that we can expect this environment for at least a couple of years as the Fed plans to keep its interest rates at 0% for that time.

What does not make sense is that I remember Ally offering almost 1% on their savings account when the Fed interest rates are at zero before they were raising rates a few years ago. Do I dare ask why is it different this time?
Perhaps they are wanting to be more conservative during this economic downturn? I believe it dropped to 0.75% during the GFC and start moving up as the Fed began raising rates. So that pretty much means we're going to be at 0.6% or lower until 2023. Maybe we really do have no choice but to invest in equities.
According to DepositAccounts, the lowest Ally online savings APY dropped in the years following the GFC, when the federal funds rate was 0-0.25%, was 0.84%.

Image

So yeah, things are different this time.

Kevin
Interesting. I swear it was 0.75% sometime in 2015-2016 before it began rising to 1% and over. Maybe I am misremembering

EDIT: I am wrong. It was 1% in 2016 according to my statements.
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andronikus
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by andronikus »

What a giant middle finger to the savers.

0.8/0.9 was the lowest they ever went during the bad years. Now I wonder how much lower they will go.
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by willthrill81 »

Ally has dropped the yield on their no-penalty CD to .60%.
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by willthrill81 »

andronikus wrote: Fri Sep 25, 2020 9:03 am What a giant middle finger to the savers.
Blame the Fed, not Ally. Savers haven't even kept pace with inflation for a decade now.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by MikeG62 »

atdharris wrote: Fri Sep 25, 2020 8:47 am
Kevin M wrote: Thu Sep 24, 2020 8:09 pm
atdharris wrote: Thu Sep 24, 2020 1:42 pm
sapphire96 wrote: Thu Sep 24, 2020 1:33 pm Wow, how low can it go? Mediocre environment for savers.

What’s worse is that we can expect this environment for at least a couple of years as the Fed plans to keep its interest rates at 0% for that time.

What does not make sense is that I remember Ally offering almost 1% on their savings account when the Fed interest rates are at zero before they were raising rates a few years ago. Do I dare ask why is it different this time?
Perhaps they are wanting to be more conservative during this economic downturn? I believe it dropped to 0.75% during the GFC and start moving up as the Fed began raising rates. So that pretty much means we're going to be at 0.6% or lower until 2023. Maybe we really do have no choice but to invest in equities.
According to DepositAccounts, the lowest Ally online savings APY dropped in the years following the GFC, when the federal funds rate was 0-0.25%, was 0.84%.

Image

So yeah, things are different this time.

Kevin
Interesting. I swear it was 0.75% sometime in 2015-2016 before it began rising to 1% and over. Maybe I am misremembering

EDIT: I am wrong. It was 1% in 2016 according to my statements.
The low point I see looking back on my old statements was 0.84% in late 2013 (confirming what Kevin found on DA).
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BV3273
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by BV3273 »

So riddle me this lol. What’s the alternative for those sitting on cash? Chasing dividend yields seems to be the only game in town for those that need some sort of income, but that’s like playing Russian roulette.
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by 6bquick »

MathIsMyWayr wrote: Thu Sep 24, 2020 3:49 pm
stoptothink wrote: Thu Sep 24, 2020 3:00 pm
6bquick wrote: Thu Sep 24, 2020 2:56 pm
stoptothink wrote: Thu Sep 24, 2020 2:53 pm When it went to 1% I cleaned out our cash EF almost completely to pay off the mortgage, now it is just a holding spot so we can max out Roths and 529s the first of every year. More to VTSAX.
Honest question, why the 1% cutoff? it was at 1.25% for a bit IIRC, why not then? anything sub 3% is historically worse than inflation, just curious as to the rationale in the timing of your move.
Just happened to be the point where we had enough in there to pay it off, there was nothing special about that 1% threshold. The lower HYS rates go, the less I feel I need sitting their in a cash "emergency fund".
CPI is currently 1.3%. At a 1/3 tax rate, I am losing about 0.9% per year at Ally savings: (1-1/3)*0.6%-1.3%=-0.9%. The true cost of a 2.5% mortgage is 2.5-1.3=1.2% without an itemized deduction. Actually, CPI does not matter. We have to compare (1-1/3)*0.6%=0.4% against the mortgage interest rate of 2.5%. I am losing 2.1% at Ally savings compared to adding to the mortgage payment.
You're not losing 2.1% at Ally. The liquidity of cash and all the benefits therein are costing you 2.1%. Only you can decide if the price is fair.
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by bugleheadd »

UpperNwGuy wrote: Thu Sep 24, 2020 5:51 pm
bugleheadd wrote: Thu Sep 24, 2020 4:10 pm what about putting it in Total Bond Market BND for a 2.41% yield?
BND has a 30-day SEC yield of 1.19%. Where are you getting your 2.41% figure from?
was looking at yahoo finance yield of 2.41%
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by atdharris »

bugleheadd wrote: Fri Sep 25, 2020 9:22 am
UpperNwGuy wrote: Thu Sep 24, 2020 5:51 pm
bugleheadd wrote: Thu Sep 24, 2020 4:10 pm what about putting it in Total Bond Market BND for a 2.41% yield?
BND has a 30-day SEC yield of 1.19%. Where are you getting your 2.41% figure from?
was looking at yahoo finance yield of 2.41%
Those aren't accurate. My brokerage says that BIL is yielding 0.85%, but in reality I believe it is paying nothing.
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by TimeTheMarket »

sapphire96 wrote: Thu Sep 24, 2020 1:33 pm Wow, how low can it go?
0%. I don't see individual savings accounts going lower. Maybe .01% or something.

I'm about to clear out what I have in savings and buy stocks. I can't justify keeping money in a bank at these rates. Screw it. So-called "high yield savings accounts" don't exist anymore.

Savings accounts have not provided good yields in many, many years. And it could continue on for many more yet.
Last edited by TimeTheMarket on Fri Sep 25, 2020 9:34 am, edited 2 times in total.
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by anon_investor »

BV3273 wrote: Fri Sep 25, 2020 9:11 am So riddle me this lol. What’s the alternative for those sitting on cash? Chasing dividend yields seems to be the only game in town for those that need some sort of income, but that’s like playing Russian roulette.
Personally, only my emergency fund/short term savings would sit in a savings account. My entire emergency fund has now been shifted to I Bonds and no penalty CDs. I wish I had started shifted my emergency fund to I Bonds in 2019 when the fixed rate was 0.5%, at least I managed to snag 0.2% fixed rate I Bonds. For my short term savings I moved as much as I could to no penalty CDs, but obviously those will expire sometime next year.

For new money I am saving for short term goals I am debating whether it is too risky to put those savings into Vanguard Short-Term Federal Fund Investor Shares (VSGBX):
https://investor.vanguard.com/mutual-fu ... file/VSGBX

What other fixed income products are out there that might serve as a safe-ish option?
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by 6bquick »

TimeTheMarket wrote: Fri Sep 25, 2020 9:29 am
sapphire96 wrote: Thu Sep 24, 2020 1:33 pm Wow, how low can it go?
0%. I don't see individual savings accounts going lower. Maybe .01% or something.

I'm about to clear out what I have in savings and buy stocks. I can't justify keeping money in a bank at these rates. Screw it. So-called "high yield savings accounts" don't exist anymore.

Savings accounts have not provided good yields in many, many years. And it could continue on for many more yet.
I only see two motivations for your decision. Either you feel that you no longer need an emergency fund/cash/liquid portion of your holdings, or you now feel that it's safe to invest said portion into equities. If it's the latter, what changed your mind? and why did you ever have cash in the first place?
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by TimeTheMarket »

6bquick wrote: Fri Sep 25, 2020 9:33 am
TimeTheMarket wrote: Fri Sep 25, 2020 9:29 am
sapphire96 wrote: Thu Sep 24, 2020 1:33 pm Wow, how low can it go?
0%. I don't see individual savings accounts going lower. Maybe .01% or something.

I'm about to clear out what I have in savings and buy stocks. I can't justify keeping money in a bank at these rates. Screw it. So-called "high yield savings accounts" don't exist anymore.

Savings accounts have not provided good yields in many, many years. And it could continue on for many more yet.
I only see two motivations for your decision. Either you feel that you no longer need an emergency fund/cash/liquid portion of your holdings, or you now feel that it's safe to invest said portion into equities. If it's the latter, what changed your mind? and why did you ever have cash in the first place?
Partly both. I wish the cash I had on hand I had put into the market in march (of course). Timing the market is stupid, but I am not a genius, so I kept a bit out when I shouldn't have. As we keep shedding I'm more comfrotable.

But this cash is an anomaly for me. I have never had substantial cash savings specifically because the yields have always been terrible. I have far too much in cash now generating peanuts.

ALso I do feel more comfortable. March was scary for me, but my wife and I both out of pure luck are in industries that are resistant to job loss from covid, so I no longer quite feel I need the cash I had before.
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by anon_investor »

TimeTheMarket wrote: Fri Sep 25, 2020 9:29 am
sapphire96 wrote: Thu Sep 24, 2020 1:33 pm Wow, how low can it go?
0%. I don't see individual savings accounts going lower. Maybe .01% or something.

So-called "high yield savings accounts" don't exist anymore.

Savings accounts have not provided good yields in many, many years. And it could continue on for many more yet.
0.6% is high yield compared to the 0.01% offered by big banks like Chase. Wasn't it only a year or so ago that Ally was paying 2%+ on their savings accounts? (higher than inflation at the time).
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by anon_investor »

TimeTheMarket wrote: Fri Sep 25, 2020 9:35 am
6bquick wrote: Fri Sep 25, 2020 9:33 am
TimeTheMarket wrote: Fri Sep 25, 2020 9:29 am
sapphire96 wrote: Thu Sep 24, 2020 1:33 pm Wow, how low can it go?
0%. I don't see individual savings accounts going lower. Maybe .01% or something.

I'm about to clear out what I have in savings and buy stocks. I can't justify keeping money in a bank at these rates. Screw it. So-called "high yield savings accounts" don't exist anymore.

Savings accounts have not provided good yields in many, many years. And it could continue on for many more yet.
I only see two motivations for your decision. Either you feel that you no longer need an emergency fund/cash/liquid portion of your holdings, or you now feel that it's safe to invest said portion into equities. If it's the latter, what changed your mind? and why did you ever have cash in the first place?
Partly both. I wish the cash I had on hand I had put into the market in march (of course). Timing the market is stupid, but I am not a genius, so I kept a bit out when I shouldn't have. As we keep shedding I'm more comfrotable.

But this cash is an anomaly for me. I have never had substantial cash savings specifically because the yields have always been terrible. I have far too much in cash now generating peanuts.

ALso I do feel more comfortable. March was scary for me, but my wife and I both out of pure luck are in industries that are resistant to job loss from covid, so I no longer quite feel I need the cash I had before.
Are you going to invest it in equities?
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by 6bquick »

TimeTheMarket wrote: Fri Sep 25, 2020 9:35 am
6bquick wrote: Fri Sep 25, 2020 9:33 am
TimeTheMarket wrote: Fri Sep 25, 2020 9:29 am
sapphire96 wrote: Thu Sep 24, 2020 1:33 pm Wow, how low can it go?
0%. I don't see individual savings accounts going lower. Maybe .01% or something.

I'm about to clear out what I have in savings and buy stocks. I can't justify keeping money in a bank at these rates. Screw it. So-called "high yield savings accounts" don't exist anymore.

Savings accounts have not provided good yields in many, many years. And it could continue on for many more yet.
I only see two motivations for your decision. Either you feel that you no longer need an emergency fund/cash/liquid portion of your holdings, or you now feel that it's safe to invest said portion into equities. If it's the latter, what changed your mind? and why did you ever have cash in the first place?
Partly both. I wish the cash I had on hand I had put into the market in march (of course). Timing the market is stupid, but I am not a genius, so I kept a bit out when I shouldn't have. As we keep shedding I'm more comfrotable.

But this cash is an anomaly for me. I have never had substantial cash savings specifically because the yields have always been terrible. I have far too much in cash now generating peanuts.

ALso I do feel more comfortable. March was scary for me, but my wife and I both out of pure luck are in industries that are resistant to job loss from covid, so I no longer quite feel I need the cash I had before.
There's a third option that this dunce didn't think of. too big a cash holding. ha. Makes sense. Thanks for sharing. I'm fairly confident in my methods, but Im always curious as to other's beliefs. PS: I'm glad you didn't get corona'd. :sharebeer
shess
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by shess »

BV3273 wrote: Fri Sep 25, 2020 9:11 am So riddle me this lol. What’s the alternative for those sitting on cash? Chasing dividend yields seems to be the only game in town for those that need some sort of income, but that’s like playing Russian roulette.
Why do you need an alternative? For the most part the real (after inflation) yield on cash is negative, regardless of how juicy the nominal yield has been. While it's easy to tell that your nominal yield is falling or rising, it's harder to tell if your real yield has changed at all.

Personally, I'm of two minds. On the one hand, this is a time of disruption, so it's plausible that there are rewards to be had by being brave. On the other hand, this is a time of disruption, so it's plausible that something will come up that will make me appreciate having cash on hand, regardless of the yield it's stashed at. Weirdly enough, I have no more ability to predict the future today than I did a year ago, so it's hard for me to argue that I should materially change my stance from a year ago.

After all, a year ago I could have been shifting to slightly-more-locked down cash-like positions, or near-cash-like positions, and for all I remember I might have received a higher premium than I would now for doing so. Why is it suddenly interesting NOW, where it wasn't a year ago? Trick question! It's more interesting now because it is a time of disruption and everyone is nervous! A year ago everyone was more confident that their cash yields would hardly matter.
atdharris
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by atdharris »

TimeTheMarket wrote: Fri Sep 25, 2020 9:29 am
sapphire96 wrote: Thu Sep 24, 2020 1:33 pm Wow, how low can it go?
0%. I don't see individual savings accounts going lower. Maybe .01% or something.

I'm about to clear out what I have in savings and buy stocks. I can't justify keeping money in a bank at these rates. Screw it. So-called "high yield savings accounts" don't exist anymore.

Savings accounts have not provided good yields in many, many years. And it could continue on for many more yet.
I am considering doing the same with the cash I have sitting outside of my CD. I have a large enough taxable account that would cover my expenses for 3-4 years if I remained unemployed. My job has not been affected by the pandemic. March was admittedly scary, but I didn't lose sleep or panic sell.

If I ever get to a point where I need actual cash, I can withdraw money out of the CD that holds 8-9 months worth of living expenses.
kbjeffrey
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by kbjeffrey »

Simple is still offering .8% on their savings account, but I'm assuming that will go down too. I also have $5,000 at Anchor which is still offering 7.83% (on up to $5,000).
rich126
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by rich126 »

People may be looking back and going "geez, locking up 3-4% for years a while ago wasn't such a bad idea" if the next few years turns out to have near 0 interest rates and poor market returns. Both of which are quite possible and could be very painful for retirees (well, normal ones and not ones with huge nest eggs).

Shifting everything to stocks as I've seen some people doing may not work out very well if the market gives you nothing or worse.

Hopefully that doesn't happen since it would be quite painful but the future right now is pretty murky for many reasons.
dknightd
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by dknightd »

The Fed policy says to keep interest rates low, and let inflation go higher. I expect interest rates on saving to continue to decline. Not a good policy for people wanting to keep cash available. :shock: :oops:
If you value a bird in the hand, pay off the loan. If you are willing to risk getting two birds (or none) from the market, invest the funds.
atdharris
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by atdharris »

rich126 wrote: Fri Sep 25, 2020 11:06 am People may be looking back and going "geez, locking up 3-4% for years a while ago wasn't such a bad idea" if the next few years turns out to have near 0 interest rates and poor market returns. Both of which are quite possible and could be very painful for retirees (well, normal ones and not ones with huge nest eggs).

Shifting everything to stocks as I've seen some people doing may not work out very well if the market gives you nothing or worse.

Hopefully that doesn't happen since it would be quite painful but the future right now is pretty murky for many reasons.
That's always a risk. I remember 2000-2013 when the market returned nothing. My reasoning is, the amount of money I have in Ally's HYSA (~$10k) is not material, and I still have 6-7 months in a CD at 1%. To me, it may be worth the risk to invest that $10k and bet 6 months from now, the market is higher than it is today.

After all, we know interest rates will not be higher until 2023. Rates on these savings accounts will only go down if they change at all.
tenkuky
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by tenkuky »

cricket49 wrote: Thu Sep 24, 2020 5:47 pm Just opened a few No Penalty CD's @ .75

These rates keep dropping. 😡
And the NPCD is now 0.6% :shock:
happydaze412
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by happydaze412 »

MikeG62 wrote: Fri Sep 25, 2020 7:13 am
happydaze412 wrote: Thu Sep 24, 2020 8:46 pm With 0% interest rates and savers getting decimated now with interest rates earning .6%. Fed target inflation is 2% and they said they are okay running with a range of 2-3% inflation. With the money supply expanding. M2 money supply expanded from 15.5T to 18.4T. That is almost a 20% increase from February to today. Inflation is coming whether we like it or not.

https://www.statista.com/statistics/112 ... stock-usa/
Could be. Same prediction was made following the great financial crisis.

However, as you know, for the expanded money supply to drive inflation in needs to result in increased lending and spending. If it continues to sit idle in the banking system (which we know it is as evidenced by the ongoing dropping of rates by financial institutions, such as covered in this thread - they simply don't need the money so they don't need to incentivize people to place it with them on deposit), then it may well not.
Fed had to come into the repo market Sep 2019 and inject massive amounts of liquidity.
Same game plan manipulation of markets and qe, 0% interest rates, massive currency printing and debt creation. That’s the game plan. Huge disconnect between stock price and fundamentals. I’m not touching stocks personally. Too much risk.
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JonnyDVM
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by JonnyDVM »

BV3273 wrote: Fri Sep 25, 2020 9:11 am So riddle me this lol. What’s the alternative for those sitting on cash? Chasing dividend yields seems to be the only game in town for those that need some sort of income, but that’s like playing Russian roulette.
I was thinking munis. They really couldn’t return worse than 0.6%....could they?
I’d trade it all for a little more | -C Montgomery Burns
BV3273
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by BV3273 »

JonnyDVM wrote: Fri Sep 25, 2020 11:41 am
BV3273 wrote: Fri Sep 25, 2020 9:11 am So riddle me this lol. What’s the alternative for those sitting on cash? Chasing dividend yields seems to be the only game in town for those that need some sort of income, but that’s like playing Russian roulette.
I was thinking munis. They really couldn’t return worse than 0.6%....could they?
I’m in NY and the deficit is a real problem. I like the tax benefits of munis but the things are a mess right now.
BV3273
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by BV3273 »

shess wrote: Fri Sep 25, 2020 10:14 am
BV3273 wrote: Fri Sep 25, 2020 9:11 am So riddle me this lol. What’s the alternative for those sitting on cash? Chasing dividend yields seems to be the only game in town for those that need some sort of income, but that’s like playing Russian roulette.
Why do you need an alternative? For the most part the real (after inflation) yield on cash is negative, regardless of how juicy the nominal yield has been. While it's easy to tell that your nominal yield is falling or rising, it's harder to tell if your real yield has changed at all.

Personally, I'm of two minds. On the one hand, this is a time of disruption, so it's plausible that there are rewards to be had by being brave. On the other hand, this is a time of disruption, so it's plausible that something will come up that will make me appreciate having cash on hand, regardless of the yield it's stashed at. Weirdly enough, I have no more ability to predict the future today than I did a year ago, so it's hard for me to argue that I should materially change my stance from a year ago.

After all, a year ago I could have been shifting to slightly-more-locked down cash-like positions, or near-cash-like positions, and for all I remember I might have received a higher premium than I would now for doing so. Why is it suddenly interesting NOW, where it wasn't a year ago? Trick question! It's more interesting now because it is a time of disruption and everyone is nervous! A year ago everyone was more confident that their cash yields would hardly matter.
I agree it’s a crazy time. I have no real need for cash earning little, but some yield would be nice. Might be time to look at some other avenues.
mptfan
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by mptfan »

I do not expect my cash to generate investment returns, that's not what it's for, I have cash so that I can sleep at night and to cover emergencies or unexpected expenses and sometimes I use it as dry powder to take advantage of really big market drops. I keep at least 3-6 months of expenses in cash or money market funds that I can access the same or next day, and I keep 3-6 months of near cash in a short term bond fund that I can access the next business day. Once I have 12 months of expenses in cash or near cash, the rest is invested. Maximizing every dollar of return is a worthy goal, but if you lose sight of the big picture and fail to account for other goals...such as having safe and ready cash as dry powder and for unexpected expenses and emergencies...you are making a mistake in my opinion.
mpsz
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by mpsz »

Seems like the writing is on the wall for these cuts to continue. I'm also surprised they dropped below where they were during/after the GFC. I'll probably close my HYSA accounts and just keep these funds at my local brick-and-mortar bank savings account to keep it simple since I don't keep a ton of cash.
patrick
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by patrick »

Even before this drop, Ally was far from the best. There are plain deposit accounts paying 1% now (Chime, First Foundation, Affirm) and you can get 3% with some restrictions:

HMBradley pays 3% on balances up to $100,000. This account requires monthly direct deposit, and you must save 20% of all deposits measured quarterly (i.e. total withdrawals no greater than 80% of total deposits).

Liberty Savings Bank pays 3% on balances up to $25,000. This account requires making at least 12 debit card purchases per month.

Porte Bank pays 3% on balances up to $15,000. This bank is mobile-only and requires $1,000 in direct deposits in a month to qualify to open the savings account.

These deposit account at 3% have higher yields than you can get on low-risk bonds (except EE bonds, but those have their own limits).
shess
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by shess »

kbjeffrey wrote: Fri Sep 25, 2020 10:55 am Simple is still offering .8% on their savings account, but I'm assuming that will go down too. I also have $5,000 at Anchor which is still offering 7.83% (on up to $5,000).
OK, for a sec you had my interest. 7.83% on $5k is equivalent to %.6 on $65k, or %.8 on $49k!

But I think you're referring to: https://www.anchorusd.com/
This seems a bit different than what Simple or Ally are offering.
frugalecon
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by frugalecon »

I have about six years left to run on a 15 year mortgage at 3.125%. I don’t itemize anymore, so that is a pretty juicy return. Plus if I put at least $20,000 I can do a no cost recast (Wells Fargo is my servicer and offers this service), reducing the required monthly payment, so I could monetize it as a stream of “income.” That is the best alternative I can come up with.
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Kevin M
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by Kevin M »

happydaze412 wrote: Thu Sep 24, 2020 8:46 pm With 0% interest rates and savers getting decimated now with interest rates earning .6%.
Decimated might be strong of a word, and it's not just savers (as in holding money in savings accounts). The 5-year TIPS (real) yield is -1.2%, and even the 30-year TIPS yield is -0.33%, so the harsh reality now is that expected real returns are negative for safe fixed income.

The 5-year breakeven inflation rate (nominal yield minus TIPS yield) is 1.45%, so the market doesn't seem to be expecting inflation much higher than that. If one is convinced it is going to be higher than that, then TIPS might be a good choice.

Kevin
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KlingKlang
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Re: Ally Bank savings interest rate dropping from 0.8% to 0.6%

Post by KlingKlang »

Just got an email from PurePoint that their on-line savings account rate is going down from 0.60% to 0.40%. I'll wait to see if they send me a birthday present next month and after that will likely close it.
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