Ally Bank - no penalty CD cashout for +0.1%

[Goldilocks]

At Ally Bank, I have two no penalty CDs paying only 0.55%. I plan to spend these funds within the next 2 years. They expire in Dec 2022 and March 2023. Since the savings account now pays 0.6% interest and new 11 month no penalty CD's pay 0.7%, I am inclined to cash in both no penalty CDs and hold them in either savings or a new no penalty CD at slightly higher interest. What do you think?

[anon_investor]

At Ally Bank, I have two no penalty CDs paying only 0.55%. I plan to spend these funds within the next 2 years. They expire in Dec 2022 and March 2023. Since the savings account now pays 0.6% interest and new 11 month no penalty CD's pay 0.7%, I am inclined to cash in both no penalty CDs and hold them in either savings or a new no penalty CD at slightly higher interest. What do you think?

100% yes. I cashed out my 0.55% NPCDs this week. Didn't realize NPCDs are now 0.7%, I will open up new ones.

[Goldilocks]

[/quote]
100% yes. I cashed out my 0.55% NPCDs this week. Didn't realize NPCDs are now 0.7%, I will open up new ones.
[/quote]

Thanks. Good to know. I'll probably do this to.

Just a check, were any Bogleheads able to call Ally and negotiate adjusting an 0.55% NPCD to a 0.75% NPCD before it matured? This way they could keep the extra 0.05% loyalty reward.

[DiMAn0684]

Why open CDs when there're several bank accounts that pay 1%+ ? Given that the fed is looking to do several more rate increases it is unlikely that the rate would drop.

Few examples:
https://www.baskbank.com/
https://www.sofi.com/banking/
https://www.thecfgbank.com/deposit-rates
https://www.merchantsbankofindiana.com/money-market/

[evelynmanley]

You might be interested in these threads:

Re: When would you invest cash in a longer term CD?
viewtopic.php?p=6676225#p6676225

CD Discussion Thread
viewtopic.php?t=292085&start=950

[Eno Deb]

Absolutely, cash them out. It's only a few clicks, doesn't cost anything, and the lag compared to their savings account will almost certainly get bigger in the next few months.

[benladel]

Ally Currently advertising 20-month Select CD that yields 2.0% APY. Its 14-month Select CD pays 1.5% APY. Early withdrawal penalty is 60-day interest.
https://www.ally.com/go/bank/20m-select ... L400002574

[anon_investor]

Why open CDs when there're several bank accounts that pay 1%+ ? Given that the fed is looking to do several more rate increases it is unlikely that the rate would drop.

Few examples:
https://www.baskbank.com/
https://www.sofi.com/banking/
https://www.thecfgbank.com/deposit-rates
https://www.merchantsbankofindiana.com/money-market/

Probably because OP doesn't want to make a new account and NPCDs are as good as liquid as savings account and everything can be done with a few clicks from an existing Ally account.

[TetrisCollider]

When you can get a 9 month T-Note for 1.85%, none of these CDs make any sense.

[Eno Deb]

When you can get a 9 month T-Note for 1.85%, none of these CDs make any sense.

You can liquidate the no-penalty CDs in minutes any time and without loss of principal. In Ally's case the money is immediately available. The same cannot be said about treasuries (which you'd have to sell at market if you need the cash before maturity, possibly at a loss, and wait for the trade to settle before you can use the money). These CDs compete more with a savings account than with treasuries.

[evelynmanley]

A good analysis of Ally's offerings - savings and CD rising rates:


Ally Bank Hikes CD Rates Again, 20-Month Select CD Rises to New High
POSTED ON SATURDAY, MAY 14, 2022 BY Ken Tumin

https://www.depositaccounts.com/banks/ally-bank/offers/