Ally lowers APR on savings from 1.5% to 1.25%

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William Million
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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by William Million » Fri May 15, 2020 7:12 pm

For now, I'm going with the 1.3% rates. However, Vanguard Ultra-Short Term Bond VUBFX might be better option. 1.83%, but some risk to lose a few percentage points in principal if things don't go your way.

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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by anon_investor » Fri May 15, 2020 7:39 pm

William Million wrote:
Fri May 15, 2020 7:12 pm
For now, I'm going with the 1.3% rates. However, Vanguard Ultra-Short Term Bond VUBFX might be better option. 1.83%, but some risk to lose a few percentage points in principal if things don't go your way.
0.53% do not seem that worth it for the potential risk to principal.

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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by William Million » Fri May 15, 2020 7:46 pm

Maybe not, but you won't lose much (and could also gain a bit)

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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by Kevin M » Fri May 15, 2020 8:24 pm

anon_investor wrote:
Fri May 15, 2020 7:39 pm
William Million wrote:
Fri May 15, 2020 7:12 pm
For now, I'm going with the 1.3% rates. However, Vanguard Ultra-Short Term Bond VUBFX might be better option. 1.83%, but some risk to lose a few percentage points in principal if things don't go your way.
0.53% do not seem that worth it for the potential risk to principal.
I own some of the admiral shares version, VUSFX, in an IRA. I also own some short-term corporate bond fund admiral, VSCSX. Here is the performance of these two funds vs. Prime MM, VMMXX, since the recent high for VSCSX:

Image

I bought VUSFX on 8/2/2019, and am just slightly ahead of VMMXX since then, and am even further ahead in VSCSX since then.

Image

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William Million
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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by William Million » Fri May 15, 2020 9:43 pm

As I see it, you're taking a max 2-3% up or down risk with very short bonds. Could go either way, of course. I'm not too worried about that. If it goes down, the interest rate will make up all or most of it. If it goes up, you're getting 3-5% return, beating any CD or savings account.

But only if willing to take a moderate risk.

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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by anon_investor » Fri May 15, 2020 11:44 pm

William Million wrote:
Fri May 15, 2020 9:43 pm
As I see it, you're taking a max 2-3% up or down risk with very short bonds. Could go either way, of course. I'm not too worried about that. If it goes down, the interest rate will make up all or most of it. If it goes up, you're getting 3-5% return, beating any CD or savings account.

But only if willing to take a moderate risk.
To me not worth it for money I am holding in a savings account which are for upcoming expenses (e.g. tax bill in 6 months, etc.), not worth risking principal. Vanguard Ultra-Short Term Bond (VUBFX) might be better than a 1 year CD right now though since the duration is under 1 year. I have a $5k Ally no penalty CD expiring in July. It might be worth it to put the $5k in VUBFX and just let it sit there...

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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by Ricchan » Sat May 16, 2020 1:15 am

RetiredNewbie wrote:
Fri May 15, 2020 3:23 pm
wordsmith11 wrote:
Thu May 14, 2020 12:19 pm
AmEx HYSA dropped to 1.3% today.
So did CIT Bank's Savings Builder.
Ouch. And here I was all excited to sign up for their $300 Savings Builder bonus (available till end of the month).

They actually offer two bonuses. $300 for $50k, or $150 for $25k. You need to keep the funds in the bank for 105 days (or 45 days for existing/recent CIT account holders). I believe a (good enough) estimate of effective APY is:

EAPY = APY + 365 * Bonus / RequireDeposit / DaysHeld

Where APY is their current Savings Builder APY (1.30%).

For the $300 bonus / $50k deposit / 45 days scenario, that works out to an effective 6.17% for 45 days. The 105 day scenario gives 3.39% for 105 days. (The $150 bonus gives the same effective APY, since both bonus and required deposit differ by a factor of 2.)

So, I guess the bonus is still worth doing. Still too bad they lowered the base rate, but I guess it was inevitable.

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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by Momus » Sat May 16, 2020 1:54 am

Capital One $500 bonus isn't bad either. 1.5% rate. Citi at $400 bonus.

Or first foundation bank, neighbors bank at 1.75%.

I will be chasing some of these bonuses and probably make an extra 2k for some toy money this yr.

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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by PizzaEater » Fri May 22, 2020 9:37 am

Momus wrote:
Fri May 15, 2020 12:34 am
PizzaEater wrote:
Thu May 14, 2020 9:29 am
Momus wrote:
Mon May 11, 2020 9:08 pm
Open CD today and fund it in 10 days. Rate lock.
I opened 2 CDs on Monday night. One I funded with my Ally Savings account. Of course it funded immediately and shows an Apr 11, 2021 maturity date, with a rate of 1.45%.

The second I funded from my Bank of America account. Through yesterday, the CD showed the 1.45% rate, but with a $0 balance (as the funds had not yet cleared from BoA). This morning I logged in, and now the $5000 is there, but the maturity date has updated to Apr 14, 2021, and the the rate has changed to 1.30% (i.e., the current rate as of today). Will this all get corrected 10 days after my original opening date?
Yes.
I can confirm that as of today the rate now says 1.45%, with a maturity date of Apr 14, 2021. So just to review:

On May 11, 2020 I opened 2 11-month No-Penalty CDs with an advertised rate of 1.45%. This turned out to be the last day before rates dropped.

On the first CD, I funded it from my Ally Savings account, so it funded immediately. The dashboard always reflected a rate of 1.45% and a maturity date of Apr 11, 2021.

For the second CD, I funded it from my Bank of America checking account. While waiting on the funds to clear, the dashboard indicated a rate of 1.45% and a balance of $0. After the funds cleared (3 days), the indicated rate changed to 1.30%, the balance changed to (correctly) $5000, and the maturity date changed to Apr 14, 2021. After 10 days from originally opening the CD, the dashboard now says that the rate is 1.45%, with a maturity date of Apr 14, 2021. So, my CD will earn interest for a full 11 months, starting on May 14, 2020, with the advertised rate from May 11, 2020.

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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by Exafchick » Fri May 22, 2020 3:18 pm

I use Barclay's for my EF and the rate went from over 2% to 1.30%. Sign of the times!

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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by eldinerocheapo » Sat May 23, 2020 9:27 am

I'm cashing in on my savings account to pay last year's taxes, this year's estimated taxes, and paying the tax on Roth conversions from my TIRA accounts. This will take up a good chunk, and then I'll do the same with cd's as they mature. We'll hopefully remain in the 12% tax bracket as a result.
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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by 9-5 Suited » Sat May 23, 2020 10:26 am

Making extra payments on my 2.9% mortgage feels like raking in the dough now :D

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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by anon_investor » Sat May 23, 2020 12:18 pm

Exafchick wrote:
Fri May 22, 2020 3:18 pm
I use Barclay's for my EF and the rate went from over 2% to 1.30%. Sign of the times!
I feel your pain. My 2.3% no penalty CD, which is part of my emergency fund, just expired... I renewed part of it at 1.35% and put the rest into VLGSX (Vanguard Long Term Treasury Index Fund).

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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by William Million » Sun May 24, 2020 1:03 pm

Given how close CD rates are to high yield savings accounts, I don't see the point in CDs. I suppose no penalty CDs are a different thing, but they also very close to high yield savings accounts.

I've got half my fixed income in mid-/short/-ultra-short-term bonds, and the other half in savings accounts. Right now, I can't see going long.

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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by anon_investor » Sun May 24, 2020 1:50 pm

William Million wrote:
Sun May 24, 2020 1:03 pm
Given how close CD rates are to high yield savings accounts, I don't see the point in CDs. I suppose no penalty CDs are a different thing, but they also very close to high yield savings accounts.

I've got half my fixed income in mid-/short/-ultra-short-term bonds, and the other half in savings accounts. Right now, I can't see going long.
That is what people thought a few weeks ago. Now they probably wished they had locked in some CDs back then at those old rates.

I went long with my fixed income, not worried about interest rates going up any time soon. No credit risk since I went with long term treasuries.

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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by William Million » Sun May 24, 2020 2:50 pm

anon_investor wrote:
Sun May 24, 2020 1:50 pm
William Million wrote:
Sun May 24, 2020 1:03 pm
Given how close CD rates are to high yield savings accounts, I don't see the point in CDs. I suppose no penalty CDs are a different thing, but they also very close to high yield savings accounts.

I've got half my fixed income in mid-/short/-ultra-short-term bonds, and the other half in savings accounts. Right now, I can't see going long.
That is what people thought a few weeks ago. Now they probably wished they had locked in some CDs back then at those old rates.

I went long with my fixed income, not worried about interest rates going up any time soon. No credit risk since I went with long term treasuries.
haha, so far you were right. I guess I'm just a chicken with rates so low. Let's see going forward.

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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by delrinson » Sun May 24, 2020 2:56 pm

9-5 Suited wrote:
Sat May 23, 2020 10:26 am
Making extra payments on my 2.9% mortgage feels like raking in the dough now :D
I hear you. I am now treating my 2.75% mortgage as a negative bond and investing out of it, so to speak.

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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by anon_investor » Sun May 24, 2020 2:59 pm

William Million wrote:
Sun May 24, 2020 2:50 pm
anon_investor wrote:
Sun May 24, 2020 1:50 pm
William Million wrote:
Sun May 24, 2020 1:03 pm
Given how close CD rates are to high yield savings accounts, I don't see the point in CDs. I suppose no penalty CDs are a different thing, but they also very close to high yield savings accounts.

I've got half my fixed income in mid-/short/-ultra-short-term bonds, and the other half in savings accounts. Right now, I can't see going long.
That is what people thought a few weeks ago. Now they probably wished they had locked in some CDs back then at those old rates.

I went long with my fixed income, not worried about interest rates going up any time soon. No credit risk since I went with long term treasuries.
haha, so far you were right. I guess I'm just a chicken with rates so low. Let's see going forward.
I sure miss when HYS accounts were offering over 2.2% just last year... I think after the 2008/2009 crash, HYS accounts ended up bottoming out around 0.75%. If that happens again, that will make 1.3% look great.

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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by Kevin M » Sun May 24, 2020 5:07 pm

William Million wrote:
Sun May 24, 2020 1:03 pm
Given how close CD rates are to high yield savings accounts, I don't see the point in CDs. I suppose no penalty CDs are a different thing, but they also very close to high yield savings accounts.
Right, even if NP CD rate is same or slightly lower than HY savings account, it's a better deal, since the HY savings account rate almost certainly will fall in the next weeks and months, while the NP CD at least locks in the rate for 7 or 11 months (or whatever the term).
William Million wrote:
Sun May 24, 2020 1:03 pm
I've got half my fixed income in mid-/short/-ultra-short-term bonds, and the other half in savings accounts. Right now, I can't see going long.
I wouldn't call a CD with a term of 5-7 years or less "going long". A 5-7-year CD has comparable maturity to an intermediate-term bond fund (what you call "mid-term"), as well as much higher yield on a risk-adjusted basis.

Since a federally-insured CD has almost no credit risk, compare to Vanguard intermediate-term Treasury index fund with SEC yield of 0.34% (the state tax exemption bumps TEY up to 0.38% for me). Not very good compared to about 2% you can get in a good 5-year CD, strictly comparing yields.

The main reason to go with a CD over a savings account is to reduce reinvestment risk; i.e., the risk that rates will be even lower when your short-term security matures, or that your HY savings account rate will continue to drop and you'll end up earning much less than if you had locked in the same or higher rate for a few months or years.

And you don't have to even "go mid". Even good 1-, 2- and 3-year direct CDs have rates higher than most HY savings accounts.

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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by tenkuky » Fri May 29, 2020 4:10 pm

The NPCD has dropped to 1.2% now.
I have a 11 mo NPCD maturing in 2 weeks and guess I've got to put in at this lousy lower rate.

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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by ThatsMyFamJam » Fri May 29, 2020 5:47 pm

Fitness Bank (part of Affinity) says it yields 1.75% if you average at least 12,500 steps/day. For me, that's about 5.5 miles. Good if you're already in habit. I may be doing Census work soon, so this could be a "two birds" situation.

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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by Kevin M » Fri May 29, 2020 6:54 pm

ThatsMyFamJam wrote:
Fri May 29, 2020 5:47 pm
Fitness Bank (part of Affinity) says it yields 1.75% if you average at least 12,500 steps/day. For me, that's about 5.5 miles. Good if you're already in habit. I may be doing Census work soon, so this could be a "two birds" situation.
I see six banks offering 1.5% or more with no gimmicks at Deposit Accounts, with the top no-gimmick rate at 1.61%: https://www.depositaccounts.com/savings/. Some don't have much rate history, and the one with the longest rate history, DollarSavingsDirect at 1.50%, had a yield of only 0.55% from 12/23/2012 to 4/5/2017, so we shouldn't necessarily expect these yields to last.

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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by anon_investor » Fri May 29, 2020 7:11 pm

tenkuky wrote:
Fri May 29, 2020 4:10 pm
The NPCD has dropped to 1.2% now.
I have a 11 mo NPCD maturing in 2 weeks and guess I've got to put in at this lousy lower rate.
Bummer, I have a NPCD expiring in July (2.05%)... I guess that makes me feel better that I renewed one this month at 1.35% (1.30% +0.05% renewal bonus). It just feels bad coming from 2.3%...

Also glad I managed to max out my 2020 I Bond allotment in April at an effective 12 month rate of 1.74%.

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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by atdharris » Fri May 29, 2020 7:57 pm

wordsmith11 wrote:
Thu May 14, 2020 12:19 pm
AmEx HYSA dropped to 1.3% today.
It was only a matter of time before they did that. I fear eventually we'll be back to sub 1% rates in these HYSA.

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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by MikeG62 » Sat May 30, 2020 8:09 am

anon_investor wrote:
Fri May 29, 2020 7:11 pm
tenkuky wrote:
Fri May 29, 2020 4:10 pm
The NPCD has dropped to 1.2% now.
I have a 11 mo NPCD maturing in 2 weeks and guess I've got to put in at this lousy lower rate.
Bummer, I have a NPCD expiring in July (2.05%)... I guess that makes me feel better that I renewed one this month at 1.35% (1.30% +0.05% renewal bonus). It just feels bad coming from 2.3%...
Why not just go with a NP CD since the rate is almost the same as the short term traditional CD anyway? Preserves flexibility for a promo rate CD should one pop up.

Could also take advantage of a transfer bonus (like the one Capital One is currently offering - 1% bonus on transfer of up to $50,000 with holding period of only 90 days). There is no cash-like investment where you can put those funds and earn more over 90 days.
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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by andrige » Sat May 30, 2020 8:18 am

Capital one has gone from 1.7% -> 1.5% -> now 1.3%. All of these changes are not much different than the 1.4% yield to maturity of the total bond funds.

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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by anon_investor » Sat May 30, 2020 8:35 am

MikeG62 wrote:
Sat May 30, 2020 8:09 am
anon_investor wrote:
Fri May 29, 2020 7:11 pm
tenkuky wrote:
Fri May 29, 2020 4:10 pm
The NPCD has dropped to 1.2% now.
I have a 11 mo NPCD maturing in 2 weeks and guess I've got to put in at this lousy lower rate.
Bummer, I have a NPCD expiring in July (2.05%)... I guess that makes me feel better that I renewed one this month at 1.35% (1.30% +0.05% renewal bonus). It just feels bad coming from 2.3%...
Why not just go with a NP CD since the rate is almost the same as the short term traditional CD anyway? Preserves flexibility for a promo rate CD should one pop up.

Could also take advantage of a transfer bonus (like the one Capital One is currently offering - 1% bonus on transfer of up to $50,000 with holding period of only 90 days). There is no cash-like investment where you can put those funds and earn more over 90 days.
I did renewed to a NPCD this month (1.35% is better than today's rate). I am undecided what to do with my NPCD that expires in July.

If I had a large lump sum available, I agree chasing bonuses is probably the most profitable.

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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by anon_investor » Sat May 30, 2020 8:41 am

andrige wrote:
Sat May 30, 2020 8:18 am
Capital one has gone from 1.7% -> 1.5% -> now 1.3%. All of these changes are not much different than the 1.4% yield to maturity of the total bond funds.
My money in CDs are all for my emergency fund or anticipated large bills (e.g. income tax payment, etc.), so I want the principal safe. Otherwise using total bond would probably be easier.

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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by andrige » Sat May 30, 2020 8:57 am

anon_investor wrote:
Sat May 30, 2020 8:41 am
andrige wrote:
Sat May 30, 2020 8:18 am
Capital one has gone from 1.7% -> 1.5% -> now 1.3%. All of these changes are not much different than the 1.4% yield to maturity of the total bond funds.
My money in CDs are all for my emergency fund or anticipated large bills (e.g. income tax payment, etc.), so I want the principal safe. Otherwise using total bond would probably be easier.
I completely agree with you. I want the money I may need immediately to be as safe as possible. My tax-advantaged accounts are in bonds. My non-tax advantaged accounts are currently in different HYSAs (less interest rate risk, similar yields, less credit risk, and FDIC insured). I'll re-evaluate if bond rates substantially change or HYSA rates substantially decrease relative to bonds.

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Re: Ally lowers APR on savings from 1.5% to 1.25%

Post by anon_investor » Sat May 30, 2020 10:34 am

andrige wrote:
Sat May 30, 2020 8:57 am
anon_investor wrote:
Sat May 30, 2020 8:41 am
andrige wrote:
Sat May 30, 2020 8:18 am
Capital one has gone from 1.7% -> 1.5% -> now 1.3%. All of these changes are not much different than the 1.4% yield to maturity of the total bond funds.
My money in CDs are all for my emergency fund or anticipated large bills (e.g. income tax payment, etc.), so I want the principal safe. Otherwise using total bond would probably be easier.
I completely agree with you. I want the money I may need immediately to be as safe as possible. My tax-advantaged accounts are in bonds. My non-tax advantaged accounts are currently in different HYSAs (less interest rate risk, similar yields, less credit risk, and FDIC insured). I'll re-evaluate if bond rates substantially change or HYSA rates substantially decrease relative to bonds.
With the interest rates falling, I bought Series I Savings Bonds for the first time this year in April. Too bad there is a cap on annual purchases. I may start counting I Bonds as part of my emergency fund after I hold them for 1 year and buy more I Bonds with the CDs that expire next year. Still leaves me with the question of what to do with my CD that expires in July. I hope interest rates stay above 1% at least come renewal time. Tempted to buy Series EE Savings Bonds.

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