Ally Bank is pushing for their top cd rates which includes a 2-year CD that earns 2.09% APY. The current cd rates being offered for the following terms seem to be competitive as well:

12 months 1.65% APY
18 months 1.74% APY
2 years 2.09% APY
3 years 2.49% APY
4 years 2.74% APY
5 years 3.15% APY

One good news that we got about the certificate of deposit deals is that the bank has lowered their early withdrawal penalties to only 2 months of interest. This is very beneficial to consumers especially those who invest to take advantage of the highest cd rates of long term certificates.

Most banks and credit union still apply the 180 day interest as their penalties and some can cost you as much half of the earnings for a 60 month CD. Basically, when you have a 5 year CD and you decide to close it down prior to maturity, you still a decent earning that is comparable to other offerings in the market today.

Possible Catches

What could be the possible issued with the reduced early withdrawal penalties of Ally Bank on their CDs? First, any early withdrawal can be refused by the bank. We do not see this in the disclosure page of Ally but make sure that you read the fine prints of any bank deals.

Second, it will take you some effort and a good deal of time to close a CD. Our readers reported that they encountered delays when they tried to close their Ally certificates of deposit early. We asked the CSR on how we go about it when closing a CD, he said told us that you need to contact an Ally advocate to help you with the closure. It usually takes 5 business days for the bank to send the funds to your account via ACH. It can take a week or so if you ask for a check to be mailed to you. If you have a liquid account with Ally, you can ask them to transfer the funds to your savings and it will take one banking day.

Another down side of the Ally offers is that you cannot take out a partial amount. This means, that when you withdraw from the CD, you close the CD. It can be a good strategy if you open small certificates instead of injecting all the funds into one big CD account.

Withdrawal of interest from your Ally CD account can only be done in disbursement. You can not request for a one time big time give me my interest thing but instead opt for a yearly, quarterly, or monthly withdrawal of earnings.

Still, the lowering of the early withdrawal penalty is a good move for Ally Bank. It may be really beneficial when interest rates will jump up in the future.

Other good deals with Ally

Ally Bank still offers their No Penalty CD. It has a 9 month term which earns 1.24% APY. You can open an account by calling the bank, over the internet, or by mail. You can see the details of how you should go about it on the FAQ page of the bank’s website.

Account holders of the no penalty CD can takeout the funds after six banking days after opening or any time moving forward without having to worry about penalties. Again, the withdrawal is considered to be done in full amount.

Ally Bank is FDIC insured with certificate number 57803.