Ally CD Review: Diverse CDs With Competitive Rates

Learn what options set Ally Bank's CDs apart.

Long gone are the days when you had to walk into a brick-and-mortar bank to open an account. Now, you can easily open an account online.

Ally Bank is taking technology further: It has no physical locations. It does, however, have more than 43,000 nationwide ATMs from which you can access your money, and at the end of 2016, Ally Bank had served more than 4 million retail customers.

The bank offers a range of products and services and its CDs are particularly diversified so you can find one that suits you perfectly. Read on for a review of Ally’s CD choices and what they offer. Of course, getting the highest interest rates is key, but there are other factors to consider, too.

Ally Offers Competitive CD Rates

CDs are safe investments with guaranteed returns, which might appeal to people who are afraid of risk. Ally Bank doesn’t have branches, which reduces its costs, and it passes those savings on to its customers in the form of higher interest rates.

You should always try to get the best APY possible. The best rates are typically reserved for larger deposits — they generally bump up if you invest $5,000 or more and bump up again if you invest $25,000 or more. For example, an 18-month Ally CD pays the following interest rates as of Aug. 18, 2017:

  • Less than $5,000: 2.05%
  • $5,000 to $24,999: 1.95% APY
  • $25,000 and up: 2.05% APY

Ally shows competitors’ rates on similar products, even if the rate is higher. And if Ally Bank rates go up within 10 days of your opening an account, your interest will go up, too. Last, Ally doesn’t charge a maintenance fee on any of its CDs.

Find Out: What to Ask Before Opening a CD Account

Ally Bank CD Pros and Cons

Like all financial products, CDs offer both advantages and disadvantages. Review these Ally CD pros and cons to decide if one is a good fit:

Pros of Ally Bank CDs

So you can better decide on the right investment for your money, understand the benefits of an Ally Bank CD:

  • Access your accounts via phone, tablet or laptop.
  • Ally uses Webroot, software that protects you from viruses, malware, phishing, spyware and unsecure sites.
  • Ally offers 24/7, live customer service.
  • CD rates are competitive.

Cons of Ally Bank CDs

Before committing to an Ally Bank CD, decide whether these drawbacks are deal-breakers for you:

  • No brick-and-mortar locations are available, so you can’t go into a branch and make a transaction or talk to a bank representative.
  • The bank might charge penalty fees if you take money out of your CD before it matures.

Ally Bank’s Raise Your Rate CDs

When interest rates are expected to fall, it makes sense to lock yours in at the current, higher rate. When interest rates are rising, however, you might not want to put your money in a CD because you’re locked in for the term. Ally offers two Raise Your Rate CD options that let you bump up your CD rates during their terms if interest rates rise.

If you invest in a 24-month CD, you can boost your interest rate at any time during its term. If you invest in a 48-month CD, you can raise your rate twice. Currently, the 24- and 48-month Raise Your Rate CDs start at 2.05% APY if you invest less than $5,000, more than the three-year CD at the same amount, but not as high as the 2.15% APY you can lock in on an Ally 60-month High Yield CD.

Related: 10 Best CD Accounts of 2017

Ally Bank’s CD Penalties

One drawback to a certificate of deposit is that when you take money out before it matures, you typically have to pay a penalty, which varies depending on the term and bank. For example, Ally’s High Yield and Raise Your Rate CDs charge an early-withdrawal fee that depends on the CD’s term:

  • 24 months or less: 60 days of interest
  • 25 months to 36 months: 90 days of interest
  • 49 months or longer: 120 days of interest
  • More than four years: 150 days of interest

Find Out: How to Close Your CD Early Without Paying a Fee

Ally Bank’s No Penalty CDs

If you might need to tap your money early but still want a higher interest rate than a savings account, consider an Ally No Penalty CD. The rates are a little lower for smaller deposits, but you won’t sacrifice your return if you have to pull your money out. Plus, you can even qualify for a higher rate if you put in more than $25,000.

For example, a 12-month High Yield CD currently pays 1.90% APY. An 11-month No Penalty CD rate depends on your deposit:

  • Less than $5,000: 1.90% APY
  • More than $5,000 but less than $25,000: 1.25% APY
  • $25,000 or more: 1.50% APY — higher than the penalty CD

Is an Ally Bank CD Right for You?

Ally’s CDs range from three months to five years and some feature no penalties for early withdrawal and the ability to increase your interest rate. If you’re looking for a certificate of deposit, put Ally on your list — don’t worry about banking solely online, because your deposit will be covered by FDIC insurance just like it would be at a bank with physical locations.

Up Next: Your Guide to Market-Linked CDs

This content is not provided by Ally Bank. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone and have not been reviewed, approved, or otherwise endorsed by Ally Bank.

About the Author

Michael Keenan is a writer based in the Kansas City area, specializing in personal finance, taxation, and business topics. He has been writing since 2009 and has been published by Quicken, TurboTax and The Motley Fool.