Ally Bank, an Online institution which was formerly known as GMAC, does a good job of simplifying the saving process by streamlining the customer experience and offering some interesting and straightforward products.

Ally

A Penalty-Free CD? Ally’s Got It

Certificates of Deposit (CDs) are savings products that generally offer good interest rates for a preset period of time, with potentially steep penalties if you withdraw early.

Ally offers a few kinds of CDs, perhaps the most creative of which is the No-Penalty CD. Over an 11-month term, the CD turns in a 1.35% APY, a competitive interest rate for a CD with those terms these days. The difference between Ally’s No-Penalty account and others is, you guessed it, the no-penalty aspect of the CD. If you withdraw your money early, you won’t face a fee of any kind. Bank of America also offers a penalty-free CD, called the Risk Free CD, but it comes with just a 0.40% APY.

Another alternative would be opening a savings account (no withdrawal fee). Some savings accounts come with competitive interest rates, as you can see on our rates table.

Flexible CD Rates

Most everything about Ally’s two-year Raise Your Rate CD seems normal: A relatively high 1.94% APY, a penalty for early withdrawal and no monthly fees. But the account comes with the interesting ability to raise your rate once during the two-year term.

If Ally’s APY goes up at any time during your term, you can call the bank and request an upgrade to the better rate. You can only do that once during your two years, but one rate upgrade is better than none.

Using Long-Term CDs for Short-Term Profits

One interesting facet of Ally’s five-year CD is the minimal penalty it features for early pullouts.

Ally’s five-year CD currently carries 2.99% interest. If you take your money out early, you incur a penalty equal to 60 days of interest.

If you put $25,000 into the five-year CD, you would earn $758.76 in interest in the first year. If you took your money out after that first year, your penalty would be $126.46, leaving you with $632.30 in interest profit.

If you put the same $25,000 into a savings account — say, a newdominionDIRECT account with a 1.50% APY — you would bring in $375 of interest in the first year.

The difference between cutting your CD term short and opening a savings account is $257.30.

Cutting this long-term CD short might not be a way to get rich quick, but you could save a bit more money with than you would with a savings account.

Ally Isn’t the Only Bank With Attractive CD Options

Ally isn’t the only bank offering interesting CD packages or competitive interest rates. A look at the CD rates table shows impressive APYs on long-term CDs from banks such as newdominionDIRECT and American Express Bank.

Discover Bank and Bank of America each have available no-penalty CDs, and taking a few minutes to look for low-penalty, long-term CDs at your current bank could lead you to a way to turn a long-term CD into short-term interest profits.

A GMAC press release highlights the transition to the Ally brand will be limited to the corporate entity. The firm will continue to offer the products and services provided by GMAC, Ditech and other brands under the Ally Financial Inc. umbrella. Options to potentially use the Ally brand currently are being evaluated, but no final decisions have been made.

Company Sets Six Key Priorities

In reviewing the GMAC press release, it was interesting to see the six key strategic priorities the company chose to focus on to lay out a path toward improved performance:

• Become the premier global auto finance provider for dealers and consumers.

• Improve our cost structure and efficiency.

• Improve our access to the capital markets, our debt ratings and cost of funds.

• Fully transition to a bank holding company model.

• Improve our liquidity position by building deposits at Ally Bank.

• Continue to de-risk our mortgage business and define a viable long-term strategy for our mortgage origination and servicing business.

Ally Expands Online Product Portfolio

With the continued efforts to integrate the Ally brand, 2010 first quarter results show that Ally Bank reported pre-tax income of $231 million, compared to a pre-tax loss of $90 million in the same period a year previous. The improved performance was driven by increased net revenue due to higher auto originations and investment income, lower loan loss provision expense related to mortgage, and improved cost of funds. The bank also expanded its U.S. Online product portfolio by introducing an interest checking account, as part of Ally Bank’s continued focus on growing deposits. Total assets at Ally Bank were $55.2 billion on March 31, 2010, compared to $55.3 billion at year-end 2009.

Read the full press release at http://www.ally.com/learn/ally-financial/.

Discover Bank Stays on Top

Discover Bank has cut rates by 0.10 percentage points on all of its CD’s this week. However, despite these cuts, its 12 month CD with a rate of 1.60% is still one of our highest.

Ally Bank follows, with a 1.58% 12 month CD, which is down 0.02 percentage points. Ally’s 9 month CD saw a larger drop of 0.10%, putting it at the 7th place on our list of 9 month CD rates behind Discover and EverBank.

ING Direct saw the largest cuts in its CD rates, with 0.25 percentage points being taken off its 24, 30, 36, 48 and 60 month CDs. ING Direct rates also dropped 0.15 percentage points for its 12 and 18 month CDs, and 0.10 for its 6 and 9 month rates.

Why Rates Might Be Dropping

These recent drops could be a result of the decline in consumer confidence that occurred over the past month. According to the Conference Board, the Consumer Confidence Index dropped 10.5 points from January to February. This number can have the effect of keeping bank rates low, as banks are unlikely to raise rates until there is a greater economic demand. If consumers began to borrow more, this could stimulate banks to raise rates, but low consumer confidence show that at least for now, this is not likely.

To see our top CD rates, visit out CD rates page here.

Ally Checking Account

Online Checking

It is no surprise that Ally, the fastest growing online bank in the country, would eventually expand its products to include checking, as many other online banks have already offered their customers a checking as well as a savings product. Ally, however, challenges these other banks by bringing consumers a checking account with no minimum balance, while still offering a 0.50% APY, a rate that is higher than the current checking accounts offered at ETRADE, ING Direct, and Capital One. If customers hold more than $15,000 in their account, the APY goes up to 1.15%, one of our highest rates.

The Ally Promise

Even though Ally came later to the checking game, they took their time and did their research, which could pay off for consumers.

“We’ve really done our research and listened to customers to develop a product that puts the customer first,” said Sanjay Gupta, the CMO at Ally. “We’re developing our products with the philosophy that we are a financial partner with our customers and we’re making money with them-not off them.”

It has been this transparent, straightforward approach to banking and a commitment to customer service that has helped Ally become a top competitor among online and branch based banks alike. Offering services like free checks, free online bill pay, no fees and free transfers and overdrafts, Ally’s Interest Checking is sure to gain the attention of consumers looking for a online bank with high rates as well as the convenience of a checking account.

To learn more about Ally Checking, visit the website here.

Then, the latest economic data released shows that new jobless claims drop to the lowest level for this year, while the retail industry saw its second straight monthly sales gain after a year-long decline. Could consumers perhaps be opening their wallets again, finally ushering in much anticipated economic activity?

Increased economic activity is certainly something that we hope will come soon enough. Because only then would we be able to expect deposit interest rates to rise again. And this is the bit of not-so-pleasant news that prudent savers will have to deal with: the Federal Reserve announced after its policy meeting last Wednesday that it is standing by its decision to keep benchmark interest rates at near-zero levels while the economy remains weak. Nothing surprising in that, but still disappointing for those who are hoping to get more out of their extra funds.

Let’s check out how much further down banks cut their CD rates in response to the Fed’s pronouncement:

6-month CDs

CD rate averages for 6-month CDs dropped the lowest this week, although fortunately not that substantially. Inching down from 0.95% to 0.93%, the 6-month CD rate fell by 2 basis points and slid farther from the 1.00% mark.

12-month, 36-month, 48-month, and 60-month CDs

Averages for 1-year, 2-year, 4-year, and 5-year CD rates also fell, each by a single basis point. If you think that a 0.01% decrease in CD rate average isn’t that much, you are quite right in that, but bear in mind too that these are some of the lowest rate levels seen in years.

24-month CDs

Only the 2-year CD rate was able to hold its own this week with the average maintained at 1.72% APY.

Bank CD Rate Cuts

In response to the recent flurry of developments, not too few banks made CD rate cuts this week and while banks lowering their CD yields are not uncommon, what could be cause for worry for savers looking to maximize their deposit yields is that the banks that made substantial rate cuts this week are those banks which offer some of the most competitive, if not the top, CD rates such as Ascencia (best 6-month CD rate), UmbrellaBank.com (best 1-year CD rate), Discover Bank, Ally, and American Express Bank.

To check if your bank has perhaps bucked the trend and instead, raised their CD yields for this week, visit our CD rates page.

ING Direct

Who Will Be the Next ING Direct?

The dissolution of ING Direct comes as a shock, as the online banking subsidiary is one of the largest and most successful of its kind. Even though the restructuring isn’t scheduled to occur until 2013, many people with ING Direct account are already trying to prepare themselves for the switch to a new bank that offers similar services, to avoid any complications that might arise for ING users closer to the sell off date.

One of the things that set ING Direct apart when it first started was its marketing campaign, specifically the very catchy “Orange” campaign. Online banks have a unique opportunity to expand and explore a new direction of bank branding, especially because online banking in general draws a younger consumer base. Therefore, in addition to being able to offer high rates on products like CDs due to the lack of overhead costs for online only banks, these banks can also bill themselves as the hip, new way to bank.

The Contestants

In order to help those ING Direct customers who looking for a easy switch to a bank that offers similar services, and see which banks might fill the void left by ING Direct, we have complied this list of comparable online banks that we think were ING Direct’s biggest competitors:

• Ally – Ally is the online bank that most directly embodies the marketing and business model that made ING Direct so successful. Ally’s brand is dedicated to transparency in banking, and in fact, regularly offers higher CD rates than ING Direct.

• Capital One Direct – Capital One is another of the online banks that out a great deal of time and effort into their marketing campaigns, as anyone who has seen the “What’s in Your Wallet” ads can tell you. However, despite their great branding technique, Capital One has been unable to match some of the other online CD rates.

• Discover Bank – Discover Bank is your basic, all around great online bank. While they don’t offer the same skyrocketing rates as some of the other online banks, they are consistent and regularly provide 12 month CDs that are in the top 5, as well as a variety of credit cards.

• Umbrella Bank – This bank reached the top of our 12 month CD charts last week, and continues to raise its APY far above that of its competitors. However, the Office of Thrift Supervision has released a cease and desist order for the parent bank, so keep your eye out for changes to this banks operations in the future.

• Amboy Direct – Amboy is another online bank that regularly maintains some of the top CD rates on our site. As the Online division of Amboy National Bank, Amboy customers can use either the online bank or 25 branch based locations in central New Jersey.

• Ascencia – Ascencia is an Internet-only bank headquartered in Louisville, KY. While one of the lesser known of the online banks, it also regularly outperforms the national averages with 12 months CD rates of 2.00%

For more online banking options, visit our Best Online Banks page here.

Discover Bank

Discover’s site allows you to input your own deposit amount and term length to see how their rates measure up to the “national average.”

Key Feature(s): Current rate, savings calculators

State Farm Insurance

State Farm makes it easy to navigate rates for all of its products, and gives you the option to apply for many different accounts quickly and easily online.

Key Feature(s): Online application, Claim center

USAA Federal Savings Bank

USAA is one of our most well-reviewed banks, with a 4.4 star MBT rating. Its website reflects this, with a friendly interface and extensive personal finance advice for customers.

Key Feature(s): My Financial Assesment (USAA customers only), advice center

Ally Bank

Ally has a great site that provides easy navigation of its products and rate comparisons, as well as access to your own account and easy account opening for new customers.

Key feature(s): Up-to-date rate comparisons

Integra Bank

Integra Bank has a aesthetically pleasing, easy-to-use interface as well as great features like Worksheets, downloadable forms that help you organize everyday information and finances.

Key Feature(s): Worksheets, User friendly navigation

Citizens Bank

This newly designed site provides a great Help Me Choose feature that gives advice on the best product to suit your banking needs, as well as easy tabbed browsing.

Key Feature(s): Help Me Choose

E*TRADE

E*Trade started as an online investing website, and still offers great investment advice in addition to its banking services. It provides a convenient breakdown of its rates by product right on the banking homepage.

Key Feature(s): Investment planners, Rate Tables

EverBank

This bank’s website dedicates a whole section to financial research and planning, including calculators, rates, and even foreign currency exchange rates.

Key Feature(s): Research & Planning section

Nationwide

Nationwide shows you a big display of its lead offer right when you open the page, and has a Compare Rates tool that gives you great advice on what product is right for your needs.

Key Feature(s): Comparison tools

Dollar Bank

Dollar offers an accessible site with clear links to all of its products, as well as a tool that watches specific interest rates and emails them to you.

Key Feature(s): Rate Watch

If you know of any other banks with great websites, give them a review or send us an email. We’d love to hear your suggestions.

So is this perhaps a foretaste of better things to come? It would be quite foolhardy to rush to that conclusion just yet. Fact is, while the nation’s largest banks are slowly building up their fortunes again as the economy gets better, banks deemed “too small to save” are still bound to close shop within the next few years.

And while we’re still looking forward to a best case scenario, we can’t also help but wonder how this would affect the country’s savers. Fortunately for those who are diligently saving up, there are still more than a few options when looking for competitive CD rates than just your friendly neighborhood bank. Case in point: this week’s best CD rates come from online banks. Here is the full list:

6-month CDs

Ascencia still has one of the highest offerings for the 6-month CD at 1.76% APY. If you’re looking for another winning deal for short-term investments however, don’t forget that Everbank’s Yield Pledge Money Market Account still guarantees a 2.51% APY for the first three months.

12-month CDs

Last week’s top 12-month CD rate of 2.15% from Umbrella Bank was slashed by the bank to only 2.02% recently. But what bank customers lost from Umbrella Bank they stand to gain from Amboy Direct and ING Direct this week, with both online banks offering 2.10% APY for a 1-year CD.

ING however, has much more in store for the consumer with its Added-Value CD that gives an additional 0.15% for new funds deposited. That would give the ING depositor a total of 2.25% APY, a deal matched only by MetLife Bank’s promo rate. MetLife however, requires a $25,000 minimum while with ING Direct, any opening amount is accepted.

24-month and 36-month CDs

Both E-Loan and Flagstar Direct maintain their hold on the top spots for 2-year and 3-year CD rates respectively, and without any changes on the CD rates. E-Loan is at present, giving 2.37% for the 24-month CD, while Flagstar Direct’s 36-month CD is at 3.00% APY.

48-month CDs

Although still retaining top spot for the best CD rate for the 4-year term, Intervest National Bank lowered its rate from 3.20% to 3.15% APY.

60-month CDs

Citibank also dropped its previous 60-month CD yield from 3.50% to 3.25% APY. As a result, the banks just close behind it also closed in to share the top spot for the highest 5-year CD rate. Ally, Discover Bank, E-Loan, and Onewest Bank all offer 3.40% for this long term CD.

Find out if your bank is presently giving the same good deals by checking out our comprehensive database of nationally-available CD rates today.

The 6-month to 24-month CD yields continued to inch downward and this is not so unexpected as the Fed did say that interest rates were holding steady for the time being. But what came as a pleasant surprise was the relatively substantial rise in the long term investments, from the 36-month to the 60-month CDs. Two days into the last quarter of this year, here’s how CD rates fared:

6-month CD

The CD rate average for 6-month CDs ticked downwards from 1.06% to 1.04%, dropping by two basis points this week. Even if it manages to go down by just a single basis point every week from now, it would be at the 1% mark by the end of this month.

12-month and 24-month CDs

The averages of these two CD terms both varied this week: the 12-month CD remained the same at 1.35% and the 24-month CD decreased from 1.73% to 1.71%. In general, a 0.02% cut may not seem like much but remember that these rates are some of the lowest we’ve seen CD rates drop down to for years now.

36-month and 48-month CDs

Obviously, it’s not all bleak and gloomy news today as the 36-month and 48-month CDs surged forward this week with both averages bumping up by 2 and 3 basis points. The 36-month CD went from 2.04% to 2.07%, while the 48-month CD is now at 2.38% from last week’s 2.36%.

60-month CD

The news was equally upbeat for the 60-month CD as it went up from a 2.63% average last week to 2.66% as of today. While the rate itself is far from being record-breaking high, this is the highest it’s seen to date from its plunge in mid-August. The good news is that the 60-month has made a steady climb out of its August ditch.

Bank CD Rate Hikes and Rate Cuts

Let’s cap this CD rate averages weekly summary with some of the more significant rate hikes and rate cuts this week.

Bank of Internet’s unexpected 0.45% rate increase plus the fact that many banks also increased their rates sometime this week only goes to show that there are still some good CD options available, and that there is still hope that perhaps, not only the economy, but also CD rates are finally turning around.

ING Direct posted a significant increase of +0.25%, while Ally pushed its rate up a modest +0.05%.

Ally and ING Direct Raise CD Rates

Ally Bank also offers a 9-month fixed rate, no penalty CD which allows you the option of no fee early withdrawal, with a rate of 1.85%.

Branchless banks such as Ally and ING Direct are generally able to offer higher rates on their CDs, due to the lack of overhead that is experienced by more traditional brick and mortar institutions.