Ally Bank CD Rates Review

Aug 21, 2017 | Be First to Comment!

ally bank cd review

Imagine your money growing faster than the top online savings accounts without any added risk. Certificates of deposit (CDs) can do that for you. Because the money isn't meant to be withdrawn until maturity, banks offer higher interest rates on CDs. That's also why they're so good for long-term savings.

Ally Bank is one major online bank that provides CDs to customers. It is already known for its great savings account.

Ally Bank’s lineup of CDs are ideal for this purpose because the CD rates are exceptionally high. Depositors get the convenience of managing and tracking their own earnings, and with Ally being an online-only bank, there are fewer fees that could reduce your earnings than you might pay at a walk-in bank location.

Highly Competitive Rates Available

As one of the top online banks, Ally Bank offers an impressive lineup of CDs that surpasses most other deposit products you can find on the market. An,d the rates never change for the life of your deposit. There's no need to worry about fluctuating interest rates.

So, how do Ally’s CD rates stack up? Ally offers three different CDs with a variety of terms, rates, and features:

  • High Yield CDs: Traditional CDs with terms between 3 months and 5 years
  • Raise Your Rate CDs: Special bump-up CDs with terms of 2 years or 4-years
  • No Penalty CD:  A special CD with a term of 11 months and 3 different rate tiers based on the deposit amount

Interest rates vary from CD to CD, so keep in mind which product suits your needs best. With the exception of the 12-month CD and the 5-year CD, Ally's CDs have three rate tiers that increase as you deposit a larger amount of money.

On the Raise Your Rate CD, you have the chance to increase your interest rate once with the 2-year term option, or twice with the 4-year term -- if Ally’s interest rate increases during that time. It is a decent choice during times when interest rates are likely to be on the rise.

With the No-Penalty CD, note that the lowest rate tier may not even be able to beat Ally's amazing online savings rate. However, with higher rate tiers on the CD, you would be able to earn a high rate than the savings account.

Tip: Find out exactly how much you'll have at maturity with a CD calculator.

Early Withdrawal Penalties

Maximizing your savings in CD requires a great deal of discipline, especially when your interest compounds daily. You may be tempted to withdraw a little bit here, a little bit there, but remember that a CD isn’t like other liquid savings accounts; early withdrawals on a CD can trigger penalty fees that defeat the purpose of saving.

Early withdrawal penalties apply at all times for the High Yield and Raise Your Rate CDs.

Ally Bank CD Early Withdrawal Penalties

CD Term Early Withdrawal Penalty
24 months or less 60 days of interest
25 - 36 months 90 days of interest
37 - 48 months 120 days of interest
48 months or more 180 days of interest

The No Penalty CD allows for withdrawals of your balance and any earned interest within the first 6 days of opening your account, but after that, penalties will be charged.

Minimum Deposit Requirements

CDs are designed for folks who are serious about building up a solid investment, so larger minimum deposits are often required of borrowers to put the higher interest rates that come with CDs to go to work and do their thing. Of course, this can be problematic for people who don’t have enough money to deposit.

Luckily, Ally Bank does not have a minimum deposit requirement for its CDs.

But, depositors should plan on making an initial investment of $5,000 to start saving. You can earn a higher CD rate on Ally’s High Yield and No Penalty CDs when you have $5,000 invested -- and an even higher rate with a $25,000 deposit.

IRA Version

CD yields can be used for anything you want -- like saving for retirement -- but the dividends you earn on two of Ally’s CDs can be earmarked specifically for it. The High Yield and Raise Your Rate CDs are also available in an IRA, or Individual Retirement Account, with the same terms and interest rates.

This can be a good alternative if you don’t have a 401(k) or another employer-sponsored retirement plan, or you’d like to supplement the retirement investment you already have.

On both CDs, you can choose between three IRA options:

  • Traditional IRA
  • Roth IRA

Each account offers tax advantages that mean less money paid to the IRS and more in your pocket. Traditional IRAs are tax-deferred, so you don’t pay taxes on your savings until you withdraw. Roth IRAs allow for both tax-free growth and withdrawals. And for small business owners, a SEP IRA gives employees a retirement planning option with the security and high yields of a CD in one.

Ally Bank recommends consulting with a tax professional before opening an IRA because there are contribution limits and other rules regarding IRA rollovers, transfers and conversions.

What Happens at Maturity?

When the CD hits maturity, it’s done earning interest, and you’re free to withdraw your funds, with all the interest you’ve earned and finance the goal you’ve been saving up for.

You can also automatically renew your CD, which will take all your compounded earnings and start them over in a new CD of your choice with Ally’s current APY Choosing this option means having a potentially higher deposit at your disposal, qualifying you for a better interest rate. To get even more advanced, you can “ladder” several CDs, opening several accounts with different maturity dates.

Ally CDs Compared to Competitors

The first rule of choosing any type of bank account is to shop around. You never know who might offer a better interest rate, or more attractive terms and conditions, or simply just for an easier user experience.

With that, take a look at how the CDs at some of these financial institutions stack up against Ally’s:

Synchrony Bank CDs

Synchrony Bank’s big extended family of CDs gives depositors the choice between a short-term, 3-month account up to 60 months, where you can make a deposit as low as $2,000 all the way up to jumbo deposits of $100,000 or more. The longer the term, the higher the interest rate.

Like other CD products (as well as Ally Bank), Synchrony’s CDs are backed by FDIC insurance.

Goldman Sachs Bank CDs

GS Bank’s CDs further broaden your choices of where to invest your money. The bank’s certificates are all about long terms and small minimum deposits, where you can put down as little as $500 starting at a 6-month CD, all the way up to socking away money in a 6-year CD with a high APY.

Goldman Sachs Bank USA customers have some added freedom and flexibility, too; open a CD and choose how much your monthly interest is disbursed, either to a Goldman Sachs Bank USA savings account or another account of your choice.

Discover Bank CDs

If patience is your virtue, one of Discover Bank’s CDs carries a 10-year term to grow interest to exponential proportions. Ideal for laddering with other CDs of shorter terms, you can open CDs that mature more quickly, gain access to those funds, all while having another CD earning dividends for a longer time period.

Accessibility is another perk to Discover’s CDs. Terms start as low as 36 months, and minimum deposits start as little as $2,500.


Are these CDs a good choice and worth considering? Yes. Any of the above banks and their CDs combine low-risk, secure savings with the stability of high interest rates that won’t vary or change with market conditions. If interest rates drop to next to nothing, your CD will remain locked into its original rate for the life of the account.

Ally ekes out the others for the online and mobile guarantee it offers for its CD products, FDIC insurance, and customer service availability. As for the products themselves? We like the themed approach the bank takes for each CD, so whether you want to bump up your rate, save without penalty fees, or just tap into some high yields, Ally goes beyond the standard account approach to give customers a product worth investing in.

More: The Best CDs of the Year
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