Who Has Better CDs? Ally Bank vs. Capital One 360

Mar 27, 2017 | 1 Comments


The two of the nation’s largest online banks, Ally Bank and Capital One 360, have been battling each other for years. While their savings accounts and checking accounts are in close competition, their CD offerings differ greatly.

Certificates of deposit (CDs) are relatively straightforward deposit accounts -- commit a certain amount of money for a period of time to earn interest and pay a penalty if you withdraw funds prematurely.

The typical saver might simply compare the top CD rates and pick the best one. On this front, Ally Bank has not been able remain competitive with Capital One 360, which offers noticeably higher CD rates.

Here’s a sampling of CD rates at the two online banks:

Ally Bank CDs vs Capital One 360 CDs

CD Term Ally Bank Capital One 360
6 months 0.60% APY 0.40% APY
12 months 1.05% APY 1.25% APY
5 years 1.65% APY 2.00% APY

Ally Bank also offers an 11-month no-penalty CD (0.87% APY) but it pays less than Ally’s online savings or money market accounts. Furthermore, Ally has 2-year and a 4-year CDs that allow a one-time increase of the interest rate, which can come in handy if you find that you’re stuck with a low rate when interest rates are rising.

In addition to higher CD rates, Ally Bank is more lenient with its early withdrawal penalties. Ally Bank charges just 60 days worth of interest on an early withdrawal of any CD while Capital One 360 has early withdrawal penalties of 2 months’ interest on CD terms of 12 months or less and 6 months’ interest on CD terms of longer than 12 months.

While interest rates and early withdrawal penalties are the key criteria in picking a CD, banks can offer more to attract customers. Ally Bank offers a CD renewal bonus of 0.25% APY to keep loyal customers. Many community banks also allow customers to negotiate the rate when they renew a CD. Capital One 360 does not provide such a perk.

Although Ally Bank does outshine Capital One 360 with its CDs, note that other online banks do offer higher rates (see tables below). Ally Bank's lax penalty policy and renewal bonus are likely to be the differentiating factors.

Related Stories:

Rates in Flux: Which CDs Should You Invest In?

Online Checking Accounts: Ally Bank vs. Capital One 360

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Wednesday, 28 Aug 2013 6:44 PM
<p>My experience with Ally's laxity has not been consistent with your description .. They were punitive when I explored taking a larger distribution of an IRA than normal. No other IRA had this kind of policy. Unless they have changed, I intend to move when it finally matures.</p>