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

Aug 03, 2017 | 1 Comments

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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.

Higher Interest Rates Usually Matter the Most

The typical saver might simply compare the top CD rates and pick the best one. After all, they're designed to help you grow your money.

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

More Types of CDs Available

With traditional CDs, you keep a specific amount money in the CD until it matures. You're not supposed to withdraw the money, increase the deposit, or change the interest rates.

Banks may offer different types of CDs that provide more flexibility with how you can manage your money.

Ally Bank offers a no-penalty CD that doesn't charge an early withdrawal penalty if you ever decide to withdraw the money before the CD matures. However, the interest rate tends to be lower on this type of CD. You might even find that Ally's Online Savings account provides a higher interest rate than its no-penalty CD.

Ally Bank also offers 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.

Keep Note of the Early Withdrawal Penalties

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.

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

Capital One 360 CD Early Withdrawal Penalties

CD Term Early Withdrawal Penalty
12 months or less 3 months of interest
More than 12 months 6 months of interest

Get a Bonus When You Renew Your CD

Banks can offer more to attract customers. Ally Bank offers a CD renewal bonus 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.

More: The Best CD Accounts of the Year
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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>