Ally Bank Small Penalty Certificate of Deposit (CD)
The Ally Bank small penalty certificate of deposit (CD) should not be mistaken for the Ally Bank “No Penalty” CD. That is a different product. Actually, the small penalty is for the early withdrawal for all CD terms.
Ally Bank’s High Yield CDs are fixed rate CDs for a fixed term. The very good rates can be acquired through the long term CDs. As with other CDs from other banks and credit unions, early withdrawals before maturity have a corresponding penalty from each institution. Most banks and credit unions have penalties of at least 180 days of interest for terms over 1 year and some even have penalties as high as half the term in interest.
With Ally Bank, the early withdrawal penalty for all CD terms is only 60 days of interest. The exception to the limitation is the Ally No Penalty CDs. This makes a huge difference for people investing in long term CDs. No one knows what the future will bring, especially with the current economic situation. For one reason or another, there may be some people who have invested in long term CDs finding themselves needing the funds prior to the end of their CD term. Yes, they will still be losing money worth 60 days of interest but that figure sure is a lot better than 180 days of interest, or worse.
Many of Ally Bank’s CD rates are much higher than rates with comparable terms available from other banks today. Having an Ally Bank small penalty certificate of deposit (CD) provides a better alternative for a lesser evil.
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Tags: Ally Bank, bank rates, CD rates, certificate of deposit, investing, money
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