Ally Bank Changing CD Withdrawal Penalty

by Michael on Oct 30, 2013 · 1 comment

Ally Bank Logo

It’s no secret that I love (or at least loved) Ally Bank thanks to the flexibility afforded by their generous early withdrawal penalty on CDs.

For those that are unaware, Ally has always (or at least as long as I’ve been aware) allowed you to break a CD, no matter the length and for whatever reason, with a 60 day interest penalty.

Unfortunately, this policy (which is much better than at other banks) will be changing effective 12/07/2013. That’s the bad news. The good news is that the change will only apply to CDs bought or renewed after that date.

In other words, existing CDs will still be subject to the old 60-day policy. So for those of us with money already parked in Ally CDs, that’s great news.

As for CDs bought or renewed after the new policy goes into effect, here’s an overview of how the early withdrawal penalties will work…

  • For two year (or less) CDs, the penalty will be 60 days of interest.
  • For three year CDs, the penalty will be 90 days of interest.
  • For four year CDs, the penalty will be 120 days of interest.
  • For five year CDs, the penalty will be 150 days of interest.

Wow, that’s a huge change at the high end, and definitely something to consider before you go stashing a bunch of money in a long-term CD at Ally Bank.

In other news… They’ve once again extended their 0.25% loyalty bonus for those who renew CDs upon maturity.

This loyalty bonus has been an ongoing perk at Ally Bank. It technically expires quarterly (I think) but they’ve continued to renew it such that it’s been in place throughout the time that we’ve been banking with Ally.

1 Money Beagle October 30, 2013 at 12:08 pm

I don’t blame them. Banks have to be able to count on the invested funds so that they can use the money for their own business purposes, and if they weren’t able to maximize that due to the no-penalty policy, it makes sense for them to make the change. It also benefits their customers because it actually makes them stronger by removing that level of risk.

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