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Home » Banks, CD's, Reviews

Ally Bank Raise Your Rate CD: Insurance Against Rising Interest Rates

Last updated by on 6 Comments

The likelihood of interest rates for bank deposits increasing from the historical lows that they are at now is pretty high. I personally have been sitting on the sideline with cash, or investing in lower time commitment (3 & 6 month) and subsequently lower yield Certificate of Deposits (CD’s) because I’ve been anticipating an increase.

If you’ve been in the same situation, you might want to look into a ‘raise your rate’ CD. I discovered one of these offered by Ally Bank, called the Ally Bank Raise Your Rate CD. I didn’t have any luck finding a similar option at another bank, so if you are able to, please share in the comments.

What is a ‘Rising Rate CD’?

Ally raise your rate cdEssentially, a ‘rising rate CD’ is a Certificate of Deposit that allows you to increase the interest rate from whatever it is at the time you make your deposit to a higher interest rate at a later time within your CD’s life. It is a great option if you want to make a decent yield on your savings at a rate higher than a savings account, but are fairly certain that rates will go up during the length of your CD’s term. We’re exactly in that situation right now, in my opinion. I can’t see interest rates staying at these historical lows for much longer, particularly with the impending inflation coming from the debt our country is in. So why not earn a decent yield now and an even better yield later?

The Ally Bank Raise Your Rate CD

I’m a big fan of Ally Bank because they really do offer products that are in their customers’ best interests. The Ally Raise Your Rate CD is definitely one of those products. It is a 2-year term CD with some great features that put it at the top of its class:

  • Open with $0 – no minimum to open
  • No monthly fees for the CD
  • Ten Day Best Rate Guarantee – note that this is one of my favorite features. Instead of taking whatever the interest rate is the day you fund the CD (like most banks), Ally will apply the best interest rate within ten days of opening or when your Ally CD renews, you automatically get the best rate offered during those ten days.
  • Daily compound interest for maximum earnings (most banks do monthly or quarterly compounding).
  • FDIC insured.
  • Automatic renewal at maturity – Initial deposit plus earned interest

But, the key feature, and the reason that I thought this product was worthy of review on 20somethingfinance, is the ability to ‘raise your rate’ on the CD. If, at any point, during the 2 year CD term you would like to increase your initial interest rate yield to whatever it is at the present time, you can call Ally and ask them to increase the rate. And there is no cost to do so. How beautiful is that? Protection, or insurance, against rising rates! Now there is no excuse to sit on the sidelines with your cash because you are afraid rates will increase.

Bank CD Rate Comparison

ally bank CDHow do Ally Bank CD Rates compare with other banks? Pretty darn well, actually. At the time of this post, Ally is offering 1.99% on this CD (you may want to check their site for the latest rate). At the same time, their biggest online bank competitors were offering much less for the same term – Ing Direct at 1.10%, Bank of America at 1.10%, Chase at 1.01%, and HSBC Advance at 0.75%. I’d encourage you to compare Ally’s yield at the time you read this with the other banks listed to make sure it is still the best. But as of right now, they are not only beating the competition, they are blowing it out.

Any Downsides to the CD?

I always try to give fair product reviews and cover the downsides. No erroneous fees – check. No high minimum – check. No huge penalty for early withdrawal – check. Like most CD’s, the Ally Raise Your Rate CD has an early withdrawal fee if you pull your money out before it matures. The early withdrawal fee is 60 days of earned interest, which is actually much more lenient than other CD’s that I have owned. I couldn’t find any downsides or ‘tricks’ to screw over the little guy in the fine print.

Final Thoughts on the Ally Raise Your Rate CD

If you’re in the market for a CD or have cash sitting around in a checking or savings account, I don’t think there is a better CD on the market right now than the Ally Bank Raise Your Rate CD. If you’re looking for an alternative CD, you might want to check out my review on the EverBank MarketSafe Diversified Metals CD, but that closes May 13.

Ally Bank CD Discussion:

  • Have you purchased a CD from Ally before?
  • What interest rate are you currently earning on your CD’s?
  • What do you think of this CD?

About the Author
I am G.E. Miller, & this is my story. My goal is financial independence ASAP. If you share that goal, join me & 7,500+ others by getting FREE email updates. You'll also find every post by category & every post in order.


6 Comments »
  • M Denis says:

    GE – Thanks for the good tip. My cash on hand is a 6 month emergency fund, so liquidity and how quickly I can access my cash is my most important concern. Although I have kept my ears open for ways to stay liquid and get a better return. I have an ing orange savings now at 1.10% apr and have avoided a CD because of penalties and possibly having a CD slowly give up my cash. A quick call to Ally put my fears to rest about liquidity – they would release funds in 2 business days if I withdrew early. This along with the fact that the only penalty would be 60 days interest makes this sound like a good deal.

  • Ryan Martin says:

    Like you said, it’s not good to be in cash. Saving money without any form of compounding won’t get you ahead. Every little bit helps especially when you’re younger.

    I started an ING savings account when I was 25, it set an excellent foundation.

    This definitely sounds like a good product.

  • JLH says:

    We started laddering CDs with Ally last year when we decided to try to make a little more interest on our savings. When we went to renew a few months ago, we actually got an extra 0.5% on top of the advertised rate since we were repeat customers! It automatically became a raise your rate CD as well. My only question is this: how should I decide when to call in for my rate increase?

  • stephanie says:

    I had a CD with this option a few years ago from USBank (I want to say I opened a 30-month CD around Oct. 2006?), which I never actually raised the rate on. When I bought the CD the rate was nearly 5%, and by the time I cashed it out in spring of last year rates were quite low (I want to say it would have rolled over at around 1.5%). The only “catch” was they gave you a form when you enrolled that you had to bring back in to the bank when you wanted to change your rate. Not a problem for me – my financial stuff is all very organized, and I don’t have a problem hanging onto stuff like that and being able to locate it when necessary. For anyone who doesn’t have a decent filing system (or worse yet, throws stuff away), that could be a problem.

    My only CD currently is getting 2.1% at ING for another 6 months. Right now ING savings accounts pay 1.1%, and their CDs pay less than that unless you get a 36+ month CD, which will then pay 1.25%. The extra .15% interest isn’t worth having my money tied up, IMO. With the small sums that I have available to put in CDs ($2k or $3k, tops), I don’t think it for me to chase rates at this point.

  • Natalie says:

    Thanks for the article. This really opened my eyes to online banking. I will be getting a savings account with Ally soon. However, if you want a long term investment wouldn’t it make more sense to get an I series savings bond? I’m currently getting over 4%. You can’t cash them in during the first year, but you can liquidate them anytime thereafter and only lose the last month of interest.

  • Natalie says:

    The series I bonds I bought several years ago are still getting almost 3 % but it looks like the current rate is only 0.75% so I took your advice to go with an Ally CD. However, I chose the 5 yr cd. Not that I plan on having my money in for 5 years, but with the penalty only being 2 months interest and the difference between the 2 yr and the 5yr is .83% it actually make more sense to buy the 5 year if you are planning on having your money invested for more than 6 months. You will earn more than enough to pay for the penalty and still get a better interest rate overall. I bought a few too so that if I need access to just some of my money I won’t have to pay the penalty on all of it.

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