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Perhaps the biggest drawback to a certificate of deposit is that you have to lock your money away for the term of the CD. While you can withdraw your deposit early, with most CDs you get hit with a penalty equal to several months’ worth of interest.
3-month APY 5.21%
6-month APY 5.41%
12-month APY 5.51%
12-month APY 5.00%
18-month APY 5.00%
24-month APY 4.30%
3-month APY 5.40%
6-month APY 4.00%
9-month APY 5.50%
13-month APY 4.65%
18-month APY 4.60%
24-month APY 0.40%
6-month APY 5.05%
12-month APY 5.30%
24-month APY 4.50%
5-month APY 5.40%
12-month APY 4.20%
15-month APY 4.50%
14-month APY 5.40%
10-month APY 5.30%
One alternative to having a less than fluid CD situation is creating a CD ladder. By laddering, you’ll be able to separate your CD into multiple CDs. So you’ll always have the ability to take cash out without losing interest in a penalty.
What happens if you don’t have enough funds to create a CD ladder? Well, a few banks have recognized this drawback. So they are encouraging new customers to open a CD by offering what they call a no-penalty CD.
The Ally Bank no-penalty CD has an 11-month term. That’s a touch shorter than a standard 12-month high yield CD. And the no-penalty CD carries with it an interest rate slightly shorter as well. So why would anyone own this CD and not the higher interest version?
Ally Bank 11 Month No-Penalty CD
The Ally Bank 11 month no penalty CD offers everything a traditional CD offers with one big hook. There is no minimum to the amount of money you need to deposit to open an Ally no-penalty CD. The current APY is 4.55%.
What sets apart the Ally Bank no penalty CD from a traditional CD is that after you’ve deposited funds and held them for six days, you can withdraw the full balance of your CD at any time, without penalty. Traditional CDs charge a penalty for early withdrawal. This CD allows you to close it any time after the first six days for any reason, penalty-free.
Related: Ally Invest Review
How Does The Ally Bank No-Penalty CD Compare
Ally’s no-penalty CD’s current rate of 4.55% places it among the highest APYs available. It is not, however, the highest. The best no-penalty CD rates today are 5.00% APY or higher.
Within Ally Bank, however, the no-penalty CD stacks up nicely. Compared to Ally Bank’s savings account and 12-month CD, the no-penalty CD is currently a solid option:
- High Yield Savings Account (4.25% APY)
- 11 Month No Penalty CD (4.55% APY)
- 12 Month High Yield CD (4.85% APY)
Ally No-Penalty CD Bottom Line
There’s no question in my mind that the Ally Bank offer is the best no penalty option available today. It beats the rates offered by just about any other bank’s regular CD with a comparable term. But the real question is whether you chose Ally Bank’s 12-month CD, which does charge early withdrawal fees, over the 11-month CD that doesn’t charge a penalty. Depending on how much you have to invest, you could earn 15 more points of interest on the 12-month CD. Just make sure you don’t withdraw the funds early.