Ally Bank’s Early Withdrawal Penalty

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Ally Bank will change its early withdrawal penalty effective December 7, 2013.  CDs purchased or renewed on or after that date will have the new schedule.

I have recommended Ally Bank’s 5-year CD product for several years.  With a 60 day withdrawal penalty, it was a great place to park emergency funds.  For a very small cost, investors could access their cash early – whether it be for spending needs or for a higher-rate product.  It may still be a decent place for some of your cash, but the withdrawal penalty on the 5-year CD is increasing to 150 days’ loss of interest from 60 days.  The 4-year CD will increase to 120 days’ loss of interest and the 3-year CD will increase to 90 days’ loss of interest.

Please be aware of these changes and evaluate CD rates and withdrawal penalties carefully.