Ally Bank’s Early Withdrawal Penalty

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.