The Flexible Saver: Reacting to Certificate of Deposit Rates

Understanding How Certificate Of Deposit Rates Can Reshape Your Savings Plan

September 2012

For your typical hard-working saver, figuring out how to adapt a savings strategy to the current financial climate is something of a Catch-22:

  • On one hand, conservative savings vehicles like certificates of deposit tend to earn lower interest rates than riskier investments.
  • On the other, the stock and bond markets are more volatile than they've been in years.

Still, there are plenty of smart decisions among the conservative choices, explained Richard Barrington, a personal finance expert with MoneyRates, in a recent interview with Ally Bank.

"It is important for people to realize the banking industry is very fragmented," he said, "so that if there is something going on with your bank that you don't like, you have a lot of options."

Your first consideration, he explained, should be finding the best possible certificate of deposit rates: "Go to a site like ours, pick a CD product and term length, and you'll get a list of some of the best rates out there."

But don't simply choose the highest rate, he warned. "There are plusses and minuses to every product."

Among the other important questions to ask:

  • Does this certificate of deposit rate apply to the entire length of the CD? "There are what are called 'teaser' rates," Barrington explained, "so make sure you know the rate for the full term."
  • What is the penalty for early withdrawal? According to Barrington, "That question is important not just because you might need the money early for an emergency, but because interest rates could go up again. And in some scenarios, it might make sense to pay the penalty in order to get a higher rate."
  • What are the rollover rules? Barrington explained that a bank will notify you that your CD is about to mature, and let you know what the new rollover rate will be. But it's up to you to be mindful of your own certificate of deposit rates, and not just let inertia take over.

At Ally Bank, we offer an array of CDs to suit your needs, all backed by our Ten Day Best Rate Guarantee for CDs. It gives you the highest rate we offer for your CD term during the ten days starting with the day you open your account. All you have to do is make your deposit within that time.

And our 2-year and 4-year Raise Your Rate CDs allow you to take advantage of rising interest rates: Start with a great rate, plus have the option to increase your rate once over the 2-year term or twice over the 4-year term if our rates on these CDs goes up.

Live customer care from Ally Bank is available 24/7 to help you make the most of our certificate of deposit rates, which are among the most competitive in the country. Visit to explore your options and get answers to your questions via email or webchat - or if you'd rather, give us a ring at 877-247-ALLY (2559).

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