Saving money with certificates of deposits is a great idea, especially if you have cash just sitting in your checking account or elsewhere, earning little to no interest. These approaches may help you sock money away, but you miss out on the fact that CDs earn interest at a higher rate while keeping your cash in a safe place at the same time.
Saving your money in a CD allows you to deposit it securely with a bank for a set period of time while it accrues interest and grows. Online banks usually pay a higher interest rate on certificates of deposit than brick-and-mortar banks because they have lower operating costs and pass the savings on to customers in the form of higher interest rates. What's more, Ally Bank customer's online CDs are insured by the Federal Deposit Insurance Corporation (FDIC) up to the maximum amount allowed by law.
Certificates of deposit remain in a bank until a predetermined term has expired (maturity), ranging from a few days to several years, which generally enables banks to pay you a higher interest rate than they can for a regular savings account. While you can withdraw your money at any time from a regular savings account, you may wish to wait to withdraw your money until maturity - at the end of the predetermined term - because most CDs come with an early withdrawal penalty.
An exception to that is the Ally Bank No Penalty CD, which allows you to withdraw your money including earned interest without an early withdrawal penalty - anytime after the first six days of funding your account. Explore all the options for saving money Ally Bank has when you visit allybank.com or call live, 24/7 customer service at 877-247-ALLY (2559) today.