What to Do When CD Rates Fall

Making Sure You Get the Best Bank Certificate of Deposit Rates

January 2016

Wondering what to do with savings you've earmarked for certificates of deposit (CDs)? It's understandable that some people are eyeing longer-term FDIC-member bank certificate of deposit rates as a way to help balance against risk. But if one of your CDs is close to maturing, it might make sense to rethink your strategy a little, according to Eric Stiff, vice president of marketing for Members Credit Union in Winston-Salem, N.C. "It's not always a good idea to tie yourself to a really long-term CD," Stiff said. "You may not want to lock yourself into something with so low a rate. But CDs are still a good savings tool, as long as you choose carefully."

One way to take advantage of the security of CDs while making sure you don’t miss out on potentially rising rates is to construct a CD ladder. A CD ladder is a system that diversifies your money across CDs with varying maturity dates. For example, you might put 20 percent of your funds in five different CDs, each of which would have a different term length. If you chose CDs with term lengths of 12 months, two years, three years, four years and five years, for example, once the 12-month CD matured, you could then renew it in a new five-year CD. Following this process every year would result in a CD maturing every year, allowing you to take advantage of potentially higher long-term rates.

Sites like Bankrate.com and MyBankTracker are great places to start comparing CD rates from around the country. In addition, you can go to Allybank.com and see how our rates stack up to some of our competitors’.

Ally Bank CDs offer four advantages:

  • With our Ten Day Best Rate Guarantee, when you fund your CD within 10 days of your open date, you'll get the best rate we offer for your term and balance tier if our rate goes up within that time.
  • We grow your money faster by compounding interest daily. Some others may compound monthly, quarterly or even annually.
  • We don't require a minimum deposit to open a CD. Open and fund with any amount.
  • Our rates are among the most competitive in the country.
  • Our 2-year and 4-year Raise Your Rate CDs allow you to take advantage of rising interest rates. You have the option of a one-time rate increase if our Ally Bank 2-Year CD rate goes up; you have the option to increase your rate twice (two times) if our Ally Bank 4-Year CD rate goes up.

Learn more about how Ally Bank can help you reach your savings goals at Allybank.com or call live, 24/7 customer care at 877-247-ALLY (2559) today.

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