The Facts About CD Penalties and Minimum Deposits
What is a certificate of deposit?
A certificate of deposit (CD) is a time deposit. When you open a CD, you agree that you will not withdraw the funds until the maturity date, which varies from a few months to several years after you open the account, depending on the term you choose. Once the CD reaches the maturity date, you can withdraw your money (principal and interest), open a new CD or simply renew your CD. Some people see the deposit term on CDs as a way of imposing savings discipline and removing the temptation to tap into the funds for something other than your initial goal.
Do CDs have minimum deposit requirements?
Many CDs do have minimum deposit requirements. At Ally Bank you can open and fund any CD with any amount and earn among the most competitive interest rates in the country according to Bankrate.com.
What penalties are associated with CDs?
You can close a CD before the term ends, but you typically will pay an early withdrawal penalty for doing so. One option for avoiding an early withdrawal penalty is to open an Ally Bank No Penalty CD, which allows you to withdraw all your money, including interest earned, without penalty, any time after the first six days following the date you fund your CD.
What types of CDs work best for me?
Banks offer a variety of types of CDs to fit a variety of financial goals. At Ally Bank, we offer three types of CDs:
- High Yield CD—A CD with our fixed rate for a fixed term.
- No Penalty CD—A CD that allows you to withdraw all your money, including interest earned, without any penalty, any time after the first six days following the date you fund your account.
- Raise Your Rate CDs—With these CDs, you have the option of a one-time rate increase if our 2-Year CD rate goes up; you have the option to increase your rate twice (two times) if our 4-Year CD rate goes up.
Ally Bank is committed to making saving as easy, secure and rewarding as it can be. Learn more at Ally.com or call live, 24/7 customer support at 877-247-ALLY (2559) today.