CDs and checking accounts are both types of bank accounts you can use to meet your financial goals. And when you bank with Ally Bank, both accounts earn interest. Plus, all deposits in Ally Bank checking accounts and CDs are insured by the Federal Deposit Insurance Corporation (FDIC) up to the maximum allowed by law.
So what is the difference between the two types of accounts?
CDs are time deposits. When you open a CD, you agree that you will not withdraw the funds until the maturity date, which vary from a few months to several years after you open the account, depending on the term you choose. You can close a CD before the term ends, but you typically will pay an early withdrawal penalty for doing so. Because the funds for a CD generally can only be withdrawn penalty free at maturity, they generally offer a higher interest rate than checking accounts.
Checking accounts are transactional accounts. Checking accounts are designed for you to access to your money any time. When you deposit money into a checking account, you can access that money via check or debit card almost immediately. Because you make no guarantee to the bank that the money will be there for any period of time, most banks pay a lower interest rate on funds in checking accounts.
If you need to access your money on a regular basis, a checking account may be best for you. If you want to save your money and earn a higher interest rate, a CD may be the answer. Of course, you also can open both and get the benefits of each type of account.
Whatever you choose, you can count on Ally Bank for superior service and rates that are consistently among the most competitive in the country.
Learn more at Allybank.com or call live, 24/7 customer care at 877-247-ALLY (2559).