With so many savings options available, you may wonder how certificates of deposit (CDs) work. Here’s some basic information that can help you decide if a CD is right for you.
A 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. You can close a CD before the term ends, but you typically will pay an early withdrawal penalty for doing so.
At member banks, CDs (and all deposits) are insured by the Federal Deposit Insurance Corporation (FDIC) up to the maximum amount allowed by law. CD interest rates sometimes are higher than savings account interest rates. Moreover, online banks often offer the best rates because they have lower operational costs than brick-and-mortar banks.
The various options available with CD interest rates set them apart from other savings tools. In most cases, the interest rate is fixed, although accounts with variable rates are also available at some banks.
The Ally Bank No Penalty CD is a notable exception to the early withdrawal penalties you may see with other CDs. As the name implies, the Ally Bank No Penalty CD is a fixed-rate CD that allows you to withdraw all your money without penalty, any time after the first six days following the date you funded your account. Plus, keep the interest earned.
To learn more about how CDs work, find some of the most competitive interest rates available and discover the versatile Ally Bank No Penalty CD, go to Allybank.com or call live, 24/7 customer care at 877-247-ALLY (2559) today.
Ally Bank, Member FDIC