The Ally Bank High Yield Online CD

The new high yielding online certificate of deposit from Ally Bank has recently received high reviews for both its ease of use and consistent ability to earn yields that outperform other financial institutions.

Money Magazine in their May 2011 edition of Best Money Moves for 2011 listed Ally’s High Yield CD on their list.

I decided to break down some of the reasons why this CD would be a great place to park some savings.

• $0 Opening Balance Requirement
• Ease of Online and Electronic Set Up
• No Monthly Maintenance Fees
• 10 Day Best Rate Guarantee
• Daily Compounding of Interest
• High Yielding Interest

$0 Opening Balance

With no opening balance requirement this beats many other brick and mortar banks that require opening balances of $500 or sometimes even a few thousand.

Ease Of Online Set Up

On the same note of having better set up rules than the traditional banks Ally – which is a fully online bank – is set up to make everything easy by being able to open and fund and manage accounts directly from your computer at home.  Ally Bank and ING Bank and other online banks have really taken the lead in making a very user friendly environment for their customers.

No Monthly Maintenance Fees

Because the bank does not have the overhead of a full retail branching system it can provide higher rates and charge lower fees.  Think of how much banks like Chase or Bank of America spend everywhere year on maintaining their thousands and thousands of branches all over the country.  The benefits here are that the bank does not charge any maintenance costs for this CD.

10 Day Best Rate Guarantee

The 10 day guarantee allows you to receive the best interest rate for your new account during the initial 10 day period of opening.  As long as you fund the account within 10 days of opening then the interest rate will be adjusted to the highest rate offered during that 10 day window.  Many other banks simply apply the rate available either on the day you open the account or the day you fund.

Daily Compounding Interest

There’s a reason why Einstein called Compounding Interest “The most powerful force in the universe.”  I’m sure we’ve all heard the story how if you start with a penny and then double that and then double that, etc… then in a very short amount of time you will have a ridiculous amount of money.  That in essence is compounding interest.  Normally it works against most people in the sense of their credit card balances but in this case you can have it work for you.  The more often it is compounded the better and daily certainly beats the many other financial institution which take weekly or monthly averages.

Highest Yield CD

The Ally 12 Month High Yield CD is currently yielding approximately 1.01%.  Compare that rate to the national average of 0.53% – as tabulated by mybanktracker.com – or Bank of America 0.35% or Chase 0.25% or Wells Fargo 0.05%.  You can check out the rates by going to the Ally website and seeing for yourself what the current rates are and how they currently stack up to other major banks.

Just in case you’re wondering exactly who is Ally Bank and if they are some out of the blue fly by night organization.  Ally is the renamed GMAC Bank – General Motors Acceptance Corporation – and has been around since GM first created the bank to handle car financing in 1919.  After the General Motors financial problems at the very beginning of the Great Recession they were spun off to bring in more money and were renamed Ally Financial in 2010.

Hopefully this review will help you to understand the benefits of the Ally 12 Month High Yield CD and if it’s a good money move for you in 2012.

You can sign up for an Ally High Yield CD here.

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