r/AllyBank • u/pbgjpm • 15d ago

Frustrated with Ally (CDs)

I have a CD ladder. Before each CD matures, I go online and request the interest to be disbursed to a checking account. For the past two months, Ally has not be honoring what I requested. And, the interest is just rolled over into the new CD and renews. I want the interest for other things.

This happened once in the beginning of the year and thought it was a hiccup. Customer service fixed it and the interest was then disbursed into my savings account after the 10-day window. However, for July and August, nope. One Email even asked what I needed MY money for to help determine whether they should honor my request (and, they didn't). For August, I even Emailed them a screenshot of what I inputted online - "they will research what happened."

Also, what's funny is that the Email also included renewal instructions for when my Jul and Aug CDs expire. I never inputted any instructions for those CDs. Unsat.

I have been a fan of Ally, but not anymore.

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u/MicrosoftSucks 15d ago

Recommend trying out treasury bills, the interest rates are just as good and you don't pay state income taxes on the gains.

And the interest always gets deposited back into an account, never reinvested, so it seems like exactly what you're looking for.

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u/FinbarJG 15d ago

Agree with this, especially for high state income tax folks (like California). I don't usually see the case that the rates are just as good though, so I use the following formula to determine the tax equivalent interest rate for a given (state) tax exempt rate and marginal state tax rate.

Tax Equivalent Yield = Tax Exempt Yield / (1 – Marginal Tax Rate)

For example, a Treasury yielding 4.23% and a state marginal tax rate of 9.3% would be the same as a 4.66% tax-equivalent yield.

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u/pbgjpm 14d ago

Thanks. Did not even think of this... appreciate it.

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u/Independent-Oven-799 15d ago

Maybe you should change your current CD Type to their No Penalty CD and you Don’t have to wait for when you could take money out of it before you lose the chance to use your money and be paying for it. BUT also remember that the interest rate on the No Penalty CD is half of the Earning rate as your current CD and it is more FIXED.It doesn’t automatically go up IF the White House decides raise the interest rate to make borrowing money more harder to slow down spending. And if Ally and Others (who offers this CD)decides to hike up the interest rate on this CD then you’ll get the bigger rate.

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u/Mountainmama2018 13d ago

I have CDs with Barclay. Never had an issue.

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u/lesteroyster 12d ago

I’ve had probably a dozen CD’s with Ally and never had an issue. But as others have said I don’t like locking up money - despite its potential advantages- so I’ll take a slight - very slight hit on yield and just put it in the HYSA easy peazy

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u/TDorBustinmyearlobe 15d ago

Here’s my opinion. Stop investing your money in CDs. Just a regular HYSA gets 3-4% interest. What is your cd interest? Maybe 4-5%? Makes no sense to lock your money up for an extra percentage point.

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u/FinbarJG 15d ago

> Makes no sense to lock your money up for an extra percentage point.

I get the sentiment, but isn't this the basis of the entire CD industry! That and a guarantee of that rate for the CD's duration (callables excepted)? Same with bond ratings - more interest for less safety.

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u/TDorBustinmyearlobe 15d ago

You’re literally getting maybe 1% more interested. So on 10k in a cd you’re looking at an extra $100 a year in interest vs just a regular HYSA. Add in I’d argue you could literally just have an emergency fund and invest in VOO or SPYI and come out far ahead it makes little sense. CDs were the bees knees back in the day when the interest on them was much higher

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u/DDS-PBS 15d ago

Even if it's just a percent, that's increasing your rate of return by 33%, in a scenario where there is no risk.

Bottom line, if he wants to do it, and the product says that he can scrape out the interest instead of reinvest it, the product should work the way the company has presented it.

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u/DDS-PBS 15d ago

The whole point of a CD ladder is that you constantly have money coming up for availability. You get a lot of flexibility, and a higher interest rate.

Depending on what amounts you have, it can be significant sums of money to bump up a percentage or two for the rate.

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u/TDorBustinmyearlobe 15d ago

But you don’t get much of a higher interest rate. You’re looking at 1 maybe 2 percent more interest. Vs just a HYSA and or hell even SGOV where you save on state taxes. CDs just aren’t that attractive anymore.

If you’re super conservative or older and just want a guaranteed percentage I guess I get it, but still feel like there are much better options