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1) Sign up for Ally Bank at www.ally.com
2) Open up a 3 month CD
3) Wait for it to mature.
4) Renew the CD to 5 years at 1.59% APY, and receive a .25% loyalty bonus, for a total of 1.84% APY.

It's worth it to pay the penalty to withdraw money from a CD prematurely.
Ally has a small, 60 day interest penalty, so that means if you cancel after:
1 year you get a resulting APY of 1.54%
2 years you get a resulting APY of 1.69%

Edit: If you purchase or renew your CD after 12/07/2013, the penalty is going up:
3 years         90 days of interest
4 years         120 days of interest
5 years or longer   150 days of interest
« Last edited by incendia on March 10, 2014, 09:49:22 AM »

Author Topic: How I'm getting almost triple the 1 year CD % rate for 1 year!  (Read 33244 times)

Offline Dan

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Re: How I'm getting almost triple the 1 year CD % rate for 1 year!
« Reply #45 on: November 04, 2012, 11:52:38 AM »
I generally like to know exact numbers. Just my nature. Doesn't matter that much I guess.

More importantly what is the penalty assessed on? Whats removed or the whole balance?
I've added the APY equations to my post.  The difference caused my monthly compounding may effect it slightly, but not enough to make a huge difference.

I'd assume any withdrawal will cause the full penalty but I don't know that for sure.
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Offline Smokey Joe Robinson

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Re: How I'm getting almost triple the 1 year CD % rate for 1 year!
« Reply #46 on: November 04, 2012, 11:56:44 AM »
I've added the APY equations to my post.  The difference caused my monthly compounding may effect it slightly, but not enough to make a huge difference.

I'd assume any withdrawal will cause the full penalty but I don't know that for sure.

Thanks, where can I find the post? I searched the main site, couldn't find it. Can you post a linky?
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Offline Dan

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Save your time, I don't answer PM. Post it in the forum and a dedicated DDF'er will get back to you as soon as possible.

Offline Smokey Joe Robinson

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Re: How I'm getting almost triple the 1 year CD % rate for 1 year!
« Reply #48 on: November 04, 2012, 12:18:16 PM »
http://forums.dansdeals.com/index.php?topic=13492.msg331179#msg331179
:D

classic spaz moment. Thanks

Decided to call Ally again: If you want to withdraw early then that terminates the CD entirely and the penalty is assessed on the full balance. Once you sign up and the funds are placed they can give you exact numbers using their software so you'll know precisely what closing early will cost you. Hope this helps.
« Last Edit: November 04, 2012, 12:34:08 PM by Smokey Joe Robinson »
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Offline Barryg

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Re: How I'm getting almost triple the 1 year CD % rate for 1 year!
« Reply #49 on: January 02, 2013, 10:58:51 PM »
I'm assuming this is pretty obvious, but it's worth mentioning, that since most CD's Ally's are working without fees and with percentages, it would be worth it to split money up. For example, $5000 at 2% with no fees for 5 years could also be invested as two $2500  accounts for 5 years, the advantage being, if needed to get the two month penalty, but you don't need all the money, you'll have half your money not penalized.

Offline churnbabychurn

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Re: How I'm getting almost triple the 1 year CD % rate for 1 year!
« Reply #50 on: January 02, 2013, 11:15:37 PM »
How would I go about figuring out the resulting apy (after 60 day penalty is assessed) if I were to pull the funds lets say 6 months, 1 year, 1.5 years, and 2 years from opening date? Assume current 1.64 apy +.25 bonus. Anybody know? They compound the interest daily so Im thinking its a bit more complicated than simple mathematics.

Also is the penalty assessed on the funds you pull or the whole balance?
The formula used to calculate compound interest is:

M = P( 1 + i )n
M is the final amount including the principal.
P is the principal amount.
i is the rate of interest per year.
n is the number of years invested.
Applying the Formula
Let's say that I have $1000.00 to invest for 3 years at rate of 5% compound interest.
M = 1000 (1 + 0.05)3 = $1157.62.
You can see that my $1000.00 is worth $1157.62.
Same for days.

Offline myb821

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Re: How I'm getting almost triple the 1 year CD % rate for 1 year!
« Reply #51 on: January 02, 2013, 11:24:24 PM »
The formula used to calculate compound interest is:

M = P( 1 + i )n
M is the final amount including the principal.
P is the principal amount.
i is the rate of interest per year.
n is the number of years invested.
Applying the Formula
Let's say that I have $1000.00 to invest for 3 years at rate of 5% compound interest.
M = 1000 (1 + 0.05)3 = $1157.62.
You can see that my $1000.00 is worth $1157.62.
Same for days.
except that ur forumla is wrong the formula should read M= P(1+i)^n

Offline churnbabychurn

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Re: How I'm getting almost triple the 1 year CD % rate for 1 year!
« Reply #52 on: January 02, 2013, 11:43:13 PM »
To be honest it was a cutn^paste job

Offline bubbles

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Re: How I'm getting almost triple the 1 year CD % rate for 1 year!
« Reply #53 on: January 03, 2013, 12:03:07 AM »
except that ur forumla is wrong the formula should read M= P(1+i)^n

don't mess with the actuary  :D

Offline myb821

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Re: How I'm getting almost triple the 1 year CD % rate for 1 year!
« Reply #54 on: January 03, 2013, 12:08:06 AM »
don't mess with the wannabee actuary  :D
FTFY

Offline Smokey Joe Robinson

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Re: How I'm getting almost triple the 1 year CD % rate for 1 year!
« Reply #55 on: January 03, 2013, 01:03:18 AM »
I'm assuming this is pretty obvious, but it's worth mentioning, that since most CD's Ally's are working without fees and with percentages, it would be worth it to split money up. For example, $5000 at 2% with no fees for 5 years could also be invested as two $2500  accounts for 5 years, the advantage being, if needed to get the two month penalty, but you don't need all the money, you'll have half your money not penalized.

To do that you'd need to open 2 3 month cds so you can get the loyalty bonus on both. But a good idea nonetheless.
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Offline Galitzyaner

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Re: How I'm getting almost triple the 1 year CD % rate for 1 year!
« Reply #56 on: January 03, 2013, 05:32:56 AM »
I'm assuming this is pretty obvious, but it's worth mentioning, that since most CD's Ally's are working without fees and with percentages, it would be worth it to split money up. For example, $5000 at 2% with no fees for 5 years could also be invested as two $2500  accounts for 5 years, the advantage being, if needed to get the two month penalty, but you don't need all the money, you'll have half your money not penalized.
Oh my, if only I knew this a half a year ago :(   oh well.., thanks for the wise counsel!

Offline yehuda S

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Re: How I'm getting almost triple the 1 year CD % rate for 1 year!
« Reply #57 on: January 03, 2013, 12:11:39 PM »
Is the 5 yr 1.79% CD still available? I can only find a 4 yr 1.35% on their site.
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Re: How I'm getting almost triple the 1 year CD % rate for 1 year!
« Reply #58 on: January 03, 2013, 12:14:07 PM »
5 years is 1.61 APY or 1.86 APY with the 3 months renewal trick.
Save your time, I don't answer PM. Post it in the forum and a dedicated DDF'er will get back to you as soon as possible.

Offline Barryg

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Re: How I'm getting almost triple the 1 year CD % rate for 1 year!
« Reply #59 on: January 03, 2013, 12:23:00 PM »
To do that you'd need to open 2 3 month cds so you can get the loyalty bonus on both. But a good idea nonetheless.
True true

Oh my, if only I knew this a half a year ago :(   oh well.., thanks for the wise counsel!

And if I only knew about Dan's deals, Amazon and Vanilla a year and a half ago... (Better late...)