I just received notice from Ally Bank that they will be changing the early withdrawal charges on their CDs. If you’ve followed any of my CD posts, you will see that I have created a CD ladder at Ally Bank. I chose Ally Bank because of it’s low early withdrawal fees, making long term 5 year CDs a little more “liquid” than other long term CDs. But unfortunately it looks like Ally Bank can’t keep those rates anymore and decided to increase the early withdrawal fees.
Here’s a breakdown of the new fee system: (taken from Ally website)
| Before 12/07/2013 | |
| All CD terms | 60 days of interest |
| After 12/07/2013 | |
| 2 years or less | 60 days of interest |
| 3 years | 90 days of interest |
| 4 years | 120 days of interest |
| 5 years or longer | 150 days of interest |
This means a 5 year CD can make you lose 5 months of interest! With a 5 year CD rate at 1.60% and high yield savings account at 0.86%, it might be more worth it to just keep a high yield savings account. With higher early withdrawal fees, my CD ladder seems to make even more sense to me now.