I have some money in a no-penalty CD at Ally Bank. A no-penalty CD offers the best of both worlds: The interest rate is guaranteed not to go down during the term, and the money stays liquid at all times. If you need money before the CD matures, there is no early withdrawal penalty.
It used to be very easy to break a CD at Ally Bank. You go through an online interface and choose to transfer the money to an Ally savings account or a linked external account. Now Ally Bank quietly removed the simple online process. They replaced it with this message:
We’re only processing early withdrawals by phone right now.
Call us at 1-877-247-2559. We’re here 24/7.
The message makes it sound like it’s only temporary, maybe during system maintenance, but it’s not. You get that message all the time. The online process is gone. If you need to withdraw early from your CD, you must call customer service.
Calling sounds simple but it’s not. If you don’t remember your favorite movie or whatever answer you gave to the security question, you won’t pass authentication. If you gave your Google Voice number as your mobile phone number, which they happily supported when you set up your account back then but now they don’t, you won’t be able to receive any security code they text you. If you fail authentication when you call, they will lock your online account. Now you’ll have to wait for someone from the Loss Prevention department to contact you in two to five business days. If you need the money from your CD, which is why you were forced to call to begin with, they don’t care. No way to contact Loss Prevention. No way to expedite. Just wait until they find time to call you. Please don’t ask me how I know. [Update: It took eight business days for them to call me. I had no access to my accounts during those eight business days.]
Before you call any financial institution, while you still have online access to your account, go through all the security setups and make sure you have all the information you gave them when you first set up your account a long time ago. Reconsider using any online-only bank that forces you to call to transact business.
An online bank not allowing routine transactions online isn’t acceptable to me. I will close my account with Ally when my CDs mature.
When rates are so low anyway, it favors banks and credit unions with a physical presence. At least you have an option to go in and talk to someone to resolve any issues, whereas you are helpless when an online bank cuts off your access. If you can’t find good rates from a local bank or credit union, consider Marcus. Marcus also offers no-penalty CDs. Rates on savings accounts and CDs at Marcus are competitive with the rates at Ally Bank.