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.
[Update: Ally Bank restored online early withdrawal from no-penalty CDs in July 2021. That was too late. I moved my money elsewhere and I won’t use them again.]
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Thanks for the heads up and this is really bad move from Ally’s part! I have experienced all the worst things you mentioned, like locked account and no call from Loss Prevention dept etc. It was a huge pain.
This happened to me also. I’d be interested to know what bank you end up choosing when you leave Ally. I have some CDs at other banks but have been using Ally checking and savings.
Also, thanks for your posts over the years! I usually end up wishing you would write more- I find them very interesting and helpful.
Doug M says
I very much appreciated this, thank you. A year ago I moved the bulk of my Ally savings to my Vanguard Prime Money Market Fund, left $400 behind to keep the account open. Ironically, given what VMMXX has NOT been doing for awhile now (virtually no monthly dividends) I was preparing to move it all back to Ally. This has given me pause, I expected a lot better of Ally. Thanks again.
This sounds like a breach of contract, or at the very least a bait-and-switch. You bought the CDs with the understanding that they could be easily sold at any time, and now Ally has retroactively changed the terms so you cannot sell them easily.
I’m looking to move away from Ally as well. Can you document and share your process of finding a new online bank?
Harry Sit says
I added a new paragraph at the end. 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 about the same as those at Ally Bank.
Yan Wang says
I’m curious about what you think of Fidelity’s online services. I have quite a few accounts with Fidelity but found that its online services can certainly improve. Fidelity seems to prefer you call them for some pretty simple transactions. For example, I have a personal checking account and a business brokerage account with Fidelity. To transfer money between the two accounts, I have to call them (even though it’s clear both accounts are owned by the same persons).
Harry Sit says
I’ve always had great service from Fidelity. When you have a business, treat yourself as any other employee. Ask what you’ll do if you have an employee. If you’ll write a check from the business account to pay them, write a check from the business account to pay yourself. If your employee will deposit that check to their personal account via their mobile phone, you do the same.
Diana Gallagher says
I had to backdoor my funds out of Ally several years ago…they still won’t let me transfer funds to a credit union. I had to have the credit union Take my money.
I pulled my money out of Ally when they started blocking VPNs. It’s sad to see them going downhill. One day transfers are the only good thing left now. Maybe they’ll ax that next.
Check out https://www.citizensaccess.com
They have an 11 month “liquid CD” that sounds very similar to the no penalty CD.
I haven’t used that particular product, but I’ve been quite pleased the their savings account and regular CDs.
Jim Davis says
I’m glad you think the bank should allow obfuscated internet connections, so that every con man in the world can attempt access.
Would you be willing to pay them $1000 for every fraud committed by a VPN hacker?
Hopefully they have better measures in place than just VPN blocks to prevent “every con man in the world” from accessing their servers. Alas, their 2FA implementation for example still relies on text and email codes.
The best way to remember your favorite pizza joint or your wife’s mother’s maiden name? A password manager. It’s not 1970 anymore and managers are both really good and really secure. Plus, sharing your *actual* high school mascot or favorite car could easily be socially engineered from hackers by checking your social media profiles.
I stay off social media, and my high school mascot is: 6Lu23poy. My favorite pizza joint is: “iron cotton jurist”. Best of all, no one can guess that and I don’t have to remember it because it’s in my password manager. LastPass and 1Password are great options, as are KeyPass XC. Simply remember one master password and you are set. Again, the days of simple passwords are long gone if you care about your online security. What is my Ally security question and answer? Who cares? I don’t, I just look it up in the manager. I highly recommend people at least take a look at them.
Very good advice. I use a password manager and always have to refer to it to see which site has which of my made up Mother’s Maiden Names!
Password managers are wonderful until they’re not. What if they go bankrupt? What if it turns our the are run for an illegitimate outfit that has been stealing passwords? What if they get hacked? I’d rather maintain my own spreadsheet of passwords thank you.
Marty, you may need to research a bit more on how password managers work. If 1Password goes bankrupt I can move to another manager. The way encryption works, rogue employees can’t see your passwords. But yes, you are free to use a spreadsheet or even a text file. You’re welcome!
I use Google Voice so I went into my account at Ally and deleted that phone number. I then added it back again and it just saved the number without any verification text. I’m surprised that Ally doesn’t require you to verify the number. There is no indication to the customer that their Google Voice number would not work.
I opened an account with Ally last week and they needed some additional documentation to add my wife as a joint owner. So while I was on the line with them today I asked why they eliminated the option to cash in a no penalty CD online. The representative said that the cash in amount wasn’t being calculated properly and that they are now manually going through the calculation to be sure the customer is getting the proper cash in value. Seems a bit strange but the representative knew about the change and gave me the answer without hesitation. Maybe they will fix the programming and reinstate the option to cash online. I didn’t ask that question. P.S. Harry, thank you for your absolutely awesome blog. It is one of my favorites!!
I used “chat” to contact Ally bank. You are correct, you must use chat, phone, or a secure message to break a no-penalty cd early. However, the agent told me that no security question is asked, and she offered to break the cd, although I mentioned that I was only seeking information at this time.
Ugh, I hate the new process. This is a real bait and switch. Even though I could find better rates elsewhere, I always used Ally as my “hub” since their online services were reliable and fast. I had never had to call Ally for any reason before today. What a waste of time.
Just by timing coincidence, I tried to set up a joint checking account at Ally a few weeks ago. Already a customer with a no penalty CD and Savings. Online wizard wouldn’t allow me to add my wife as joint owner. Fair enough. Required paperwork and a signature. Already has both of our driver’s license on file. Sent in paperwork via secure message. Five days later received call and email that they need paperwork. Told them they already have it but will send it again. Sent it again and called to confirm. Now they realized that they received paperwork twice. Instead of taking care of it immediately they put me to the back of the queue for another 5 business days. Meanwhile my checks were mailed out without my wife’s name on them. Finally gave up in disgust and asked them to close the new account. I’ve had great experience with Ally with CDs but TFB makes a fair point. I think their customer service is not top shelf, at least in this case. Not horrible just not stellar. I’ll stick with my credit union. Technology isn’t great but customer service is.
In the overall scheme of things, to me this is an “annoyance”.
I just closed a no-penalty CD. It took all of 5 minutes on the phone,
most of that with the rep basically reading to me what used to be in the online messaging/confirmation dialog. 30 seconds later, the money was in my Ally Savings. Maybe I was just lucky to remember all my secrets!
An annoyance to me, but it seems like a waste of the rep’s 5 minutes for a simple task. Thats gotta cost Ally something?
“If you don’t remember your favorite movie or whatever answer you gave to the security question, you won’t pass authentication”
Those favorite movie question types are the worst. Runner up are the objective questions like your birth city that any attacker could look up.
One of the things I love about Ally though is that they let you write your own question rather than use a template question. This is fantastic because it lets you ask a question with an “objective” answer that only you will easily know. The question I use is something like “Fill in the last names: Ashley __ , Joe__, Kate__, Bob__, Sam__” I know the answer right away due to the grouping of these as being related to xyz, but an attacker with access to my address book or similar would have no easy way of picking the right last names associated with the first names.
I’m also disappointed in Ally bank due to this. Early withdrawal used to be fast and easy, now you have to call and wait for the representative to close CDs for you.
Another issue, is same day wires. The cutoff time is 12pm EST, but they also need to verify the wire by 12 pm. So, if they don’t call you to verify the wire, then it happens on the next business day. Bummer if you need the funds wired on the same day, for example when you are closing on a property.
I’d say if you think you’ll ever need you money right away, park them elsewhere or plan to initiating a transfer at least a week in advance. Otherwise Ally is fine.
We recently purchased some land to build our home. Two days prior to closing, I arranged and sent the wire from Ally to the Title agency. One day prior, the Title agency still didn’t have the funds. A call to Ally revealed they needed “more information” but hadn’t contacted me. Glad I called . . .
Now, on the day of closing, the funds STILL weren’t there. A panicked call to Ally revealed that the representative on the phone the day prior had not put in all the information they needed to verify the wire. I was stunned, but gave the new representative the extra verification information. But . . . it was now after the cutoff time for wires that day. They sent the wire the day after closing – three days after I initiated it online.
We got the land, thanks to a gracious seller and title company, but needless to say, I won’t be using Ally any more.
Looking at the thread at DepositAccounts.com, seems like Ally is not paying its debts/bonuses
Just an update. In may 2022 I closed three no penalty CDs at Ally with the click of a button. The money seamlessly transferred to my online savings account. That said, I haven’t tried taking any money out of the latter, so there may be more adventures in store. I’ve been happy with Ally up to now, and as of today at least, their online savings rates are slightly better than Marcus, equivalent to Discover, and generally competitive. Interest rates have been so low I haven’t bothered moving funds around to chase the highest rate, but things are heating up. Worth finding a few banks you like and evaluating short-term options periodically.