Ally Bank 11 month [No-Penalty CD]

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RJNetworking
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Ally no penalty CD rate increase

Post by RJNetworking »

[Thread merged into here, see below. --admin LadyGeek]

Ally increased the rate of its no penalty cd to 1.5% for accounts with 25'K and above. It's a great deal, they allow you to withdraw the balance and interest after six days of the initial deposit without penalty.

Just passing along for those looking for higher interest. Good luck!
runner3081
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Re: Ally no penalty CD rate increase

Post by runner3081 »

Already posted...

viewtopic.php?t=221553
RJNetworking
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Re: Ally no penalty CD rate increase

Post by RJNetworking »

runner3081 wrote:Already posted...

viewtopic.php?t=221553
My bad... I did a search before posting and couldn't find anything, I'll refine my search technique...
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Re: Ally no penalty 11 month CD rate increased to 1.50% this morning

Post by LadyGeek »

RJNetworking - I merged your thread into here.

The combined thread is now in the Personal Finance (Not Investing) forum (CD rate).
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Re: Ally no penalty 11 month CD rate increased to 1.50% this morning

Post by Crimsontide »

Thanks for the heads up!!! Just moved some cash over from the online savings account.
RJNetworking
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Re: Ally no penalty 11 month CD rate increased to 1.50% this morning

Post by RJNetworking »

LadyGeek wrote:RJNetworking - I merged your thread into here.

The combined thread is now in the Personal Finance (Not Investing) forum (CD rate).
Thank you LadyGeek!
AntsOnTheMarch
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Re: Ally no penalty 11 month CD rate increased to 1.50% this morning

Post by AntsOnTheMarch »

Just a brief follow up. To summarize:
  • Opened a no-pentalty CD @1.35% on 6/15.
  • Was informed by Ally (in response to email query) that rate would automatically be upgraded to 1.50% on day 11.
  • Checked on 6/25 and CD rate has been upgraded.
signewton
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Re: Ally no penalty 11 month CD rate increased to 1.50% this morning

Post by signewton »

MikeG62 wrote:Title says it all...

Edit - Applies to CD's with minimum opening balance of $25,000.

Hard pull or softpull? I already have their savings (which was softpull) and I know to open a checking its a hardpull...
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Re: Ally no penalty 11 month CD rate increased to 1.50% this morning

Post by runner9 »

signewton wrote:
Hard pull or softpull? I already have their savings (which was softpull) and I know to open a checking its a hardpull...
We have checking, savings and 1 CD at Ally. Opened a second CD on Tuesday with no issues and we both have our credit frozen.
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HueyLD
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Re: Ally no penalty 11 month CD rate increased to 1.50% this morning

Post by HueyLD »

runner9 wrote:
signewton wrote:
Hard pull or softpull? I already have their savings (which was softpull) and I know to open a checking its a hardpull...
We have checking, savings and 1 CD at Ally. Opened a second CD on Tuesday with no issues and we both have our credit frozen.
But was your credit frozen when you opened your first account at Ally?

Once you are an existing customer, the company can access your credit regardless of a security freeze.
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Blues
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Re: Ally no penalty 11 month CD rate increased to 1.50% this morning

Post by Blues »

runner9 wrote:
signewton wrote:
Hard pull or softpull? I already have their savings (which was softpull) and I know to open a checking its a hardpull...
We have checking, savings and 1 CD at Ally. Opened a second CD on Tuesday with no issues and we both have our credit frozen.
This seems consistent with our experience.

We opened our original MM account at Ally before I took steps to freeze credit. Opening new CDs of any term presents no issue.

However, a few months back when I attempted to open and opt for the higher rate offered by an Ally savings account, it would have required me to temporarily lift the freeze. I elected to just deposit the funds into a no penalty CD which which offered a rate higher than savings but not as high as the current 1.50% which I have now moved the proceeds from those accounts into.
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Re: Ally no penalty 11 month CD rate increased to 1.50% this morning

Post by Blues »

HueyLD wrote:
runner9 wrote:
signewton wrote:
Hard pull or softpull? I already have their savings (which was softpull) and I know to open a checking its a hardpull...
We have checking, savings and 1 CD at Ally. Opened a second CD on Tuesday with no issues and we both have our credit frozen.
But was your credit frozen when you opened your first account at Ally?

Once you are an existing customer, the company can access your credit regardless of a security freeze.
Apparently this is not correct, Huey, despite my having thought exactly the same thing. Check my post above.

Even though I had a MM and several CDs with Ally, they were unable to access my credit when I attempted to open a savings account a few months back. Rather than lift the freeze temporarily I just put those funds into a no penalty CD.

(I confirmed that this was the case with Ally via a telephone rep who researched the issue with the appropriate departments.)
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Re: Ally no penalty 11 month CD rate increased to 1.50% this morning

Post by HueyLD »

It may just be an Ally internal policy.

I had no problem opening a new savings account at another financial institution where I already had a banking relationship.

YMMV indeed.
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Blues
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Re: Ally no penalty 11 month CD rate increased to 1.50% this morning

Post by Blues »

HueyLD wrote:It may just be an Ally internal policy.

I had no problem opening a new savings account at another financial institution where I already had a banking relationship.

YMMV indeed.
Maybe so. I was never able to determine if it was a matter of policy or they simply were unable to access my credit info.

As I say, my understanding was the same as yours and is what I related to the Ally rep. I held on as she went back and forth with the relevant departments until I ultimately decided it wasn't worth the effort to temporarily lift my freeze and took the path reported.

Hopefully that info will help someone who banks with Ally if they find themselves in a similar situation.
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Re: Ally no penalty 11 month CD rate increased to 1.50% this morning

Post by Kevin M »

AntsOnTheMarch wrote:
  • Opened a no-pentalty CD @1.35% on 6/15.
    <snip>
  • Checked on 6/25 and CD rate has been upgraded.
Same here. And I verified that the accrued interest reflects the higher rate:

25000 * ((1 + 0.0149/365)^10 - 1 ) = 10.21

Ally shows $10.20, so close enough.

Note that this is 10 days of interest, not 11. Also note that I'm using the nominal rate of 1.49% that corresponds to an APY of 1.50%. If we take the APY as exact, then a more accurate value for the nominal rate is 1.0489%, and using that value in the above equation gives 10.20.

Checking the equation for a CD that I opened on June 20 at the 1.50% initially:

25000 * ((1 + 0.01489/365)^5 - 1 ) = 5.10

Ally shows $5.10 of accrued interest for this CD. And the CD I opened yesterday shows $1.02 of accrued interest, which the equation also gives.

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Re: Ally no penalty 11 month CD rate increased to 1.50% this morning

Post by Kevin M »

signewton wrote:
MikeG62 wrote:Title says it all...

Edit - Applies to CD's with minimum opening balance of $25,000.
Hard pull or softpull? I already have their savings (which was softpull) and I know to open a checking its a hardpull...
In addition to opening these CDs recently, I opened another checking and savings account late last year. Credit Karma shows no hard inquiries for TransUnion or Equifax for any of these.

I do see hard inquiries from a couple of credit unions I joined in 2016 (to buy good CDs), one for TransUnion and one for Equifax.

Kevin
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Re: Ally no penalty 11 month CD rate increased to 1.50% this morning

Post by kaneohe »

Kevin M wrote:
AntsOnTheMarch wrote:
  • Opened a no-pentalty CD @1.35% on 6/15.
    <snip>
  • Checked on 6/25 and CD rate has been upgraded.
Same here. And I verified that the accrued interest reflects the higher rate:

25000 * ((1 + 0.0149/365)^10 - 1 ) = 10.21

Ally shows $10.20, so close enough.

Note that this is 10 days of interest, not 11. Also note that I'm using the nominal rate of 1.49% that corresponds to an APY of 1.50%. If we take the APY as exact, then a more accurate value for the nominal rate is 1.0489%, and using that value in the above equation gives 10.20.

Checking the equation for a CD that I opened on June 20 at the 1.50% initially:

25000 * ((1 + 0.01489/365)^5 - 1 ) = 5.10

Ally shows $5.10 of accrued interest for this CD. And the CD I opened yesterday shows $1.02 of accrued interest, which the equation also gives.

Kevin
Kevin...........sounds like you have the interest thing nailed down to the penny so I'll ask you this..........I funded 2 of these CDs from savings.
I got a confirming statement in mail giving CD # and amount. However in both cases, the date on the confirmation was 1 day later than the date the funds were withdrawn from savings. Does that mean I lost a day of interest or that mean that the date on the confirmation is a meaningless date and
that the effective CD date is not shown.
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Re: Ally no penalty 11 month CD rate increased to 1.50% this morning

Post by HueyLD »

What are the maturity dates?

For example, a maturity date of 5/15/2018 means that the official funding date was 6/15/2017.

IOW, on 6/15, you should have a debit of say $25k from your savings account and a credit of $25k into your CD.
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Re: Ally no penalty 11 month CD rate increased to 1.50% this morning

Post by kaneohe »

HueyLD wrote:What are the maturity dates?

For example, a maturity date of 5/15/2018 means that the official funding date was 6/15/2017.

IOW, on 6/15, you should have a debit of say $25k from your savings account and a credit of $25k into your CD.
Good question........will have to wait for statement to find out. Just realized the confirmation statement was just to give the full acct no....the one
and only time you get it, perhaps. No amount and no maturity date shown. Do Ally maturity dates mean the funds are accessible on that date as at most banks/CU or is it like PenFed where you have to wait another day?
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Re: Ally no penalty 11 month CD rate increased to 1.50% this morning

Post by HueyLD »

If the account is already set up, you should see the CD maturity date after you log into your accounts.
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Re: Ally no penalty 11 month CD rate increased to 1.50% this morning

Post by Kevin M »

kaneohe wrote: Kevin...........sounds like you have the interest thing nailed down to the penny so I'll ask you this..........I funded 2 of these CDs from savings.
I got a confirming statement in mail giving CD # and amount. However in both cases, the date on the confirmation was 1 day later than the date the funds were withdrawn from savings. Does that mean I lost a day of interest or that mean that the date on the confirmation is a meaningless date and
that the effective CD date is not shown.
I do everything online. When I open and fund a CD online from savings or checking, I see the CD immediately online, showing the correct amount in the dashboard view. However, I cannot access transaction history for the CD until the next day, nor do I see the transaction in my savings/checking history until the next day, but the available savings/checking balance in the dashboard view reflects the transaction. Maybe the confirmation statement you're seeing reflects the one-day lag in being able to see the transaction history.

I opened a new CD yesterday for $25K, and I saw $1.02 accrued interest today. I see the $25K being withdrawn from savings and deposited to the CD on 6/24. So I don't think we're losing a day of interest.

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Re: Ally no penalty 11 month CD rate increased to 1.50% this morning

Post by kaneohe »

Kevin M wrote:
kaneohe wrote: Kevin...........sounds like you have the interest thing nailed down to the penny so I'll ask you this..........I funded 2 of these CDs from savings.
I got a confirming statement in mail giving CD # and amount. However in both cases, the date on the confirmation was 1 day later than the date the funds were withdrawn from savings. Does that mean I lost a day of interest or that mean that the date on the confirmation is a meaningless date and
that the effective CD date is not shown.
I do everything online. When I open and fund a CD online from savings or checking, I see the CD immediately online, showing the correct amount in the dashboard view. However, I cannot access transaction history for the CD until the next day, nor do I see the transaction in my savings/checking history until the next day, but the available savings/checking balance in the dashboard view reflects the transaction. Maybe the confirmation statement you're seeing reflects the one-day lag in being able to see the transaction history.

I opened a new CD yesterday for $25K, and I saw $1.02 accrued interest today. I see the $25K being withdrawn from savings and deposited to the CD on 6/24. So I don't think we're losing a day of interest.

Kevin
thanks for confirming that.
jnk715
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Re: Ally no penalty 11 month CD rate increased to 1.50% this morning

Post by jnk715 »

I just moved my whole savings account over to the no penalty cd. Seems like a no brainer. I have enough in my checking to cover any expenses.
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Re: Ally no penalty 11 month CD rate increased to 1.50% this morning

Post by bikechuck »

I am not particularly computer savvy and I resisted online banking for a time. However, a year or so ago, to capture at least some yield on my cash reserves, I opened an online savings account with Ally and have been pretty much ignoring it. Last week based on this thread I opened four no penalty CDs to boost the yield a bit more.

I was so pleased with how easy it was to navigate their website and complete the transaction(s). I had expected it to take a half hour or more with some uncertainty about whether or not I was doing things properly with the possible need for a phone call due to my lack of confidence. Instead it took less than 15 minutes, was unbelievably easy and left me with confidence that all was well. I loved that I could see the money move in virtual real time.

This CD is an excellent product and I am impressed with Ally's web site and interface. I am a highly satisfied Ally customer and I plan to recommend them to friends and family.
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Re: Ally Bank 1.25% 11 month with no EWP

Post by john_the_gun »

Does anyone here who banks with Ally have first hand knowledge setting up a CD in the name of a living trust?
Their page here (https://www.ally.com/learn/trust-account/) covers their procedure, but it would be nice to know if anyone has recently gone through this, and if it was straight forward?
It's supposed to be a challenge, that's why they call it a shortcut. If it was easy it would just be the way.
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Re: Ally Bank 1.25% 11 month with no EWP

Post by Kevin M »

john_the_gun wrote:Does anyone here who banks with Ally have first hand knowledge setting up a CD in the name of a living trust?
Their page here (https://www.ally.com/learn/trust-account/) covers their procedure, but it would be nice to know if anyone has recently gone through this, and if it was straight forward?
I opened my first CDs in the name of my living trust at Ally Bank. I also more recently opened a checking and savings account in the name of a different living trust--the process is the same regardless of account type (a CD is just another account). It's pretty much the same as anywhere else. It takes a few extra days for their trust department to verify the trust documentation.

Once they have your trust documentation, opening subsequent accounts in the name of the trust is easier, but it still requires a phone call--can't do it online (at least not back when I was buying CDs at Ally). This is why I switched to using POD for the CDs I opened subsequently at Ally.

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DrakeSRT
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Re: Ally Bank 1.25% 11 month with no EWP

Post by DrakeSRT »

Had to send them my trust cert when I opened my savings account.

When I recently opened my No Penalty CD they just reverified through their trust dept. no phone call needed either time.
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Re: Ally Bank 1.25% 11 month with no EWP

Post by oldbykur »

I opened a No Penalty CD online, within a living trust - very easy. The trust had previously opened a checking and savings account. It took about 4 days for Ally to complete the process.
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Re: Ally Bank 1.25% 11 month with no EWP

Post by limeyx »

DrakeSRT wrote:Had to send them my trust cert when I opened my savings account.

When I recently opened my No Penalty CD they just reverified through their trust dept. no phone call needed either time.
yeah same here. Opened 3 and no issues except
1. Cannot specify the initial transfer immediately online (must wait until account opened)
2. Took at least 5 business days to open

But apart from that hassle free
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Re: Ally Bank 1.25% 11 month with no EWP

Post by dual »

Bogleheads member tfb's website points out that the Vanguard money market fund has a competitive yield
https://thefinancebuff.com/money-market ... count.html

As of today (7/19/17)
VMMXX 1.11%

edit:
Just noticed that the Alliant savings account yield is also 1.11%
Also, I just bought a 1.4% one year brokered FDIC insured CD as part of my ladder in my MerillEdge IRA
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Re: Ally Bank 1.25% 11 month with no EWP

Post by frankmorris »

Just opened an Ally account myself and just using the high yield savings, with an associated checking for daily use. The no penalty high yield CD seems pretty great, although I agree it depends on the actual amount of money you're making at the end of the day. For $10,000 or so, yeah I'm probably with those who think it's a bit more work for $20 extra dollars. For someone with $100,000 in an emergency fund, starts to make a bit more sense.

Still, a great product and another example of how I believe a customer-centered product line will end up making more money for the company in the long-term.
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Re: Ally Bank 1.25% 11 month with no EWP

Post by john_the_gun »

I would sincerely like to thank Kevin M, DrakeSRT, oldbykur,and limeyx. Your responses to my question about opening a trust account with ally.com gave me the confidence to do so. I now have 3 CD's and about 15 savings accounts with them - all under my living trust. Thanks so much everyone!!
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Ally Bank raises 11 month ($25k min) No Penalty CD from 1.5% to 1.6%

Post by b4nash »

Now we can retire .1 days earlier. :wink:

https://www.ally.com/bank/no-penalty-cd/
Last edited by b4nash on Fri Dec 08, 2017 12:46 pm, edited 1 time in total.
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Re: Ally Raises 11 month $25k min No Penalty CD from 1.5% to 1.6%

Post by b4nash »

FYI - I closed my two existing 11 month no penalty CDs created back in September and opened new accounts at the new rate. The process is simple if you have an existing savings or checking account at Ally. Took 8 minutes because I had to log out between opening accounts as it seemed to think I still had an application in progress.
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Re: Ally Bank raises 11 month ($25k min) No Penalty CD from 1.5% to 1.6%

Post by aj76er »

At the short end of the yield curve there is no longer a premium for CDs over Treasuries. In fact, the 9mo Treasury actually yields more than the top-yielding brokered CD (1.62% vs 1.55%).

The 1yr T-bill rate is now 1.7% ...

I still hold some Ally no-penalty CDs because I like the principle stability ... but T-bills are getting tempting again ...
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Re: Ally Bank raises 11 month ($25k min) No Penalty CD from 1.5% to 1.6%

Post by Drovor »

b4nash wrote: Fri Dec 08, 2017 11:41 am Now we can retire .1 days earlier. :wink:

https://www.ally.com/bank/no-penalty-cd/
Thanks for the heads up. I just had a CD opened last month but went ahead and did the same to up the rate. Was simple to do and I even opened up a savings account to eliminate waiting for transfers.
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Re: Ally Bank raises 11 month ($25k min) No Penalty CD from 1.5% to 1.6%

Post by bikechuck »

I have four of these CDs that mature in May representing the majority of my cash holdings. I suppose I should close them and re-open them but I question whether doing so is worth it for one basis point.

For the philosophers in the house ... in pondering this question am I being lazy or am I placing an appropriate high value on my time?
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Re: Ally Bank raises 11 month ($25k min) No Penalty CD from 1.5% to 1.6%

Post by b4nash »

bikechuck wrote: Fri Dec 08, 2017 4:20 pm For the philosophers in the house ... in pondering this question am I being lazy or am I placing an appropriate high value on my time?
Well, I estimate the opportunity cost to be low considering you are already spending time browsing an internet forum of (mostly) amateur investors. :D
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Re: Ally Bank raises 11 month ($25k min) No Penalty CD from 1.5% to 1.6%

Post by TheTimeLord »

bikechuck wrote: Fri Dec 08, 2017 4:20 pm I have four of these CDs that mature in May representing the majority of my cash holdings. I suppose I should close them and re-open them but I question whether doing so is worth it for one basis point.

For the philosophers in the house ... in pondering this question am I being lazy or am I placing an appropriate high value on my time?
Really lazy since if you had a high value on your time you wouldn't have taken the time to post the question and read the answers which probably takes as long as closing and reopening the no penalty CDs which you would have been compensated for.
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Re: Ally Bank raises 11 month ($25k min) No Penalty CD from 1.5% to 1.6%

Post by tibbitts »

Maybe I'm wrong but I thought these CDs only pay interest at maturity, 11mo. But if you exchange for a new CD before the end of the year, you'll owe tax for 2017 on the accumulated interest, no? Otherwise I thought the interest would be due for 2018.
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Re: Ally Bank raises 11 month ($25k min) No Penalty CD from 1.5% to 1.6%

Post by VictoriaF »

tibbitts wrote: Fri Dec 08, 2017 8:29 pm Maybe I'm wrong but I thought these CDs only pay interest at maturity, 11mo. But if you exchange for a new CD before the end of the year, you'll owe tax for 2017 on the accumulated interest, no? Otherwise I thought the interest would be due for 2018.
That's my understanding, too. But you will also get the accumulated interest as cash as soon as you close a CD.

I think the primary question is not whether 10 basis points are worth the trouble but whether Ally will be offering no penalty CDs in May 2018, when the current batch will mature.

Victoria
Last edited by VictoriaF on Fri Dec 08, 2017 9:21 pm, edited 1 time in total.
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Re: Ally Bank raises 11 month ($25k min) No Penalty CD from 1.5% to 1.6%

Post by aj76er »

bikechuck wrote: Fri Dec 08, 2017 4:20 pm one basis point.
Isn't it 10bps? Still a pretty small amount :)
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Re: Ally Bank raises 11 month ($25k min) No Penalty CD from 1.5% to 1.6%

Post by VictoriaF »

aj76er wrote: Fri Dec 08, 2017 9:12 pm
bikechuck wrote: Fri Dec 08, 2017 4:20 pm one basis point.
Isn't it 10bps? Still a pretty small amount :)
Thanks. I have edited my post from 1bp to 10bp.

If you have 4 x $25k = $100k at Ally, 10bp is $100. Closing and opening CDs should not take more than an hour, and $100/hr is not bad. More importantly, as I noted earlier, you extend the life of your current no-penalty CDs beyond May 2018.

Victoria
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Re: Ally Bank raises 11 month ($25k min) No Penalty CD from 1.5% to 1.6%

Post by willift »

tibbitts wrote: Fri Dec 08, 2017 8:29 pm Maybe I'm wrong but I thought these CDs only pay interest at maturity, 11mo. But if you exchange for a new CD before the end of the year, you'll owe tax for 2017 on the accumulated interest, no? Otherwise I thought the interest would be due for 2018.
There are options on how you take the accrued interest. It was my understanding that all of the options resulted in a taxable event for 2017.
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Re: Ally Bank raises 11 month ($25k min) No Penalty CD from 1.5% to 1.6%

Post by MikeG62 »

willift wrote: Sat Dec 09, 2017 8:30 am
tibbitts wrote: Fri Dec 08, 2017 8:29 pm Maybe I'm wrong but I thought these CDs only pay interest at maturity, 11mo. But if you exchange for a new CD before the end of the year, you'll owe tax for 2017 on the accumulated interest, no? Otherwise I thought the interest would be due for 2018.
There are options on how you take the accrued interest. It was my understanding that all of the options resulted in a taxable event for 2017.
I am pretty sure if you elect to take the interest at Maturity, the interest will be taxable at Maturity and not prior.
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Blues
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Re: Ally Bank raises 11 month ($25k min) No Penalty CD from 1.5% to 1.6%

Post by Blues »

One has the option of receiving the interest monthly, quarterly or at the end of term on these 11 month CDs.

(If there is a period shorter than monthly I don't recall from the times I've gone through the process.)
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willift
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Re: Ally Bank raises 11 month ($25k min) No Penalty CD from 1.5% to 1.6%

Post by willift »

According to everything I've seen your taxable event would happen when the interest is accrued and therefore available to you.

"The answers on how the CD account holder and the bank should report the interest to the IRS is in the IRS Publication 550. This excerpt from page 6 provides some of these details:

Certificates of deposit and other deferred interest accounts. If you open any of these accounts, interest may be paid at fixed intervals of 1 year or less during the term of the account. You generally must include this interest in your income when you actually receive it or are entitled to receive it without paying a substantial penalty. The same is true for accounts that mature in 1 year or less and pay interest in a single payment at maturity. If interest is deferred for more than 1 year, see Original Issue Discount (OID), later."

Any Tax Experts available for input?
tibbitts
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Re: Ally Bank raises 11 month ($25k min) No Penalty CD from 1.5% to 1.6%

Post by tibbitts »

willift wrote: Sat Dec 09, 2017 9:59 am According to everything I've seen your taxable event would happen when the interest is accrued and therefore available to you.

"The answers on how the CD account holder and the bank should report the interest to the IRS is in the IRS Publication 550. This excerpt from page 6 provides some of these details:

Certificates of deposit and other deferred interest accounts. If you open any of these accounts, interest may be paid at fixed intervals of 1 year or less during the term of the account. You generally must include this interest in your income when you actually receive it or are entitled to receive it without paying a substantial penalty. The same is true for accounts that mature in 1 year or less and pay interest in a single payment at maturity. If interest is deferred for more than 1 year, see Original Issue Discount (OID), later."

Any Tax Experts available for input?
Oh well, I guess we'll all know the answer to this in about 2 months. That "without paying a substantial penalty" phrase is interesting - for me the hassle of redeeming it or exchanging it constitutes a "substantial penalty" so maybe it's subject to interpretation. I guess in the end exchanging for a higher interest CD now is still worthwhile since we don't know if the product will be around on January 1.
MikeG62
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Re: Ally Bank raises 11 month ($25k min) No Penalty CD from 1.5% to 1.6%

Post by MikeG62 »

tibbitts wrote: Sat Dec 09, 2017 11:06 am
willift wrote: Sat Dec 09, 2017 9:59 am According to everything I've seen your taxable event would happen when the interest is accrued and therefore available to you.

"The answers on how the CD account holder and the bank should report the interest to the IRS is in the IRS Publication 550. This excerpt from page 6 provides some of these details:

Certificates of deposit and other deferred interest accounts. If you open any of these accounts, interest may be paid at fixed intervals of 1 year or less during the term of the account. You generally must include this interest in your income when you actually receive it or are entitled to receive it without paying a substantial penalty. The same is true for accounts that mature in 1 year or less and pay interest in a single payment at maturity. If interest is deferred for more than 1 year, see Original Issue Discount (OID), later."

Any Tax Experts available for input?
Oh well, I guess we'll all know the answer to this in about 2 months. That "without paying a substantial penalty" phrase is interesting - for me the hassle of redeeming it or exchanging it constitutes a "substantial penalty" so maybe it's subject to interpretation. I guess in the end exchanging for a higher interest CD now is still worthwhile since we don't know if the product will be around on January 1.
I had two no penalty 11 month Ally Cd's that I opened in late 2016 and terminated in May 2017, rolling them into several higher rate no penalty CD's. For these CD's I had selected the pay interest at Maturity option. Ally did "not" include any interest from these CD's in my 2016 1099.
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dollarsaver
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Re: Ally Bank raises 11 month ($25k min) No Penalty CD from 1.5% to 1.6%

Post by dollarsaver »

Hello,

I already have the 1.5% no penalty Ally CD's. Called them and they will internally transfer them into the no penalty 1.6% CD's. They opened new accounts and will transfer the balance into the new accounts on Monday. Was quite easy.

I didn't have to sell and put the proceeds into the money market. They will do the transfer for me.
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