Ally 2% no penalty CD
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Ally 2% no penalty CD
Ally just bumped up their no penalty CD to 2%. Seems like a good spot for the emergency fund. I’ve never used their CD before but seems pretty straight forward.
Re: Ally 2% no penalty CD
What are MM funds running at brokerages?
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
Re: Ally 2% no penalty CD
A little above 2%, like 2.1-2.2%
Re: Ally 2% no penalty CD
Can get 2% normal savings account at E-trade or Wealthfront.
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Re: Ally 2% no penalty CD
Vanguard Federal Money Market Fund - the default for settlement accounts, is currently paying 2.11% (as of 8/15/2022).
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Re: Ally 2% no penalty CD
It's good to see that the NP CD rate has finally exceeded the high yield savings account rate.anthonypals wrote: ↑Wed Aug 17, 2022 8:24 am Ally just bumped up their no penalty CD to 2%. Seems like a good spot for the emergency fund. I’ve never used their CD before but seems pretty straight forward.
For someone who wants to hold excess cash at a bank, this is obviously a better option than their high yield savings account.
However, one can do better in a prime MMF at a broker (like FZDXX or SRPXX at Fidelity or VMFXX at Vanguard). My excess cash is in FZDXX.
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Re: Ally 2% no penalty CD
My only issue with the money market funds is that my broker (E*Trade) charges me a $50 trade fee on mutual funds held less than 90 days from first purchase. So I’m hesitant to park my emergency fund there and lose a month's interest if I have to pull out some money next month.
They are paying 2% on savings as I said above, so close enough for now. If Prime MMF goes up higher it may be worth moving to half my money at a time.
They are paying 2% on savings as I said above, so close enough for now. If Prime MMF goes up higher it may be worth moving to half my money at a time.
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Re: Ally 2% no penalty CD
There is no early redemption fee for NTF money market funds at Etrade. Read the fine print.the_wiki wrote: ↑Wed Aug 17, 2022 8:37 am My only issue with the money market funds is that my broker (E*Trade) charges me a $50 trade fee on mutual funds held less than 90 days from first purchase. So I’m hesitant to park my emergency fund there and lose a month's interest if I have to pull out some money next month.
They are paying 2% on savings as I said above, so close enough for now. If Prime MMF goes up higher it may be worth moving to half my money at a time.
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Re: Ally 2% no penalty CD
You are correct. I checked again and it was actually a $20 trade fee that threw me off. Was looking at FMPXX and FZDXX as the best performers a couple weeks ago and both had transaction fees. But it looks like PCOXX is available with no fees and 2.18% now so that is an option to consider over the savings account. Thanks for your comment - it made me recheck and find some options.indexfundfan wrote: ↑Wed Aug 17, 2022 8:42 amThere is no early redemption fee for NTF money market funds at Etrade. Read the fine print.the_wiki wrote: ↑Wed Aug 17, 2022 8:37 am My only issue with the money market funds is that my broker (E*Trade) charges me a $50 trade fee on mutual funds held less than 90 days from first purchase. So I’m hesitant to park my emergency fund there and lose a month's interest if I have to pull out some money next month.
They are paying 2% on savings as I said above, so close enough for now. If Prime MMF goes up higher it may be worth moving to half my money at a time.
FMPXX is paying 2.3% 7 day yield now, if you can get it without fees.
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Re: Ally 2% no penalty CD
Question - can't Vanguard Federal Money Market Fund go below the 2% NP CD? Or is it just the expectation that it won't?
Re: Ally 2% no penalty CD
Convenience may be a factor, but you may want to shop around a a bit more...recently saw a 9 month certificate for 2.8% on depositaccounts.com
Re: Ally 2% no penalty CD
Oh definitely. It was paying zero last year.wannabebogler wrote: ↑Wed Aug 17, 2022 11:23 am Question - can't Vanguard Federal Money Market Fund go below the 2% NP CD? Or is it just the expectation that it won't?
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Re: Ally 2% no penalty CD
Yes. Actually, I was thinking along the same lines when I read this thread. The people who are recommending using a MMF are forgetting that the CD locks in your rate, whereas a MMF's return is going to go up or down.wannabebogler wrote: ↑Wed Aug 17, 2022 11:23 am Question - can't Vanguard Federal Money Market Fund go below the 2% NP CD? Or is it just the expectation that it won't?
Even if a MMF has a slightly higher yield today, it might not stay that way. With the Ally no penalty CD, you are GUARANTEED 2% for 11 months. And if rates go up, you can always withdraw your money from the CD with no penalty and invest it in a higher yielding account. All upside, no downside.
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Re: Ally 2% no penalty CD
I buy VMFXX at Etrade. No fees at all.the_wiki wrote: ↑Wed Aug 17, 2022 11:03 amYou are correct. I checked again and it was actually a $20 trade fee that threw me off. Was looking at FMPXX and FZDXX as the best performers a couple weeks ago and both had transaction fees. But it looks like PCOXX is available with no fees and 2.18% now so that is an option to consider over the savings account. Thanks for your comment - it made me recheck and find some options.indexfundfan wrote: ↑Wed Aug 17, 2022 8:42 amThere is no early redemption fee for NTF money market funds at Etrade. Read the fine print.the_wiki wrote: ↑Wed Aug 17, 2022 8:37 am My only issue with the money market funds is that my broker (E*Trade) charges me a $50 trade fee on mutual funds held less than 90 days from first purchase. So I’m hesitant to park my emergency fund there and lose a month's interest if I have to pull out some money next month.
They are paying 2% on savings as I said above, so close enough for now. If Prime MMF goes up higher it may be worth moving to half my money at a time.
FMPXX is paying 2.3% 7 day yield now, if you can get it without fees.
You could also do the same with VUSXX, though its yield is currently not competitive with VMFXX.
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Re: Ally 2% no penalty CD
Is there a taxable issue then? Otherwise, I'm not quite sure why one would go with the MM option, unless it's just a matter of convenience?humblecoder wrote: ↑Wed Aug 17, 2022 11:32 amYes. Actually, I was thinking along the same lines when I read this thread. The people who are recommending using a MMF are forgetting that the CD locks in your rate, whereas a MMF's return is going to go up or down.wannabebogler wrote: ↑Wed Aug 17, 2022 11:23 am Question - can't Vanguard Federal Money Market Fund go below the 2% NP CD? Or is it just the expectation that it won't?
Even if a MMF has a slightly higher yield today, it might not stay that way. With the Ally no penalty CD, you are GUARANTEED 2% for 11 months. And if rates go up, you can always withdraw your money from the CD with no penalty and invest it in a higher yielding account. All upside, no downside.
Re: Ally 2% no penalty CD
The downside is that you are already starting lower than some MMF are paying. And yes there are convenience issues with CDs, in that usually you cannot just make a partial withdrawal.
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Re: Ally 2% no penalty CD
Ally's NP CD has worked pretty flawless for me for years. I've ended it early a few times to take advantage of a better NP CD rate. It wouldn't be difficult to liquidate and then buy back in the NP CD with the new amount. Just an FYI.
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Re: Ally 2% no penalty CD
Ally bank has been upping the interest in their regular savings account every couple of weeks. I would not park any money in a CD currently myself. They're currently at 1.75% for typical savings.
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Re: Ally 2% no penalty CD
The no-penalty CD is 2%. Why not just invest in that until Ally increases the rate on the savings or the NP CD?passive101 wrote: ↑Thu Aug 18, 2022 2:34 am Ally bank has been upping the interest in their regular savings account every couple of weeks. I would not park any money in a CD currently myself. They're currently at 1.75% for typical savings.
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Re: Ally 2% no penalty CD
I would do that if not for the fact that I can get more than 2% right now in my brokerage money market funds (which is where I have moved the bulk of my savings).wannabebogler wrote: ↑Thu Aug 18, 2022 8:29 amThe no-penalty CD is 2%. Why not just invest in that until Ally increases the rate on the savings or the NP CD?passive101 wrote: ↑Thu Aug 18, 2022 2:34 am Ally bank has been upping the interest in their regular savings account every couple of weeks. I would not park any money in a CD currently myself. They're currently at 1.75% for typical savings.
Re: Ally 2% no penalty CD
Yes, but... VMFXX is largely tied to the federal funds rate and the fed has indicated they plan to continue to raise this rate over the next 6 months. So when you know the fed is lowering rates, then VMFXX will drop. VMFXX has historically had a solid return except for the long period after the Great Recession and Covid Recession when they kept the funds rate near zero (and if course the bank CDs took a dive during these periods as well, though they did offer better than VMFXX). When fed funds rate is near/at 0%, banks will always offer something more competitive. But in other scenarios, something like VMFXX will usually outperform and will keep up at a quicker pace.humblecoder wrote: ↑Wed Aug 17, 2022 11:32 amYes. Actually, I was thinking along the same lines when I read this thread. The people who are recommending using a MMF are forgetting that the CD locks in your rate, whereas a MMF's return is going to go up or down.wannabebogler wrote: ↑Wed Aug 17, 2022 11:23 am Question - can't Vanguard Federal Money Market Fund go below the 2% NP CD? Or is it just the expectation that it won't?
Even if a MMF has a slightly higher yield today, it might not stay that way. With the Ally no penalty CD, you are GUARANTEED 2% for 11 months. And if rates go up, you can always withdraw your money from the CD with no penalty and invest it in a higher yielding account. All upside, no downside.
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Re: Ally 2% no penalty CD
During those periods you mentioned that took a dive, you would still have the locked-in CD rate.drg02b wrote: ↑Thu Aug 18, 2022 8:41 amYes, but... VMFXX is largely tied to the federal funds rate and the fed has indicated they plan to continue to raise this rate over the next 6 months. So when you know the fed is lowering rates, then VMFXX will drop. VMFXX has historically had a solid return except for the long period after the Great Recession and Covid Recession when they kept the funds rate near zero (and if course the bank CDs took a dive during these periods as well, though they did offer better than VMFXX). When fed funds rate is near/at 0%, banks will always offer something more competitive. But in other scenarios, something like VMFXX will usually outperform and will keep up at a quicker pace.humblecoder wrote: ↑Wed Aug 17, 2022 11:32 amYes. Actually, I was thinking along the same lines when I read this thread. The people who are recommending using a MMF are forgetting that the CD locks in your rate, whereas a MMF's return is going to go up or down.wannabebogler wrote: ↑Wed Aug 17, 2022 11:23 am Question - can't Vanguard Federal Money Market Fund go below the 2% NP CD? Or is it just the expectation that it won't?
Even if a MMF has a slightly higher yield today, it might not stay that way. With the Ally no penalty CD, you are GUARANTEED 2% for 11 months. And if rates go up, you can always withdraw your money from the CD with no penalty and invest it in a higher yielding account. All upside, no downside.
Re: Ally 2% no penalty CD
Yes for 11 months. But those CD rates will constantly lag VMFXX in a rising rate environment, and will likely never cover the gap. Plus you'll be constantly checking rates to cancel/renew the CD.wannabebogler wrote: ↑Thu Aug 18, 2022 8:58 amDuring those periods you mentioned that took a dive, you would still have the locked-in CD rate.drg02b wrote: ↑Thu Aug 18, 2022 8:41 amYes, but... VMFXX is largely tied to the federal funds rate and the fed has indicated they plan to continue to raise this rate over the next 6 months. So when you know the fed is lowering rates, then VMFXX will drop. VMFXX has historically had a solid return except for the long period after the Great Recession and Covid Recession when they kept the funds rate near zero (and if course the bank CDs took a dive during these periods as well, though they did offer better than VMFXX). When fed funds rate is near/at 0%, banks will always offer something more competitive. But in other scenarios, something like VMFXX will usually outperform and will keep up at a quicker pace.humblecoder wrote: ↑Wed Aug 17, 2022 11:32 amYes. Actually, I was thinking along the same lines when I read this thread. The people who are recommending using a MMF are forgetting that the CD locks in your rate, whereas a MMF's return is going to go up or down.wannabebogler wrote: ↑Wed Aug 17, 2022 11:23 am Question - can't Vanguard Federal Money Market Fund go below the 2% NP CD? Or is it just the expectation that it won't?
Even if a MMF has a slightly higher yield today, it might not stay that way. With the Ally no penalty CD, you are GUARANTEED 2% for 11 months. And if rates go up, you can always withdraw your money from the CD with no penalty and invest it in a higher yielding account. All upside, no downside.
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Re: Ally 2% no penalty CD
thanks - totally didn't notice it. I have proceeded from a house sell this week, sitting at Chase (around 0% lol) - and was thinking if i need to open another saving account. I already have ally - saving is around 1.8% i think - but why not put it on no penalty CD. I know there might be other options - but since i got an account already - just lot more convenient.anthonypals wrote: ↑Wed Aug 17, 2022 8:24 am Ally just bumped up their no penalty CD to 2%. Seems like a good spot for the emergency fund. I’ve never used their CD before but seems pretty straight forward.
Re: Ally 2% no penalty CD
A related question..
I have $20K at Ally 4 year raise your rate currently at .70 and am eligible to increase it to 2.25 and I would still have one more option to raise it.
Anyone see a downside to raising it to 2.25% now?
I have $20K at Ally 4 year raise your rate currently at .70 and am eligible to increase it to 2.25 and I would still have one more option to raise it.
Anyone see a downside to raising it to 2.25% now?
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Re: Ally 2% no penalty CD
I'd raise it. You'd be tripling your rate. That's a pretty significant increase.
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Re: Ally 2% no penalty CD
Correct. A no-penalty CD at a bank is equivalent to an FDIC-insured money-market account with a minimum rate guaranteed for a period of time. The Vanguard Federal MMF is a very good product, but it is not the equivalent.wannabebogler wrote: ↑Wed Aug 17, 2022 11:23 am Question - can't Vanguard Federal Money Market Fund go below the 2% NP CD? Or is it just the expectation that it won't?
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Re: Ally 2% no penalty CD
You should check how much is the penalty if you just close the CD. Because ally has a 3-year CD for 3% - also 5 year. CD for 3% . I think for your CD it may be 4-month penalty (or around $47 dollar). You might just do better to take the hit and go for 3% CD for 3 or 5 years (they don't seem to have a 4 year CD).
So you lose .70 interest for 4 month but with 3% CD - that's exra .75% over 2.25% rate. So gain extra .75% by taking extra hit now - you should come ahead roughly after 4th month. And from then on - you're good with 3%.
Re: Ally 2% no penalty CD
I’m considering doing this, thanks for posting.
Would a 1 year treasury bill be more or less preferable than the 2% 11 month NP CD? The yield on that today looks like 3.26.
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Would a 1 year treasury bill be more or less preferable than the 2% 11 month NP CD? The yield on that today looks like 3.26.
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Re: Ally 2% no penalty CD
The 6 mo treasury is just over 3%.
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Re: Ally 2% no penalty CD
4 week Treasuries paying 2.184% with no state tax, if tying your money up for 4 weeks is a problem just split your money and buy them every 2 weeks.
Re: Ally 2% no penalty CD
Just bought $50k worth of 3mo t-bill at 2.6% and 6mo t-bill for 3.06% better than HYSA or CDs at present.
Last edited by ebeb on Sat Aug 20, 2022 9:44 am, edited 1 time in total.
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Re: Ally 2% no penalty CD
https://www.ally.com/bank/no-penalty-cd/
An 11-month CD at 2.00%? Interested in hearing about circumstances under which this might be appropriate.
An 11-month CD at 2.00%? Interested in hearing about circumstances under which this might be appropriate.
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Re: Ally 2% no penalty CD
I'd rather buy a 1 month treasury paying more.Artsdoctor wrote: ↑Fri Aug 19, 2022 8:06 pm https://www.ally.com/bank/no-penalty-cd/
An 11-month CD at 2.00%? Interested in hearing about circumstances under which this might be appropriate.
Re: Ally 2% no penalty CD
What is the process for doing that? Can it be done at treasurydirect.gov?anon_investor wrote: ↑Fri Aug 19, 2022 8:07 pmI'd rather buy a 1 month treasury paying more.Artsdoctor wrote: ↑Fri Aug 19, 2022 8:06 pm https://www.ally.com/bank/no-penalty-cd/
An 11-month CD at 2.00%? Interested in hearing about circumstances under which this might be appropriate.
Re: Ally 2% no penalty CD
This blog describes how to buy treasury bills, I buy in schwab.com which is easy . treasurydirect.gov would be to buy at auction I think.
https://thefinancebuff.com/treasury-bil ... arket.html
https://thefinancebuff.com/treasury-bil ... arket.html
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Re: Ally 2% no penalty CD
Yes, or Vanguard, Fidelity, Schwab, other brokerages.Philly30 wrote: ↑Fri Aug 19, 2022 9:20 pmWhat is the process for doing that? Can it be done at treasurydirect.gov?anon_investor wrote: ↑Fri Aug 19, 2022 8:07 pmI'd rather buy a 1 month treasury paying more.Artsdoctor wrote: ↑Fri Aug 19, 2022 8:06 pm https://www.ally.com/bank/no-penalty-cd/
An 11-month CD at 2.00%? Interested in hearing about circumstances under which this might be appropriate.
Re: Ally 2% no penalty CD
Ok, thanks for the replies
Re: Ally 2% no penalty CD
I get "reminded" by others all the time when I recommend FZDXX that it is not a viable option to most on the forum because it has a $100,000 minimum. Just checked and saw FMPXX has a $1.0 million minimum.
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Re: Ally 2% no penalty CD
On Etrade it shows $100 minimum, but $20 transaction fee.