Ally Bank CDs Offer Protection From Rising Interest Rates?

Ally Bank has been making several customer-friendly tweaks to their product line which are worthy of note. First up are two that give you a way to lock in a higher rate, but with a handy exit plan in case rates start rising due to inflation or other governmental intervention.

60-day Early Withdrawal Penalties
The usual deal for a certificate of deposit (CD) is that you agree to keep your money at a bank for a fixed length of time, and the bank agrees to give you a higher interest rate in return since it allows them to lend more easily. Of course, the purchaser is hoping that rates don’t rise a lot after already being locked in.

If you break that agreement, you get hit with a hefty penalty. It is not uncommon for some banks to take half of all your interest accrued if you “break” the CD. On a 2-year CD you’d lose a year’s worth of interest. On a 4-year CD, 2 years of lost interest. But Ally CDs now have only a 60-day interest penalty for breaking their CDs, from 6 months all the way up to 5 years! (See the Fees tab.)

5-Year CD: APY
Since the early withdrawal penalty is so short, …