If you have a high-yield savings...

**asmom** · 04-05-2012, 05:50 PM

I personally had not heard of Ally's no penalty CD but it certainly sounds like a worthwhile alternative to a savings account albeit for an extremely minimal difference. In fact, the difference is so minimal that I will not even consider moving my money from my current account to that one.

Question: When are we going to stop using the term "high-yield" savings? 0.84 is certainly not
"high-yield" by any stretch of the imagination.

**disneysteve** · 04-05-2012, 05:54 PM

Originally posted by asmom View Post

Question: When are we going to stop using the term "high-yield" savings? 0.84 is certainly not
"high-yield" by any stretch of the imagination.

LOL. I keep thinking the same thing. I think from now on, we just call them savings accounts. Drop the "high-yield" title.

I'm old enough to remember when ALL bank savings accounts paid 5.5%. That was the standard for years and years. It was a really big deal when that rate became variable, and dropped to virtually zero where it is now at most banks. Seriously, 0.1% is what many banks pay. Why do they even bother?

**J.Apple902** · 04-05-2012, 08:25 PM

I agree on your saddened reflection of what savings account APYs used to be but nowadays you must say "high-yield" savings account because the norm has become APYs of less than 0.10% or even 0.00% for most standard accounts.

**bjl584** · 04-06-2012, 03:50 AM

I've never heard of this product from Ally but it may be worth looking into further just to make sure there isn't a catch.

**kv968** · 04-06-2012, 05:47 AM

Originally posted by bjl584 View Post

I've never heard of this product from Ally but it may be worth looking into further just to make sure there isn't a catch.

There's no catch:

Ally No Penalty

However you have determine if it's actually even worth opening up...
It's offering an APY of 0.93% as compared to Ally's MM account which is currently 0.84%. For an increase of a whopping 9 basis points (as Steve said, it's funny to even call these "high yield" anymore). So on $10,000 you'd make an extra $9/yr. Sure it's a little more money but is it worth opening up a CD for? Unfortunately at these rates maybe it is

They also offer a "Raise Your Rate CD" for 2 or 4 years with a current APY of 1.09% and 1.49% respectively:

Ally Raise Your Rate

You can raise your rate once with the 2 year and twice with the 4 year. There is a penalty for early withdrawl with these.

**J.Apple902** · 04-06-2012, 06:23 AM

The raise your rate CD has nothing to do with this post. It's just something cool where if you lock in your 2 or 4 yr CD, you don't get absolutely screwed if yield rates skyrocket and therefore you're not left with some abysmal rate.

**kv968** · 04-06-2012, 06:42 AM

Originally posted by J.Apple902 View Post

The raise your rate CD has nothing to do with this post. It's just something cool where if you lock in your 2 or 4 yr CD, you don't get absolutely screwed if yield rates skyrocket and therefore you're not left with some abysmal rate.

I didn't say the raise your rate CD had anything to do with your post. I was just pointing out to people that it exisited if they were interested since a few didn't even know about the no penalty one.

**Slug** · 04-06-2012, 09:19 AM

Many actually prefer the 5 yr ALLY CD because the penalties are low enough/rate is high enough to justify putting your money even if there is a chance you'll have to break it early.

**J.Apple902** · 04-06-2012, 04:38 PM

Yeah sorry kv, good point

**kv968** · 04-07-2012, 05:04 AM

Originally posted by J.Apple902 View Post

Yeah sorry kv, good point

No problem. Just trying to spread what little information I posess

**J.Apple902** · 04-07-2012, 08:15 AM

haha yeah I try to do the same!

So I still don't know what I will do in a few months when it is time for me to create my second laying of EF - the first being a comfortable checking account cushion. Obviously money is money and it doesn't matter if an APY is 0.84 vs 0.85 you should always go with the higher one. Sure it may be just a couple dollars a year but if there are no serious issues with the 11-month CD then I may go with that.

**disneysteve** · 04-07-2012, 09:27 AM

Originally posted by J.Apple902 View Post

There are several tiers of emergency funds. Many people have a couple thousand in a readily accessible local checking/savings account in order to access the money instantly. These people may also have several thousands lying in a high-yield savings account, Ally being one of the best right now at 0.84% APY.

Why wouldn't most or all of these people use the no penalty cd which has a higher APY than the high-yield savings at 0.93%?

There is one "downside" to going the CD route. In order to do the no penalty withdrawal, you need to withdrawal the full amount. So if you have a $10,000 CD and only need $1,000 for an unexpected expense, you'd need to close out the whole 10K. Then you're left having to reinvest the other 9K. Not a huge deal but it does add a bit of a hassle factor.

**jpg7n16** · 04-07-2012, 10:09 AM

Originally posted by disneysteve View Post

There is one "downside" to going the CD route. In order to do the no penalty withdrawal, you need to withdrawal the full amount. So if you have a $10,000 CD and only need $1,000 for an unexpected expense, you'd need to close out the whole 10K. Then you're left having to reinvest the other 9K. Not a huge deal but it does add a bit of a hassle factor.

What if you had say 5 $2k CDs? Is that a big hassle to open that way?

I don't really ever deal with CDs much, so don't know if that's worth the hassle or not. But might be a way around having to cash the whole thing out. I'd figure it be like opening 5 accounts. Maybe take some more time up front, but save trouble down the line

**disneysteve** · 04-07-2012, 10:20 AM

Originally posted by jpg7n16 View Post

What if you had say 5 $2k CDs? Is that a big hassle to open that way?

That would work. Just more accounts to keep track of, more 1099s at the end of the year, etc.

If you have a high-yield savings...