"Raise Your Rate CD" Coming to a Bank Near You?
May 18, 2010
Since its (re-)inception, Ally Bank has been aggressively positioning itself as a bank that offers uncommon service and products to consumers--including a no-penalty certificate of deposit (CD) that gives you better access to your funds.
Ally Bank's "Raise Your Rate CD" raises the bar for other banks who are likewise competing for deposits.
Raise Your Rate CD Offers Some Protection Against Higher CD Rates
Ally's Raise Your Rate CD is a two-year-term CD that pays a 1.99% APY at origination but then allows you to "bump up" to a new two-year Ally Bank CD if CD rates improve. You can only choose to bump up once throughout the life of the CD, and the rates quoted are all Ally rates.
The Raise Your Rate CD can be a very appealing product for CD rate watchers who would like to get their money into a decent near-2% CD but don't want to be locked into that low rate if in fact interest rates on CDs do rise within the next two years, as many expect them to do.
Will Flexible CD Rates and Terms Become a Trend?
This CD product meets a consumer need: There is a segment of bank depositors who are hesitant to buy a 2-year CD when the immediate future of interest rates is so uncertain and who will be attracted to a CD with some protection.
Other banks may want to follow suit. Certainly it is worth watching whether or not this CD product gathers a significant following.