Ally Bank CD - 1yr vs 5yr (w/penalty)

rates
As the first CD is coming due in June,
was wondering about a comment that I read.
Instead of going with the 1yr @ 1.0%,
go with the 5yr @ 1.74%
and forfeit the 60day penalty interest
if we need to withdraw for investing in other high yield funds...
Does this make sense ?
Reply to
ps56k
Actually, given today's rates, only 2 of Ally's CDs are ever optimal. The rest should all be ignored. If you think you might withdraw your money within 130 days, you should go with the no-penalty (11 month) CD. Otherwise, you should go with the 5-year CD. After 130 days, the additional interest will more than cancel out any early withdrawal penalty.
I drafted a spreadsheet that demonstrates all this. Unfortunately, Google Docs doesn't yet support conditional formatting where the condition is a formula. So if you play with the rates, it won't update the highlighting. But I think it gets the idea across.
formatting link
in a
Reply to
Bill Woessner
Tnx for the reply and posting. The CD's are just a way to keep my hands off, and not add to my various stock & mutual fund holdings, along with providing a parking place for cash... It's about $100k -
I had not actually sat and played with the numbers to see if the 5yr made sense - even with a withdrawl to potentially place the funds into a higher return account if and when that might happen.
Reply to
ps56k

Site Timeline Threads

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.