Monday, November 9, 2015

New Online CD Management Functionality at Ally Bank

Only a few days after I published a blog post on how to give advance instructions to Ally Bank to not renew a CD (Advance Request to Not Renew Ally Bank CDs at Maturity), Ally has added functionality to its online banking interface to allow modifying what happens to the CD proceeds of taxable CDs at maturity. So although the instructions in the previous blog post still will work, it now is much easier to make changes to taxable CDs using the new online functionality. 

The new functionality also allows changing the interest disbursement option (reinvest, mail a check, or distribute to another Ally or non-Ally account), and changing the term of the CD if you choose to renew. 

For IRA CDs, you still must call or use online chat to make changes.

(Reminder: Any screen shots in this post may not appear properly, if at all, in email, so email subscribers should click on the blog post title link in the email to read the post directly on the blog website.)

This morning, I received an email from Ally Bank with the subject "Funds transfer reminder". On opening the email, I saw "Your CD transfer is scheduled" in large letters at the top of the message, and below that I saw "At maturity: Close CD". OK, so far no surprises, since I had used the steps documented in the previous blog post to instruct Ally to close this CD at maturity.

Reading further, I saw the surprise:

To edit this transfer or make other changes to your CD: 
Log in to online banking
Go to the Main Menu  
Select Manage CDs

Huh? What's this?

I knew Ally had done some upgrades of their online banking site over the weekend, since a warning about this had been splashed on the Accounts Summary page each time I logged on during the previous week or so, so I figured this must have been one of the upgrades.

I logged on, followed the email instructions to navigate to the Manage CDs functionality, and checked it out.

Manage CDs

On the Manage CDs page, there are three choices: 

  • Renewal Options
  • Interest Disbursement
  • Early Withdrawal
Renewal Options

The default screen is Renewal Options. On this screen there is a drop-down selection box to select the CD to manage, and your current renewal options are displayed, along with the current CD balance, original term to maturity (e.g., 5 years), and interest disbursement selection.

Importantly, I also see a link to the right of the CD selection box that says "Looking for your IRA CD?". Clicking this link pops up a small window that says:

To make changes to your IRA CD, call us at 1-877-247-ALLY (2559). If you don’t make any changes, your IRA CD will automatically renew into the same term on the renewal date.

So you cannot use the new manage CDs functionality to manage IRA CDs. That's too bad, but it still can be done with a phone call or online chat.

There is a large Make Changes button below the list of renewal options; you may have to scroll down to see it. After clicking this button, several drop-down selection boxes appear. The first selection box shows the following selections:
  •   Transfer Funds/Close CD
    • Rollover balance
    • Add funds to this balance
    • Withdraw partial amount
    • Close my CD at maturity
Rollover balance is the default selection, and with this choice selected, additional drop selection boxes appear that allow you to select the term of the new CD (e.g., 5-year, 3-year, etc.), and to select the disbursement frequency (annually, semi-annually, quarterly, monthly) and disbursement method for the new CD.

For annual disbursement frequency, the disbursement choices are Credit to CD (i.e., reinvest interest), Send me a check, or Deposit into an account. If you select Send me a check, the mailing address is verified, with a note indicating that you can change this in your profile. If Deposit to an account is selected, a drop-down selection box is displayed, and you can select any of your Ally checking, savings or money market accounts, or any of your linked non-Ally accounts.

For monthly, quarterly, or semi-annual disbursement frequencies, the only disbursement method choices are Send me a check or Deposit into an account.

If you select a renewal option other than Rollover Balance, the selection boxes shown are modified accordingly. 

For example, if you select Close my CD at maturity, you are shown a selection box to Transfer Amount By either Online transfer or Check. For online transfer, you can transfer to an Ally account or linked non-Ally account. This is the option you would use instead of the process I documented in the previous blog post.

After making changes to the renewal options, you click the Submit Changes button to save them, or click the Cancel link to cancel any changes.

Interest Disbursement

This choice is used to change the interest disbursement frequency and method for your existing CD. The choices are the same as those documented in the previous section for changing these options for the CD at renewal. 

Being able to easily change this online is a great feature for someone who decides they'd like to have their interest disbursed to them instead of having it reinvested. I would only choose this if I could earn more interest elsewhere, or needed the money for living expenses.

Early Withdrawal

This choice allows you to do an early withdrawal online. This is a nice option for those who prefer to do things online rather than talk to a person on the phone, and who don't want to bother answering questions like "why are you doing this?" It will probably will take less time than the 5-10 minute phone call to do an early withdrawal, which is what I've done previously. It also reinforces my confidence that Ally Bank will not disallow an early withdrawal request, although of course they could remove this functionality at some point in the future.

The current balance + accrued interest is displayed for the selected CD, along with the early withdrawal penalty amount and the balance after penalty amount. As with the disbursement method, you can choose to transfer the balance by online transfer or by check.

Setting a taxable CD to not renew at maturity

So the steps to set your taxable CD to be closed (not renew) at maturity are now:
  1. Log on to online banking for your Ally account.
  2. Select Manage CDs from the main menu (three horizontal lines at top right).
  3. Select the CD from the drop-down selection box.
  4. Click the Make Changes button.
  5.  Select I Want To: Close my CD at maturity.
  6. Select to Transfer Amount By: Online transfer or check.
  7. For online transfer, select the Ally account or linked non-Ally account you want the proceeds deposited to upon maturity.
  8. Click the Submit Changes button to save your changes.
Very cool!

5 comments:

  1. On my computer, using Firefox, the "Make Changes" button does not show. It did work using Chrome browser.

    ReplyDelete
    Replies
    1. Interesting. I use Chrome pretty much exclusively--usually on a Chromebook

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  2. Hi Kevin -- I've missed seeing any new posts from you over the last little while...

    but have a question that I suspect others who follow your site might also have.

    Question:
    If you have two 5-year CD's and you need cash…, so you have to break one of them today..., which would you choose?

    CD-#1 int=1.9%; Expires mid-2018; EWP=180 days interest

    CD-#2 Int=2.25%; Expires mid 2020; EWP=180 day interest

    Thanks in advance, I've got myself twisted in knots trying to decide….

    Charlie

    ReplyDelete
    Replies
    1. Hi Charlie,

      My immediate thought is that I would break the 1.9% CD that matures in 2018. The rate is lower, you'll pay a smaller EWP, and you'd keep earning the higher 2.25% rate for another 4+ years. The 2.25% rate is competitive for 4-5 year CDs.

      A follow-on thought is that you might consider alternatives if you think you're going to need more cash from the CDs in mid-2018. However, if you think you might not need it, then I'd still probably hold onto the 2.25% CD, since it would earn an effective yield of about 1.8% over the next 2.5 years if you were to do an early withdrawal in mid-2018. That's not much lower than the 1.9% you'd earn when the lower-yield CD matures in mid 2018.

      Hope that helps,

      Kevin

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  3. Thanks Kevin!
    I think your "follow-on thought" unknotted me….!

    The thing driving my confusion has been my belief that interest rates are going up soon….And therefore as you wisely anticipated, I lean toward "preserving" my shorter term CD's so can reinvest at a higher rate when expires sooner (with no EWP)….

    But as you point out, if rates do go up, I can break my higher paying CD in 2018 and still basically break even……

    But if I'm wrong….and rates don't go up, the higher rate CD is an obvious winner…


    I think the other thing confusing my thinking is the mental block I seem to have about incurring a "penalty"…I really need to get over that….

    Seems so obvious now, Thanks again!

    Charlie

    ReplyDelete