Ally OSA down to 1.8500% APY, No Penalty CD to 1.90% APY

July 21st, 2009 · 1 Comment

Just logged in to the Ally Bank website and noticed that the yield on their OSA (online savings account) is down to 1.8500%.  Combined with my post last week on the same topic, this seems like a rather disconcerting rapid drop.

So why the rapid decrease?  Has Ally decided they’ve gathered enough funds and thus don’t need to offer deposit-attracting yields?  iBankNet shows that Ally had a total of $22,527,450,000 USD in deposits for the quarter ending 2009-03-31, but I can’t find a more recent number to compare it to, so I can’t answer that question.  As an aside, I do note that they lost $133,493,000 in the quarter.  Or perhaps the yield drops are simply a bearish reflection on the economy in that the interest they’re able to earn by putting their assets to work is trending down?  Not that long ago, they were claiming their high rates were simply a sign of high efficiency and having better opportunities to earn a better return than other institutions.  This seems like a clue that that was at best a temporary situation.

Smaller earnings on our emergency fund

Smaller earnings on our emergency fund

All that being said, Ally’s OSA yield is still above FNBO Direct’s OSA yield, which is 1.50% and unchanged since 2009-06-22.  And it is also above ING Direct’s OSA yield, which is 1.40% since 2009-07-03.   But the gap between these yield rates is certainly narrowing.

Certificates of Deposit

For those interested in a CD rate comparison, Ally’s No Penalty CD is now offering a 1.90% APY for 9-months.  Their Classic CD is 1.60% APY for both a 6-month and 9-month term.   These are both a good bit higher than FNBO Direct’s 6-month CD at a 1.00% APY, and 9-month CD which is 1.25% APY.  And a similar gap exists between Ally and ING Direct, which is offering a 1.15% APY for both 6 and 9 month CD accounts.  However, my local credit union, ATFCU, is back in the running as the yield on their 6-month CD is 1.86%.

Given that we have a 6-month CD with ATFCU (part of our “emergency fund CD ladder”) coming to term in a few days, the question is what to do with the money.  Transferring it to Ally via ACH will take 5 business days or so, which means that the Ally rates could drop even further before I can lock a rate in.  (Ally changes rates on Thursdays and the rate locks when the funding is complete — NOT when you open it)  However, I could lock in a rate for 9 months with no penalty for early withdrawal by doing so.  The benefits appear to outweigh ths risk given that Ally has only been reducing rates by 0.05% APY each week.

Tags: Savings

1 response so far ↓

  1. 1 Online Savings Account rate check for end of July, 2009 | Geographic Independence // 2009.08.01 at 7:03 am

    […] their quickly dropping trend, Ally Bank has dropped their OSA yield down to a 1.75% APY from the 1.85% it was less than two weeks ago.  However, the yield on the No Penalty CD held constant at 1.90% […]

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