HleCmt t1_jeajku6 wrote on March 30, 2023 at 4:43 PM

I've held different accounts with Ally and so far so good. Their rates are on par with other online savings accounts.

Their MM rates are usually better than their Savings, comes with a debit card and it's much easier to access your cash in an emergency.

I'd suggest opening both, putting emergency funds in the MM and down payment funds in the Savings. Set up an auto transfer from your regular checking so that money disappears from your regular spending and consideration.

Regarding the CDs, if you truly plan to never touch them until maturity, go with whatever has the highest rate. Or you can ladder different CD maturity dates so some money will become available throughout the next X months or years. Then you can decide which terms and process you like better.

Personally, I'm dithering on locking a chunk of savings into the 18 month 5% CD now or wait to see if rates rise in May or June. Maybe both.

clong55 OP t1_jeb3rci wrote on March 30, 2023 at 6:51 PM

Thanks for the thorough explanation! So all the CDs I listed in the description are not ideal if premature withdrawals are expected, even with the no-penalty option, correct? And MM is the most flexible when it comes to withdrawal, which is good for emergency funds. Following is Savings account which could be used for down payments, right?

But what is the reason for not putting the down payment money in CDs?

HleCmt t1_jecabxr wrote on March 30, 2023 at 11:33 PM

You're welcome. I don't considering No Penalty CD one of the better options because the rates are lower than other HY CDs and can only be locked in for 11 months. The rates are still better than a savings/mm account but the funds aren't as quickly/immediately available. If you're worried premature withdrawals may become a reality then I'd suggest putting some money into a No-penalty for peace of mind.

Yes, MM funds are most-immediately available via the debit card. Keep in mind if you need to transfer money from your Ally Savings into your MM it's immediately available but you need access to an Ally recognized phone/computer.

The reason for not putting all my funds into CDs is just a matter of preference. I prefer to have a mix of options, partly hedging and quick access to funds for other opportunities. On the other hand HYCD rates haven't been this high since 2010 so it's a unique opportunity. On the other other hand if you put all your funds into long term CDs and need to early-withdraw your interest penalty could cancel out the additional interest accrual of a CD over a Savings/MM, which is immediately accessable.

To start I suggest you open a Savings and MM asap. It will take your current bank around 3 days to transfer your funds so you're looking at next week. In the meantime use one of the CD interest calculators on Ally or elsewhere to compare numbers, timing and determine what feels best for you.

clong55 OP t1_jefvjp8 wrote on March 31, 2023 at 6:36 PM

very helpful to learn about different perspectives!

Another quick question about CDs, what happens after the term is up? Do we have the option to renew the term, or do we have to move everything out of the CDs?