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


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Bill Woessner

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.

https://docs.google.com/spreadsheet/ccc?key=0AoZ1EM6IBna-dE1xVWdVUENWaFd1MGJPMmJTQkktcmc
 
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ps56k

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.
 

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