Ally Bank No Penalty CD

Cash is king.  Every portfolio should have some portion of it dedicated to cash.  That is why for my latest Portfolio Pick I'm going to highlight the Ally Bank No Penalty CD.

Ally Bank advertisement featuring the No Penalty CD.  Video embedded from Ally Bank's YouTube channel.

It happens every now and then, you have a decent sum of cash in your savings account and you want a higher return.  So you open a certificate of deposit to get that return.  Suddenly a circumstance comes up that your savings can't cover.  You have no choice but to tap into that CD and take a penalty for early withdrawal.  If you close the account early in the CD's term, you end up with less money than when you opened it.

The Ally Bank No Penalty CD is one of those rare accounts that will let you "Have your cake and eat it too".  As the name suggests, this CD will let you take out your cash without getting hit by that early withdrawal penalty (after the first six days of funding).    It also pays a higher interest rate than most savings accounts, giving your cash reserve that extra boost while maintaining liquidity.

This CD is available in a single term of eleven months.  The minimum balance to open an account is $0.  The account may be opened online or by calling 1-877-247-ALLY (2559).

How I Would Invest:  I would open an account with an amount of cash I felt comfortable with sacrificing.  Yeah, I know could it back without getting penalized, but I want that higher rate of return.  I would let the interest compound.

This is not a recommendation to open an account.  While I do have accounts with Ally Bank, none of them currently are CD's.  That may change in the future.