Maximizing Savings: How Using High-Yield CDs and Savings Account Helped

High-Yield Savings and CD Ladder Strategy with Ally Bank

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My Journey from Traditional Savings to High-Yield Savings

• Switched to a high-yield savings account with Ally in 2022.
• Started a CD ladder in 2023 to optimize savings growth.
• Balanced money between savings and CDs for maximum yield.

In 2022, I opened a high-yield savings account with Ally Bank, leaving behind the meager 0.05% interest of my previous savings account.

Diversifying with Certificate of Deposits (CDs)

In 2023, I explored CD rates and invested in multiple CDs with varying term lengths, from 6 to 13 months. The 13-month CD offered a staggering 4.6% APR – 92 times more than my previous savings account’s interest!

Laddering CDs for Flexible Access to Funds

Building a CD ladder with Ally’s range of 3-month to 5-year CDs allowed me access to funds every three months, ensuring that I could adapt to changing financial needs without penalty.

Renewing CDs for Continued Growth

Ally’s CDs automatically renew, and I receive a reminder one month before the maturity date. I review the current rates and decide whether to renew the CD, choose a different term, or withdraw the funds. I’ve consistently renewed my CDs since I have no major expenses in the near future that my savings account cannot cover.

Maintaining High-Yield Savings alongside CDs

My Ally high-yield savings account serves as a cushion for big-ticket purchases, vacations, and emergencies. I use separate savings “buckets” and set up recurring transfers to keep saving easy and regular. Having a distinct savings account ensures that I don’t need to draw from my CDs prematurely and incur an early withdrawal penalty.

This article was originally published in September 2023.