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- In 2022, I finally made the jump to a high-yield savings account with Ally.
- In 2023, I decided to also start a CD ladder so I could grow money I wasn’t spending over time.
- I’m able to get the most out of my money by keeping some money in savings and some in CDs.
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In 2022, I made what I thought was a pretty solid money move: I opened a high-yield savings account and moved my money from a savings account, which had been earning me very little interest — just 0.05%. My new account was with Ally Bank.
At the beginning of 2023, I decided also to take advantage of Ally’s high CD rates. I opened CDs with several term lengths: six months, nine months, 12 months, and 13 months. At the time, the 13-month CD had a 4.6% APR, which was 92 times more than the interest I was earning from my old savings account with another bank.
I’m glad I made the move. Here’s my strategy for my CDs.
I’m laddering my CDs
If I had parked my funds in my old savings account, I would earn very little interest. Now, I’m earning nearly 100 times more. All I had to do was open a few CDs and choose the maturity dates and the amounts.
Ally’s CDs range from three months to five years. I decided on my timeframe of six months to 13 months because that was a comfortable timeline for me to keep those funds locked in.
I am building a CD ladder, so I can access funds if needed or move them into a different type of savings account every three months or so.
I’m planning on renewing my CDs
Ally’s CDs automatically renew. About a month before the renewal date, I’ll get an email reminding me that my CD is set to mature. That’s when I check the current rates and decide whether to renew my CD for the same term, move it into a different term, or pull out the funds.
If I ever miss the cutoff for making changes before the CD term ends, a 10-day grace period kicks off at the start of that CD’s maturity date.
Because I don’t have any big-ticket items in the near future that money in my main savings account can’t cover, I’ve been renewing my CDs. The only change I might make is to choose a different CD term, as the rates tend to change. Ally currently offers a 0.05% loyalty bonus for renewing CDs — the same interest rate I was earning on my old savings account.
I’m still using my high-yield savings account
I keep a cushion of funds in my Ally high-yield savings account for big-ticket purchases, vacations, and emergencies. Ally makes it easy to set up different savings buckets and recurring transfers, surprise savings and boosts to make it easy to save regularly.
By stashing my main reserve of cash into a separate savings account, I don’t risk needing to tap into my funds early and get hit with an early withdrawal penalty. As I’m constantly looking for different ways for my money to grow more, my strategy might change in the future. But for now, I’m happy with keeping my savings in a combination of high-yield CDs and savings accounts.
This article was originally published in September 2023.
Jackie Lam is a personal finance writer and is based in Los Angeles. She is an accredited AFC® financial counselor. Jackie is passionate about helping artists, freelancers, and gig economy workers with their finances. She has in-depth experience writing about budgeting, investing, frugality, money, and relationships, and loves finding interesting stories that revolve around money. She is the 2022 recipient of Money Management International’s Financial Literacy and Education in Communities (FLEC) Award and the 2022 Plutus Awards recipient for Best Freelancer in Personal Finance Media. In her spare time she enjoys volunteering, water aerobics, sticker collecting, being in nature, and learning the drums. You can connect with her on Instagram or Twitter.