I’ve written a few posts about the safety of Ally Demand Notes. I’ve had a few readers ask whether I still feel that they’re safe, so I thought I’d check in with an update.
For those who aren’t aware, Ally Demand Notes are an unsecured money market type account that currently pays 2.25% interest. Because it’s unsecured, the holdings are not covered under FDIC insurance laws, meaning that it’s not like a traditional bank savings account.
The upside is that it pays a rate of over double what you’ll find virtually anywhere else. If you’re willing to take the risk, and you qualify to participate (you have to work or have a relative who works for GM or Ally), it can be a good place to earn some extra money on your cash savings.