A certificate of deposit is a safe, reliable way to grow your savings. Unlike savings accounts, CDs have a fixed rate, which means your earnings stay the same regardless of the overall rate environment.
Traditional CDs charge an early withdrawal penalty if you need your funds before the term is up. There is a way to enjoy the guaranteed earnings of a CD and fee-free access to your money if you need it: no-penalty CDs. Annual percentage yields for no-penalty CDs may not be as high as for traditional CDs, but they're still competitive.
Read on to see which no-penalty CDs we recommend and where to find them.
CNET’s picks for the best no-penalty CD rates
| Bank | APY | Term | Min. Deposit | Withdrawal allowed |
|---|---|---|---|---|
| CIT Bank | 3.50% | 11 months | $1,000 | Full balance |
| Ally Bank | 3.75% | 11 months | $0 | Full balance |
| Marcus by Goldman Sachs | 4.00% | 7 months, 11 months, 13 months | $0 | Full balance |
More details on the best no-penalty CD rates
CIT Bank
CIT’s no-penalty CD has an 11-month term and requires a $1,000 minimum deposit. You won’t pay any monthly maintenance fees. We like that CIT Bank offers several CD types and terms. But aside from CDs, CIT Bank also offers competitive rates for savings and money market accounts. A checking account is also available if you prefer to keep all of your money with one bank. Keep in mind that CIT Bank is an online-only bank, so no physical branches are available for in-person assistance.
- No-penalty, bump-up and high-yield CDs
- Terms range from six months to five years — depending on the type of CD
- Early withdrawal penalties range from three to 12 months of interest
CIT’s no-penalty CD has an 11-month term and requires a $1,000 minimum deposit. You won’t pay any monthly maintenance fees. We like that CIT Bank offers several CD types and terms. But aside from CDs, CIT Bank also offers competitive rates for savings and money market accounts. A checking account is also available if you prefer to keep all of your money with one bank. Keep in mind that CIT Bank is an online-only bank, so no physical branches are available for in-person assistance.
- No-penalty, bump-up and high-yield CDs
- Terms range from six months to five years — depending on the type of CD
- Early withdrawal penalties range from three to 12 months of interest
Ally Bank
Ally is one of our favorite banks for opening a no-penalty CD. Its no-penalty CD doesn’t require a minimum balance and has an 11-month term. We’re also fans of its 0.05% APY boost when you renew your CD for another term.
Ally has several deposit account options, including high-yield checking, high-yield savings and money market accounts. However, cash deposits aren’t accepted. Like CIT, Ally is an online-only bank, so you’ll need to be comfortable managing your account without physical bank access. ATMs are available.
- No-penalty, bump-up and high-yield CDs
- Terms range from three months to five years — depending on the type of CD
- Early withdrawal penalties range from one to five months of interest
- Loyalty reward of 0.05% APY for CDs you renew
Ally is one of our favorite banks for opening a no-penalty CD. Its no-penalty CD doesn’t require a minimum balance and has an 11-month term. We’re also fans of its 0.05% APY boost when you renew your CD for another term.
Ally has several deposit account options, including high-yield checking, high-yield savings and money market accounts. However, cash deposits aren’t accepted. Like CIT, Ally is an online-only bank, so you’ll need to be comfortable managing your account without physical bank access. ATMs are available.
- No-penalty, bump-up and high-yield CDs
- Terms range from three months to five years — depending on the type of CD
- Early withdrawal penalties range from one to five months of interest
- Loyalty reward of 0.05% APY for CDs you renew
Marcus by Goldman Sachs
Marcus by Goldman Sachs offers three terms for no-penalty CDs — seven-, 11- and 13-month. Each requires a minimum $500 deposit, though its savings accounts don’t have a requirement to get started.
Marcus offers savings accounts that don’t require a minimum deposit. We like that you can make same-day transfers of up to $100,000 between external accounts. What’s more is you can reach customer service 24/7 by calling 855-730-7283. An extensive list of frequently asked questions is also available online.
However, there are some shortcomings. Because Marcus by Goldman Sachs is an online-only bank, it doesn’t offer an ATM network, checking accounts or money market accounts. You also can’t deposit cash or make mobile check deposits.
- High-yield, no-penalty and bump-up CDs available
- Terms range from six months to six years — depending on the type of CD
- Early withdrawal penalties range from three to nine months of interest
- CD Maturity Center available 12 months before your CD matures to make changes to your CD beforehand — including withdrawing money or closing the account
Marcus by Goldman Sachs offers three terms for no-penalty CDs — seven-, 11- and 13-month. Each requires a minimum $500 deposit, though its savings accounts don’t have a requirement to get started.
Marcus offers savings accounts that don’t require a minimum deposit. We like that you can make same-day transfers of up to $100,000 between external accounts. What’s more is you can reach customer service 24/7 by calling 855-730-7283. An extensive list of frequently asked questions is also available online.
However, there are some shortcomings. Because Marcus by Goldman Sachs is an online-only bank, it doesn’t offer an ATM network, checking accounts or money market accounts. You also can’t deposit cash or make mobile check deposits.
- High-yield, no-penalty and bump-up CDs available
- Terms range from six months to six years — depending on the type of CD
- Early withdrawal penalties range from three to nine months of interest
- CD Maturity Center available 12 months before your CD matures to make changes to your CD beforehand — including withdrawing money or closing the account
What is a no-penalty CD?
With a traditional CD, your funds stay locked up for a set term, and you can’t withdraw your money early without being charged a fee. Traditional CDs offer security, but they’re not as flexible as other savings accounts, such as high-yield savings accounts and money market accounts.Â
A no-penalty CD allows you to withdraw money before your term ends without incurring an early withdrawal penalty. Traditional CDs charge fees equal to a few months of interest if you break your term before it’s up, but a no-penalty CD allows your funds to be accessible in case you need them.Â
There are still some withdrawal restrictions depending on the bank or credit union. Most banks don’t let you touch your money until a week after your CD is opened. Some banks let you pull out funds only once or require you to withdraw the full amount.
If you don’t touch your money during the CD term, you can wait until your CD matures, after which you typically have a 10-day grace period to withdraw your funds. If you don’t take any action, your funds are usually transferred to a new CD at the current rate, which could be lower than the rate you locked in previously.
Factors to consider before opening a no-penalty CDÂ
Although no-penalty CDs offer more flexibility than traditional CDs, there are still some downsides to consider before jumping in.
Limited term options
No-penalty CDs are often hard to find. Banks that offer them typically have only one term length for this type of CD. If the term length doesn’t align with your goals, consider other options.
Lower APYs than other CDs
No-penalty CDs often offer lower APYs than traditional high-yielding CDs. Based on the banks we track at CNET, the best no-penalty CDs currently earn up to 4.00%. The top traditional CD offers 4.70% APY.
Withdrawal restrictions
Most banks that offer no-penalty CDs won’t let you withdraw money within the first seven days of opening your account. Many banks don’t allow you to make a partial withdrawal, so you’ll have to take all your money out at once.Â
Deposit limits
Similar to traditional CDs, no-penalty CDs generally don’t allow additional deposits once you open the account. When you’re ready to open a no-penalty CD, be prepared to make a one-time deposit.
Alternatives to no-penalty CDs
No-penalty CDs have some benefits, but a more flexible savings option could be better for your personal situation.
For example, there are fully liquid options -- meaning you can access your cash and add funds on an ongoing basis – that also offer decent returns, said Lawrence Sprung, a certified financial planner and author of Financial Planning Made Personal.
Money market accounts and high-yield savings accounts, for example, offer competitive APYs and easy access to your savings if you want to make regular deposits or withdrawals. However, these accounts have a variable interest rate, so the APY could change based on market conditions, and your return will be unpredictable over the long term. No-penalty CDs earn a fixed rate that won’t change during the length of the term.Â
High-yield savings accounts and money market accounts are a good option if you’re building an emergency fund or sinking fund or you want access to your money on a regular basis without incurring a penalty.
How to open a no-penalty CD
The steps for opening a no-penalty CD depend on your bank’s application process. Here’s what you can typically expect.Â
- Select your account. Choose a no-penalty CD with a term and minimum deposit you’re comfortable with.Â
- Complete the application online or in person. You’ll need your personal information, including your mailing address, phone number and Social Security number or taxpayer identification number. Your application may be approved immediately, or it may take a few days.Â
- Fund your account. Once your application is approved, you’ll make a one-time deposit to your account based on the bank’s deposit methods.
FAQs
When considering a no-penalty CD, look for banks with the highest APYs. Then consider any fees, minimum balance requirements and withdrawal restrictions. Some banks require you to withdraw your full balance, while others may allow a partial withdrawal. You also want to ensure you’re comfortable managing your account online since most online banks offer the best rates.
No, there generally aren’t any fees associated with a no-penalty CD, but each bank has its fee structure. Check the bank’s full rates and fee disclosures before opening a new account.
Methodology
CNET reviews CD rates based on the latest APY information from issuer websites. We evaluated CD rates from more than 50 banks, credit unions and financial companies. We selected the no-penalty CDs with the highest APY with a variety of terms from among the organizations we surveyed.
Banks we reviewedÂ
Ally Bank, America First Credit Union, Bank of America, CIT, Colorado Federal Savings Bank, Marcus by Goldman Sachs, Synchrony and TD Bank.
The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.
