A no-penalty certificate of deposit is a specialty CD that allows you to earn a fixed annual percentage yield without paying an early withdrawal penalty to access your funds. Like a traditional CD, a no-penalty CD provides a safe, low-risk way to grow your investment with a guaranteed return. However, there are a few trade-offs to consider: No-penalty CDs aren’t common among most banks and often have lower APYs than traditional CDs.
CNET’s picks for the best no-penalty CD rates
| Bank | APY | Term | Min. Deposit | Withdrawal allowed |
|---|---|---|---|---|
| CIT Bank | 4.90% | 11 months | $1000 | Full balance |
| Ally Bank | 4.15% | 11 months | $0 | Full balance |
| Synchrony Bank | 3.65% | 11 months | $0 | Full balance |
| Marcus by Goldman Sachs | 4.70% | 13 months | $0 | Full balance |
CIT Bank
- APY APY = Annual Percentage Yield.
- 4.90%
- Term
- 11 months
- Min. Deposit
- $1000
- Withdrawal allowed
- Full balance
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 three months to five years -- depending on the type of CD
- Early withdrawal penalties range from two to five months of interest
- Loyalty reward of 0.05% for CDs you renew
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 three months to five years -- depending on the type of CD
- Early withdrawal penalties range from two to five months of interest
- Loyalty reward of 0.05% for CDs you renew
- APY APY = Annual Percentage Yield.
- 4.15%
- Term
- 11 months
- Min. Deposit
- $0
- Withdrawal allowed
- Full balance
Ally is one of our favorite banks for opening a CD. Its no-penalty CD doesn’t require a minimum balance and has an 11-month term. If you’re eyeing a CD with Ally, 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, but you can’t deposit cash directly into your account.
- 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 two to five months of interest
- Loyalty reward of 0.05% for CDs you renew
Ally is one of our favorite banks for opening a CD. Its no-penalty CD doesn’t require a minimum balance and has an 11-month term. If you’re eyeing a CD with Ally, 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, but you can’t deposit cash directly into your account.
- 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 two to five months of interest
- Loyalty reward of 0.05% for CDs you renew
Synchrony Bank
- APY APY = Annual Percentage Yield.
- 3.65%
- Term
- 11 months
- Min. Deposit
- $0
- Withdrawal allowed
- Full balance
Synchrony’s no-penalty CD is on par with Ally’s. It has an 11-month term and doesn’t require a minimum deposit, either. We like that it also offers competitive interest rates for all of its savings options -- including money market accounts, CDs and high-yield savings accounts. But what makes it stand out is its extended customer service hours by phone and live chat online.
But it’s worth noting that Synchrony doesn’t allow cash deposits. It also doesn’t offer a checking account, so if you want to keep all your bank accounts in one place, consider another bank on this list.
- Bump-up, high-yield and no-penalty CDs available
- Terms range from three months to five years -- depending on the type of CD
- No minimum balance or monthly maintenance fees
- Early withdrawal penalties range from three months to one year of interest
Synchrony’s no-penalty CD is on par with Ally’s. It has an 11-month term and doesn’t require a minimum deposit, either. We like that it also offers competitive interest rates for all of its savings options -- including money market accounts, CDs and high-yield savings accounts. But what makes it stand out is its extended customer service hours by phone and live chat online.
But it’s worth noting that Synchrony doesn’t allow cash deposits. It also doesn’t offer a checking account, so if you want to keep all your bank accounts in one place, consider another bank on this list.
- Bump-up, high-yield and no-penalty CDs available
- Terms range from three months to five years -- depending on the type of CD
- No minimum balance or monthly maintenance fees
- Early withdrawal penalties range from three months to one year of interest
Marcus by Goldman Sachs
- APY APY = Annual Percentage Yield.
- 4.70%
- Term
- 13 months
- Min. Deposit
- $0
- Withdrawal allowed
- Full balance
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. Marcus by Goldman Sachs 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. Marcus by Goldman Sachs 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. While traditional CDs offer security, they’re not as flexible as other savings accounts, such as high-yield savings accounts and money market accounts.
A no-penalty CD, however, 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.
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 CD
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 earn as much as 4.90% 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.
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.
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.
- Select your account. Choose a no-penalty CD with a term and minimum deposit you’re comfortable with.
- 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.
- 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.
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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 reviewed
Ally Bank, 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.
