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A certificate of deposit, or CD, is a savings account that earns interest on a lump sum of money over a specified period of time. During that time, or term, the money in the CD stays untouched as it accrues interest. Terms usually range from as little as one month to as long as five years. The interest earned is at a higher rate than a regular savings or money market account — that’s an incentive given that the money in the CD can’t be accessed during the term. If, however, the CD is tapped before the term’s maturity date, an early withdrawal penalty fee is imposed and interest is forfeited. The interest that’s forfeited depends on the CD’s term and how long the account has been opened. In most cases, the penalty ranges from 30 to 90 days of earned interest forfeited.
For savers who scoff at the idea of locking away their money for up to five years in exchange for a higher interest rate, there’s an option that provides the interest-accruing benefits of a CD account but with the flexibility to withdraw the funds early without restriction: A no-penalty CD.
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What is a no-penalty CD?
Just like a standard CD, a no-penalty CD has a fixed term and earns an annual percentage yield, or APY, higher than that of a regular savings account, but it doesn’t impose a penalty if the money is withdrawn before the maturity date.
No-penalty CDs can auto renew like traditional CDs, which means the terms will restart if you don’t withdraw your money. The major difference from a regular CD is that you can withdraw either all or a portion of your deposit before the date of maturity, depending on the bank’s requirements. What’s more, you can keep all of the interest earned to date. Most no-penalty CDs restrict withdrawals for the first week from the date the account is opened.
CNET’s picks for the best no-penalty CD rates
CNET’s list of no-penalty CDs offer APYs ranging from 2% to just north of 3%. Given that the APY for a regular savings account is 0.16%, according to CNET’s sister site, Bankrate.com, a no-penalty CD can be a worthwhile alternative to a low-yield savings account.
Best no-penalty CDs
| Bank | APY | Term | Minimum deposit | Withdrawal allowed |
|---|---|---|---|---|
| Citibank | 3.10% | 12 months | $500 | Full balance |
| CIT Bank | 3.05% | 11 months | $1,000 | Full balance |
| USAlliance Federal Credit Union | 3.00% | 11 months | $500 | Full balance |
| Ally Bank | 2.75% | 11 months | $0 | Full balance |
| Synchrony Bank | 2.60% | 11 months | $0 | Full balance |
| Marcus by Goldman Sachs | 2.55% | 13 months | $500 | Full balance |
| America First Credit Union | 2.45% | 12 months | $500 | One penalty-free withdrawal per quarter |
| Colorado Federal Savings Bank | 2.00% | 11 months | $5,000 | Full balance |
Note: Annual percentage yields (APYs) shown are as of Oct. 31, 2022. CNET’s editorial team updates this information regularly, typically biweekly. APYs may have changed since they were last updated and may vary by region for some products.
More details on the best no-penalty CD rates
Citigroup
- APY: 3.10%
- Minimum deposit: $500
- Withdrawal allowed: Full balance
Details: Citibank is the fourth largest US bank and offers a wide variety of deposit accounts. The high-yield savings account consistently earns competitive APYs that rival online banks. It’s the largest bank to eliminate overdraft fees to date. Some competitive yields on savings or CD accounts are available depending on where you live. The mobile app also brings innovative features to customers.
CIT Bank
- APY: 3.05%
- Minimum deposit: $1,000
- Withdrawal allowed: Full balance
Details: CIT Bank, the online banking division of First Citizens Bank, is the largest family-controlled bank in the US. The bank offers a wide selection of deposit accounts with competitive rates and doesn’t charge monthly maintenance fees. In addition to the 11-month no-penalty CD, CIT Bank offers eight terms of regular CDs and four terms of jumbo CDs. There’s no ATM network with CIT Bank, an unusual feature for an online-only bank.
USAlliance Federal Credit Union
- APY: 3.00%
- Minimum deposit: $500
- Withdrawal allowed: Full balance
Details: USAlliance is an NCUA-insured credit union that serves 90,000 members nationwide. Membership is open to residents of certain Northeast communities, employees of partner organizations, or membership in specific charitable organizations that are detailed in its member application process. The credit union offers a number of share certificate accounts (a credit union’s version of a CD) including a special rate for its 24-month share certificate of 4.25%.
Ally Bank
- APY: 2.75%
- Minimum deposit: $0
- Withdrawal allowed: Full balance
Details: Ally is an online-only bank that offers a robust set of deposit products, loans and other financial services. In addition to its high-yield and no-penalty CDs, Ally also offers bump-up CDs that adjust to a higher APY, if available. There are no fees with any accounts, and 24/7 customer support is available via phone, chat or email.
Synchrony Bank
- APY: 2.60%
- Minimum deposit: $0
- Withdrawal allowed: Full balance
Details: Synchrony takes advantage of limited overhead to offer competitive rates for deposit accounts. Synchrony is a great option for savers looking for a variety of product offerings including IRA CDs and IRA money market accounts. Synchrony CDs can be opened with no minimum balance requirement making saving accessible for a wide range of customers.
Marcus by Goldman Sachs
- APY: 2.55%
- Minimum deposit: $500
- Withdrawal allowed: Full balance
Details: Launched in 2016, Marcus by Goldman Sachs is the online-only banking arm of Goldman Sachs, one of the 10 largest banks in the US. Marcus is ideal for savers looking for banking products with competitive yields and no-fee personal loans. Customers can open a high-yield savings account, three types of certificates of deposit and apply for a no-fee personal loan.
America First Credit Union
- APY: 2.45%
- Minimum deposit: $500
- Withdrawal allowed: One penalty-free withdrawal per quarter
Details: Membership is available to residents of select West and Southwestern US counties, employees of select America First Credit Union partner organizations or a list of affiliated community organizations. For a detailed list, visit the America First website. The no-penalty CD is called a Flexible Certificate account. This account permits one penalty-free withdrawal each quarter and limits the maximum deposit of $100,000 per member.
Colorado Federal Savings Bank
- APY: 2.00%
- Minimum deposit: $5,000
- Withdrawal allowed: Full balance
Details: Colorado Federal Savings Bank is an online-only bank offering a limited variety of deposit accounts and residential construction mortgages. The savings and CD APYs are competitive, but the higher minimum deposit requirements may put the savings accounts out of reach for new savers
FAQs
Why should I get a no-penalty CD?
A no-penalty CD enables you to earn a higher APY than a savings account and the ability to access your money if you need it without paying early withdrawal penalties. It offers more flexibility than traditional CDs, yet allows you to experience higher growth on deposit accounts.
How should I choose a no-penalty CD?
There are two questions to ask yourself when considering a no-penalty CD. First, what is the highest APY available? If your bank doesn’t offer a competitive APY on a no-penalty CD, consider working with another bank. Second, what are the types of withdrawals permitted by the bank? Some banks require you to with the full balance while others may allow a partial withdrawal.
Are there fees associated with no-penalty CDs?
No, there are generally no fees associated with a no-penalty CD. Because no-penalty CDs are offered by banks and credit unions insured by the FDIC and NCUA, respectively, there is very little risk of losing your money after purchasing a no-penalty CD.
What are the alternatives to no-penalty CDs?
A money market account can also pay a higher APY than a traditional savings account with more flexibility than traditional CD. Like the no-penalty CD, a money market account limits the number of transactions. However, that limit is generally six transactions per month. Also, you can add additional money to a money market account at any time.
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 surveyed include: Alliant Credit Union, Ally Bank, America First Credit Union, American Express National Bank, Axos Bank, Bank of America, Bank of the West, Bank5 Connect, Barclays, BMO Harris, Bread Savings, BrioDirect, Capital One, CFG Community Bank, Citizens Access, Colorado Federal Savings Bank, Connexus Credit Union, Consumers Credit Union, Discover Bank, First Internet Bank of Indiana, First Tech Federal Credit Union, FNBO Direct, GO2bank, Golden 1 Credit Union, HSBC Bank, Huntington Bank, Lake Michigan Credit Union, LendingClub Bank, Live Oak Bank, M&T Bank, Marcus by Goldman Sachs, Merrick Bank, Nationwide (by Axos), Navy Federal Credit Union, NBKC, OneUnited Bank, Pentagon Federal Credit Union, PNC, Popular Direct, PurePoint Financial, Quontic Bank, Rising Bank, Salem Five Direct, Sallie Mae Bank, Santander Bank, Synchrony Bank, TAB Bank, TD Bank, TIAA Bank, Truist Bank, U.S. Bank, UFB Direct, Union Bank, USAA Bank, Vio Bank, and Wells Fargo.
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.
