BEST OF
3 Best No-Penalty CD Rates for January 2021
A no-penalty certificate of deposit is a type of CD that charges no fee for withdrawing money before the term expires. Terms tend to be around one year. You generally can withdraw the full balance any time starting the week after the day you fund a CD. In contrast, when you withdraw early from a regular CD, you pay at least several months’ of interest earned.
» Want to see a wider pool of high rates? See our list of the best high-interest accounts
Here’s a look at some of the best no-penalty CD rates.
A no-penalty certificate of deposit is a type of CD that charges no fee for withdrawing money before the term expires. Terms tend to be around one year. You generally can withdraw the full balance any time starting the week after the day you fund a CD. In contrast, when you withdraw early from a regular CD, you pay at least several months’ of interest earned.
» Want to see a wider pool of high rates? See our list of the best high-interest accounts
Here’s a look at some of the best no-penalty CD rates.
Summary of Best No-Penalty CD Rates for January 2021
| Bank/Institution | NerdWallet Rating | APY | Minimum Deposit | Learn More |
|---|---|---|---|---|
0.45% | $500 | Read review | ||
0.30% | $1,000 | Read review | ||
0.50% | $0 | Read review |
Marcus by Goldman Sachs No-Penalty CD
APY
With $500 minimum balance
Minimum Balance
Member FDIC
CIT Bank No-Penalty CD
APY
With $1,000 minimum balance
Minimum Balance
Member FDIC
Ally Bank No Penalty CD
APY
With $0 minimum balance
Minimum Balance
Member FDIC
No-penalty CDs: Pros and cons
No-penalty CDs can be a solid option, but see if the positives outweigh the negatives.
Pros
High rates without penalty: CDs typically have higher rates than savings accounts, but most CDs make you commit to keeping your money locked up for a set period. No-penalty CDs give you the flexibility to withdraw early without losing any money.
Opportunity to withdraw fee-free if rates go up: CD rates tend to be fixed once you open a CD, so you can miss out if your financial institution starts offering higher rates. But you don’t have to wait for a no-penalty CD to end its term to put your money into another CD with a higher rate.
» Want to see more CD options? Check out our list of the best CD rates overall
Cons
No partial withdrawals generally: If you withdraw early from a no-penalty CD, you might have to withdraw the entire balance and close the account.
No multiple deposits: This is standard for all CDs, but if you find the flexibility of no-penalty CDs appealing but want to keep contributing savings, your best bet is a high-yield savings account. See the best online options.
What's involved in opening a no-penalty CD?
You'll need to decide on where to open the no-penalty CD, what term to get and whether to open a single or joint account. To see all five steps, check out this guide to opening a CD account.
Best no-penalty CD rates
Marcus by Goldman Sachs: 0.45% - 0.25% APY, 7 months - 13 months, $500 minimum to open
CIT Bank: 0.30% APY, 11 months, $1,000 minimum to open
Ally Bank: 0.50% APY, 11 months, no minimum to open
Last updated on January 1, 2021
Methodology
We featured easy-to-join financial institutions that NerdWallet has vetted and reviewed with the highest rates for no-penalty CDs. Higher rates might be available elsewhere.
To recap our selections...
NerdWallet's Best No-Penalty CD Rates for January 2021
- Marcus by Goldman Sachs No-Penalty CD: 0.45% APY
- CIT Bank No-Penalty CD: 0.30% APY
- Ally Bank No Penalty CD: 0.50% APY
Frequently asked questions
A CD, or certificate of deposit, is a type of savings account that keeps money locked up for a set period or term, generally three months to five years. Historically, a longer the CD term equals a higher rate, but this isn’t the case as much right now. Here are this month's best CD rates.
A no-penalty CD is a type of CD that doesn’t charge a penalty for withdrawing money before the term ends. It can be appealing if you want the traditionally higher yield of a CD, compared to regular savings accounts, and think you might need the money sooner than planned.
No-penalty CDs offer an attractive balance between higher yields and free access to funds when necessary, but there is an important caveat: Most financial institutions that offer no-penalty CDs don’t allow partial withdrawals. When you need funds early from a no-penalty CD, you must take all of it.
CDs don’t have monthly fees like checking or savings accounts may have, but a penalty is generally charged if you withdraw before the CD term expires. This early withdrawal penalty tends to be several months’ worth of interest, so it’s usually best to wait to access funds from a CD when the term expires. The exception is no-penalty CDs.
An early withdrawal penalty varies by CD term and by provider, but you can expect a range generally from three months’ worth of interest to one year’s worth. If you withdraw too early, you might even have to part with some of the original amount you deposited into the CD. The only CDs that don’t have penalties are no-penalty CDs. See our list of popular financial institutions’ CD early withdrawal penalties.
For the most part, yes. As with regular CDs, you lock in a rate that might be lower than a rate the financial institution offers in the future. However, given the current rate environment, rates may drop before they rise, so this risk is minimal. Plus, you can opt out of a no-penalty CD without cost.
No. The Federal Reserve cut rates in March 2020, which encouraged financial institutions to lower their CD rates. Rates are likely to continue falling before they go up again. For more context, see our explainer on historical CD rates.
This depends on what you need more: a fixed rate or access to your funds. For a more in-depth comparison, see our article on no-penalty CD vs. savings account.
Most of the online financial institutions that offer competitive no-penalty CD rates have terms around one year, some a few months shorter, others a few months longer.
No. CDs are meant for savings you can set aside and leave untouched. Consider a high-yield savings account for money you may need in a pinch. If you have more funds to set aside and want flexibility, a no-penalty CD could be a suitable option.
