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No-Penalty CD: Rates and How They Work

Aug. 1, 2019
Banking, CDs
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What is a no-penalty CD?

A no-penalty certificate of deposit is a type of CD that has no fee for withdrawing money before the term expires. 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.

Here’s a look at some of the best no-penalty CD rates at online banks.

Best no-penalty CD rates

Compare the no-penalty CDs offered at a limited number of online banks:

BEST NO-PENALTY CD INTEREST RATES | AUGUST 2019

Ally Bank

4.5 NerdWallet rating

11-month CD: Rate depends on deposit.
• Under $5,000: 1.80% APY.
• $5,000-$24,999: 2.05% APY.
• $25,000 and up: 2.20% APY.
• No minimum deposit.

CIT

4.0 NerdWallet rating

11-month CD: 2.05% APY.
• $1,000 minimum deposit.


Marcus by Goldman Sachs

4.0 NerdWallet rating

7-month CD: 2.25% APY.
11-month CD: 2.20% APY.
13-month CD: 2.15% APY.
• $500 minimum deposit.


PurePoint

3.0 NerdWallet rating

11-month CD: 1.65% APY.
13-month CD: 2.00% APY.
14-month CD: 1.75% APY.
• $10,000 minimum deposit.

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 a bank 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

  • Not the highest CD rates: You can find much better yields by comparing the best six-month and one-year CD rates.
  • 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.

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