Best No-Penalty CD Rates: Lock in Rates at 4.33%
No-penalty CDs provide a high return while giving you the flexibility to access your cash whenever needed. Check out Kiplinger's top finds.
If you have short-term savings goals but don't want to tie up your money in a longer CD, a no-penalty CD offers the best of both worlds. You'll earn a rate that helps you reach your goals while maintaining quick access to your funds.
Normally, a certificate of deposit is a "park the money and forget about it" type of savings vehicle. However, with a no-penalty CD, you can access your money when needed without paying fees.
Moreover, now is an excellent time to find a flexible savings solution that outpaces inflation.
Best no-penalty CD rates
Here's a look at the best no-penalty CDs I've found. Note: I update these biweekly:
Account |
APY |
Min. Deposit |
Terms |
Withdrawal frequency |
Row 0 - Cell 5 | Row 0 - Cell 6 |
4.33% |
$500 |
6 months |
Whenever, past the first seven days |
Row 1 - Cell 5 | Row 1 - Cell 6 | |
4.00% |
$1 |
5 months |
Whenever, past the first six days of account opening |
Row 2 - Cell 5 | Row 2 - Cell 6 | |
4.00% |
$500 |
11 months |
Whenever, past the first seven days of account opening |
Row 3 - Cell 5 | Row 3 - Cell 6 | |
4.00% |
$1,000 |
9 months |
Once per month |
Row 4 - Cell 5 | Row 4 - Cell 6 |
How does withdrawing funds from a no-penalty CD work?
With a no-penalty CD, you'll have to wait a week after funding the account before you can withdraw funds. While penalty-free withdrawal can be useful if you think you might need the cash at some point in the foreseeable future, keep in mind that it's not as easy as making a withdrawing from a traditional savings account.
You'll need to notify your bank before taking out funds. Additionally, many institutions require you to withdraw all cash from an account, not just a partial amount, if you decide to "break open" your CD.
In other instances, you might be able to withdraw a portion of your funds. But you'll only be able to do one withdrawal per month.
If you're concerned about having more regular access to your account, a high-yield savings account might be a better fit.
Opening a no-penalty CD account
Like other CD accounts, no-penalty CDs offer higher annual percentage yields (APYs) on deposits than traditional savings accounts. With a no-penalty CD, you'll lock in an APY when opening the account. If banks drop rates, your APY won't be affected.
They're good savings options for individuals who want guaranteed returns on their savings but don't want to commit to a traditional CD account in case they need access to their cash before the CD maturity date.
Most of the time, no-penalty CDs have relatively short terms, typically under 14 months.
Use the tool below to quickly compare the rates of some of today's top CD accounts:
On the other hand, since there are no penalties for withdrawing your cash early, you have the option to put your money in a new CD account if rates go up. Our savings calculator can help you determine how much interest you earn.
Before opening any savings account, it's vital to make sure your bank is federally insured. Banks offering FDIC-insurance protect up to $250,000 in individual deposit accounts and up to $250,000 for each person's share of joint accounts.
Deposits in federal credit unions offer similar insurance, thanks to the National Credit Union Administration (NCUA), protecting up to $250,000 per credit union member (whether in an individual or a joint account).
No-penalty CDs or savings accounts: Which is better?
No-penalty CDs and savings accounts both offer a way to earn interest while keeping your money accessible, but there are some important differences. No-penalty CDs typically offer a fixed interest rate for a set term, while savings account rates can change over time. The two also differ in how you can deposit and withdraw funds.
Here's how they compare when it comes to interest rates, flexibility and account requirements.
| Header Cell - Column 0 | No-Penalty CD |
Savings Account |
|---|---|---|
Interest Rates |
Fixed. |
Variable. |
Access to funds |
You'll need to wait seven days after opening the account to access funds. You also need to give your bank advance notice before withdrawing cash. |
Cash can be accessed at any time. |
Term |
Typically, under 14 months. |
None. |
Minimum Deposit |
Minimum deposit requirements vary from bank to bank. |
Often require a low minimum deposit or none at all. |
Withdrawals/ Deposits |
Partial withdrawals and additional deposits after opening the account aren't allowed. |
Funds can be withdrawn or deposited anytime. |
A no-penalty CD can be a good choice if you want to protect your savings from falling interest rates without locking up your money for the entire term. If rates rise, you can withdraw your funds after the initial waiting period and move them to an account offering a higher APY.
However, no-penalty CDs often offer lower rates than traditional CDs. If you're building your savings over time or want the flexibility to make regular deposits and withdrawals, a high-yield savings account might be a better fit.
Bottom line on the best no-penalty CD rates
If you're unsure whether you'll need to access funds from your CD before its maturity date, a no-penalty CD can be a good option. With a no-penalty CD, you won't be charged an additional fee if you decide to withdraw your balance before the term is through.
Right now, you can lock in a rate that outpaces inflation, protecting your cash from losing its purchasing power.
Deciding where to keep your savings is just one part of building a financial plan. If you're weighing CDs against other savings and investment options, a financial adviser can help you balance competitive returns with your need for accessible cash.
Use the tool below to connect with an adviser who can help you make the most of your money:
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