The best no-penalty CD rates for 2024
A no-penalty CD allows you to take advantage of higher CD rates without risking an early withdrawal penalty — offering liquidity and flexibility to access your money when needed.
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Bob Haegele is a personal finance writer focusing on topics such as investing, credit cards, and banking. He earned his bachelor’s degree in information technology from Marquette University and began his career in healthcare tech.
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Hanna Horvath is a CERTIFIED FINANCIAL PLANNER™ and Bankrate's senior editor of content partnerships.
Updated May 14, 2024, 3:08 PM EDT
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No-penalty certificates of deposit (CDs) offer more flexibility and liquidity than regular CDs. They allow you to withdraw your money before the CD’s term is up without incurring any penalties. No-penalty CDs offer higher interest rates than other savings vehicles, such as traditional savings accounts.
That makes no-penalty CDs ideal for investors who want to lock in a higher return today but keep the option to respond to changing market conditions down the road.
Best no-penalty CD rates
We examined the CD interest rates across banks and credit unions to find the best options. Here are some of the best no-penalty CDs, ranked from highest interest rate to lowest. CD rates are accurate as of June 2024.
OptimumBank: 5.05% APY
This no-penalty CD is best for short-term savers who can’t meet specific minimum deposit requirements.
OptimumBank’s traditional CD options include multiple months terms and may come with restrictions, such as early withdrawal penalties. But, this bank has partnered with Raisin (formerly SaveBetter) to offer a no-penalty CD with a high APY and a $1 minimum to open.
Interest on this CD compounds daily, but you must wait 30 days after requesting a withdrawal to take out your money.
Climate First Bank: 5.00% APY
Climate First Bank is a bank that focuses on environmental sustainability. It offers a variety of banking products, including personal checking and savings accounts, SBA loans, and mortgages. Its 6-month no-penalty CD currently has one of the highest rates available and only requires a $500 minimum deposit.
Those who want a bank that aligns with climate change goals while earning one of the best 6-month CD rates should consider this option.
America First Credit Union: 5.00% APY
America First Credit Union offers a variety of accounts, including checking accounts, savings accounts, certificate accounts, and IRAs. While its 1-year no-penalty CD has an outstanding APY, what stands out is the ability to make additional deposits of up to $10,000 per month.
This CD is best for those who want to make added deposits after opening their account, and it has one of the best 1-year CD rates.
To become a member of America First Credit Union, you must meet one eligibility requirement, which includes living, working, worshiping, or attending school in specific areas of Utah, Nevada, Arizona, and Idaho. Membership is also available via affiliation with select employer groups, associations, or family relationships with existing members.
CIT Bank: 3.50% APY
CIT Bank is the online-only division of First Citizens Bank. Because CIT Bank operates online, it can offer more competitive yields on its products. This includes its 11-month no-penalty CD. While CIT Bank offers CDs with terms ranging from six to 60 months, 11 months is the only CD term with no penalty.
Interest compounds daily, and you can make a withdrawal starting just one week after opening.
Marcus by Goldman Sachs: 4.70% APY
Marcus offers a variety of financial products, including savings accounts, CDs, investment accounts, and credit cards. While several no-penalty CDs on this list only offer a single term, Marcus lets you choose from 7-month, 11-month, and 13-month terms.
This account is best for those who want a no-penalty CD with the ability to choose from multiple term lengths. Remember that the 7-month and 11-month options come with much lower yields.
Ally Bank: 4.00% APY
Ally Bank is an online bank offering a full suite of banking products, including checking and savings, credit cards, investing, mortgages, auto loans, and personal loans. While its CD doesn’t have the highest APY on this list, it has no minimum deposit and no monthly fees.
This account is best if you want to open a no-penalty CD with no minimum opening deposit.
What is a no-penalty CD?
No-penalty CDs work much like regular certificates of deposit, with one major exception — you can withdraw your money anytime without incurring pesky early withdrawal fees.
These CDs are a great option for investors who want to earn a fixed rate of return without the risk of losing funds due to early withdrawal penalties.
“People should consider no-penalty CDs for their relative ease of use, familiarity, and rate of return if excess cash is just sitting around not being used,” says Andrew Herzog, certified financial planner at The Watchman Group.
The best no-penalty CDs often have rates higher than traditional savings and money market accounts. But, not all banks and credit unions allow partial withdrawals from these accounts. Some require you to withdraw the entire amount and only allow you to do so after a set number of days.
No-penalty CDs provide a safe and secure investment option backed by FDIC insurance.
While no-penalty CDs offer flexibility, it's important to note that the interest rates may be slightly lower compared to traditional CDs, where early withdrawal penalties apply.
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How to find the best no-penalty CD for you
When selecting a no-penalty CD, there are several key factors to consider:
- Interest rate: Look for a no-penalty CD with a competitive interest rate to maximize your earnings. Keep in mind that longer terms often come with higher rates.
- Minimum deposit: Some no-penalty CDs require a higher minimum deposit than others, so consider how much you're able to invest upfront.
- Term length: No-penalty CDs typically have shorter terms than traditional CDs, ranging from a few months to a year. Consider your financial goals and when you might need access to your funds when choosing a term length.
- Withdrawal terms: While no-penalty CDs allow for penalty-free withdrawals, some may have restrictions on when you can make a withdrawal or how much you can withdraw at once. Be sure to read the fine print and understand the specific terms of the CD.
- Financial institution: Consider the reputation, financial stability, and customer service of the bank or credit union offering the no-penalty CD.
Maximizing your no-penalty CD
To get the most out of your no-penalty CD, consider these tips:
- Shop around: Compare rates and terms from multiple financial institutions to find the best no-penalty CD for your needs.
- Consider a CD ladder: By opening multiple no-penalty CDs with staggered maturity dates, you can take advantage of higher rates on longer-term CDs while still maintaining frequent access to a portion of your funds.
- Reinvest your earnings: If you don't need to withdraw your funds at maturity, consider reinvesting your principal and interest into a new no-penalty CD to continue growing your savings.
- Keep an eye on rates: While no-penalty CDs offer a fixed rate for the term of the CD, rates can fluctuate over time. Keep an eye on the market and be prepared to reinvest in a new CD if rates rise significantly.
Alternatives to no-penalty CDs
The benefits of no-penalty CDs are flexibility and higher yields. However, some alternatives can offer similar advantages. Here are a few to consider:
- High-yield savings accounts: These accounts can have rates similar to no-penalty CDs. They let you withdraw money without penalties, though they may limit your monthly withdrawals.
- High-yield checking accounts: These accounts work like regular checking accounts, but some pay interest nearly as high as no-penalty CDs. However, they often have requirements like maintaining a daily minimum balance to earn the highest APY.
- Money market accounts: These accounts are a hybrid of checking and savings accounts, letting you deposit and withdraw funds and offering features like check writing and debit cards. However, some may have tiered interest rates based on your balance.
- Treasury bills: These are short-term government debts backed by the federal government. They have maturities ranging from a few weeks to one year. Treasury bills offer safety and liquidity, and their yields can be similar to no-penalty CDs.
While there are many alternatives to no-penalty CDs, they all have pros and cons. The best choice depends on your financial goals, risk tolerance, and time horizon.
How we rated the best CDs
To determine the best CDs, we carefully evaluated a wide range of factors, including interest rates, fees, and minimum deposit requirements.
Our team analyzed numerous CD offers and selected the top contenders based on these key criteria. The options on this list represent the best value benefits available.
Here are some of the key factors we considered:
- Interest rate: The interest rate is the primary reason someone would choose a savings, CD, or money market account over another, so this is our most heavily weighted factor.
- Fees: Fees, particularly early withdrawal penalties can eat into the overall cost of a CD.
- Minimum deposit & balance requirements: High minimum deposits can be a barrier, and high balance requirements to avoid fees or earn the best rate limit the CD's usefulness.
Frequently asked questions about no-penalty CDs
Can I make partial withdrawals from a no-penalty CD?
Withdrawal terms vary by financial institution, but many no-penalty CDs allow for partial withdrawals without closing the account. However, some may require you to withdraw the full balance and close the CD.
Are there any fees associated with no-penalty CDs?
Most no-penalty CDs do not charge any fees for early withdrawal or account maintenance. However, it's always a good idea to review any potential fees with the bank or credit union before opening an account.
Can I add funds to my no-penalty CD after opening?
Most no-penalty CDs do not allow additional deposits after the initial funding. If you wish to add more money, you'll typically need to open a new CD.
Are no-penalty CD rates lower than traditional CD rates?
No-penalty CD rates may be slightly lower than traditional CD rates for the same term length due to the added flexibility they offer. However, they still tend to offer higher rates than most savings accounts.
What happens if I don't withdraw my funds at maturity?
If you don't provide instructions for your no-penalty CD funds at maturity, most financial institutions will automatically reinvest your principal and interest into a new CD with the same term. Be sure to check your institution's specific policy.
The bottom line
No-penalty CDs let you withdraw your money before the end of the term, providing flexibility that traditional CDs don’t offer. Some no-penalty CDs let you make partial withdrawals, but many require you to withdraw the entire amount in the account.
It's essential to compare the best CD rates from different banks to find the best option that aligns with your investment goals and time horizon.
Editorial disclaimer: Opinions expressed are author's alone, not those of any bank, credit card issuer, or other entity. This content has not been reviewed, approved, or otherwise endorsed by any of the entities included in the post.