The Best No-penalty CDs of April 2023

The Best No-penalty CDs of April 2023

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Our experts answer readers’ banking questions and write unbiased product reviews (here’s how we assess banking products). In some cases, we receive a commission from our partners; however, our opinions are our own. Terms apply to offers listed on this page.

Most CDs charge you a fee if you need to withdraw money from your account before it matures. But with a no-penalty CD, you won’t have to pay an early withdrawal penalty.

No-penalty CDs aren’t very common, so you only have a few strong banks to choose from. If you want even more term options and are willing to consider banks that charge penalties, check out our overall best CD rates guide.

Most of our top picks have low minimum opening deposits, competitive interest rates, or a variety of term options.

The Best No-Penalty CD Rates

  • CIT Bank No Penalty 11-Month CD – Product Name Only: CIT Bank No Penalty 11-Month CD – APY APY
  • America First Credit Union Flexible Certificate – Product Name Only: America First Credit Union Flexible Certificate – APY APY 
  • Ally No Penalty CD – Product Name Only: Ally No Penalty CD – APY APY
  • Marcus 13 Month No-Penalty CD – Product Name Only: Marcus 13 Month No-Penalty CD – APY APY
  • Synchrony No-Penalty CD – Product Name Only: Synchrony No-Penalty CD – APY APY

These are our picks for the best no-penalty CDs. Our top picks for CDs are protected by FDIC or NCUA insurance. Although Silicon Valley Bank and Signature Bank have recently been shut down, keep in mind money is safe at a federally insured financial institution.  When a financial institution is federally insured, up to $250,000 per depositor is secure in a bank account.

Compare the Best No-Penalty CDs

Expert Advice on Choosing the Best CD

To learn more about what makes a good CD and how to choose the best fit, four experts weighed in:

PFI Banking Expert Panel that includes: Tania Brown, Roger Ma, Sophia Acevedo, and Mykail James

Here’s what they had to say about CDs. (Some text may be lightly edited for clarity.)

How can someone determine whether a bank is the right fit for them?

Tania Brown, certified financial planner at SaverLife:

“Obviously, you want to make sure it’s FDIC insured. Also, your banking experience — do you like walking into a bank? Well, then you need someone local. Do you just not care if you ever see your bank? Then you’re okay online. Do you write checks? Do you not write checks? So it’s thinking through how your experience with it is going to be before you make that decision.”

Sophia Acevedo, certified educator in personal finance, banking reporter, Personal Finance Insider:

“I would create a list of what I prioritize most in a bank account. For example, some banks have accounts that charge monthly service fees. I would look to see what the requirements are for waiving the monthly service fee and whether I think I could feasibly meet those requirements each month. If I’m searching for an interest-earning bank account I’ll pay attention to interest rates. I would make sure the account pays a higher interest rate than the average bank account.”

How should someone choose a CD term length?

Roger Ma, certified financial planner with lifelaidout® and author of “Work Your Money, Not Your Life”:

“I would think about when you need the money and then compare that with what the prevailing CD rates are, and then what makes sense from a financial perspective, but also from your own personal timing perspective.”

Mykail James, MBA, certified financial education instructor,

“I believe in having a plan for whatever the funds are. If it’s supposed to be a house fund, and you want to wait for another two years to buy a house, that’s what you should be thinking of when you want to have this money.”

How should someone decide whether to put their money in a high-yield savings account, money market account, or CD?

Tania Brown, CFP:

“So I guess we’ll start off with how much money you want to put in and … the level of transactions you want to have. If you want to have any transactions, that automatically takes out CDs. Then you’re stuck between the high-yield savings and the money market account.”

Sophia Acevedo, Personal Finance Insider:

“Generally, I think a high-yield savings account or money market account could be good options for an emergency fund or short-term savings goals. A high-yield savings account offers a higher interest rate than traditional savings accounts at brick-and-mortar banks. Meanwhile, money market accounts might be worth considering if you want more account accessibility — several offer paper checks, ATM cards, or debit cards. CDs could be worthwhile if you don’t need access to some of your money, since they have a fixed interest rate for a specific term.”

How can someone decide if a no-penalty CD is right for them?

Sophia Acevedo, Personal Finance Insider:

“I would pay attention to the interest rate and see if it’s significantly higher than other savings options. If it is almost the same as a high-yield savings account or money market account, you might prefer one of the latter because you can make additional deposits. With a no-penalty CD, you’ll only be able to deposit money when you open an account or when the term ends.”

Methodology: How Did We Select the Best No-Penalty CDs?

Personal Finance Insider’s mission is to help smart people make the best decisions with their money. We understand that “best” is often subjective, so in addition to highlighting the clear benefits of a financial product or account — a high APY (Annual Percentage Yield), for example — we outline the limitations, too. We spent hours comparing and contrasting the features and fine print of various CDs so you don’t have to.

We reviewed CD offerings from around a dozen national banks using our CD rates methodology. For each account, we compared the minimum opening deposits, early withdrawal penalties, and interest rates. We also considered the overall banking experience at each bank by assessing customer support availability, mobile app ratings, and ethics.

No-Penalty CDs: Frequently Asked Questions

What is a no-penalty CD?

With regular CDs, otherwise known as “term CDs,” the bank charges you a penalty for withdrawing money before your CD term is over. Banks typically charge the interest you’ve earned over a certain amount of time. For example, a bank might charge 90 days interest for a 6-month CD, and 180 days interest for a 1-year CD.

With a no-penalty CD, you can withdraw money without paying an early withdrawal penalty. The catch is that most banks require you to withdraw your entire balance — you can’t just take out what you need and leave the rest.

In most cases, you must wait at least seven days after opening the CD to withdraw funds with no penalty.

How much do early withdrawal penalties usually cost?

Every institution charges different early withdrawal penalties. You’ll pay the interest that’s accumulated over a certain amount of time, or the interest that would accumulate over that chunk of time if your account hasn’t been open very long.

Banks typically charge higher early withdrawal penalties for longer terms. A bank might charge 90 days interest for a 3-month term and 365 days interest for a 5-year term, for instance.

It’s common to pay between 90 and 365 days interest as an early withdrawal penalty, but a bank may charge less or more in interest.

How do CD rates work?

Most CDs lock in your rate for the entire term. For example, if you open a 1-year CD at 2%, you’ll earn 2% for the entire year. If you renew your CD after it matures, you’ll earn the new rate available in a year.

There are exceptions to the fixed-rate rule. Some institutions offer variable-rate CDs or CDs that allow your rate to change after a predetermined amount of time.

Which is better, a no-penalty CD or a regular CD?

Each has its pros and cons, so it depends on what you want out of a CD.

No-penalty CDs can be good accounts if you’re worried about needing money before the CD matures. This way, you won’t have to pay a penalty if you take out money early.

You have limited term length options for no-penalty CDs, though. If you want to open a CD for a longer amount of time — and usually earn a higher interest rate as a result — you’ll want to open a regular CD. You can also open term CDs with shorter terms than no-penalty CDs offer, which could be a good option if you suspect you’ll need money in a few months.

Which is better, a no-penalty CD or a high-yield savings account?

The choice between a no-penalty CD and high-yield savings account will depend on several factors.

For easy, frequent access to your savings, you’re better off choosing a savings account than a CD. A no-penalty CD doesn’t charge you for withdrawing money, but institutions limit how often you can take out cash. In most cases, you have to withdraw all your funds if you want to access money early.

On the plus side, a CD locks in your rate for the entire term. This could work to your advantage, because savings interest rates have been dropping. By choosing a CD, you aren’t affected by fluctuating rates.

Is a no-penalty CD a good place to store an emergency fund?

Yes and no.

A no-penalty CD is a better place to keep emergency savings than a term CD, because you won’t have to pay a fee to withdraw money should you find yourself in an emergency.

But a high-yield savings account is probably better for an emergency fund than a no-penalty CD. With a savings account, you can take out money up to six times per month, and some banks are extending that limit during the coronavirus pandemic. Many no-penalty CDs also require you to withdraw all your money if you need funds early. But with a savings account, you can just take out what you need and leave the rest in the account to continue earning interest.

You may even prefer a money market account as an emergency savings tool. Unlike savings accounts, money market accounts usually come with paper checks or a debit card. This makes it even easier to access your savings quickly in case of an emergency.

CIT Bank No-Penalty Certificate of Deposit (CD)

Why it stands out: CIT Bank pays a competitive rate on its no-penalty CD.

Term length: 11 months

What to look out for:  You can find a slightly lower minimum deposits elsewhere. But if you already bank with CIT Bank, it could be worthwhile to use the bank for a no-penalty CD, too.

America First Credit Union Flexible Certificate

Why it stands out: America First Credit Union gives you more flexibility with deposits and withdrawals than most banks. Unlike other institutions, America First lets you continue depositing money into your CD after you’ve opened it, up to $10,000 per month. Many banks make you take out all your funds if you need to make an early withdrawal, but America First lets you make partial withdrawals.

Term length: 12 months

What to look out for: Like most credit unions, America First compounds your interest monthly rather than daily, which will limit how much you earn over time.

Ally No Penalty CD

Why it stands out: Ally doesn’t require an opening deposit, so you can open a CD with any amount. It also pays a competitive interest rate for a no-penalty CD.

Term length: 11 months

What to look out for: Ally pays a good rate on its no-penalty CD, but you can earn higher rates with some of its others CDs. The Ally High Yield CD pays high rates on various term lengths. You also may want to look at the Raise Your Rate CD, which lets you increase your rate should Ally’s rates go up. You’d be able to increase rates once during a 2-year term and twice during a 4-year term.

Synchrony No-Penalty CD – Product Name Only

Why it stands out: Synchrony is another financial institution that lets you open a no-penalty CD with Synchrony CD – Minimum Deposit

Term length: 11 months

What to look out for: You’ll want to consider whether you have a preference on how you’ll withdraw money from a CD. When you’re ready to cash out your CD, you must call Synchrony. Some other banks will let you cash out your CD through online banking. 

Marcus by Goldman Sachs No-Penalty CD

Why it stands out: Most banks only have one term length for no-penalty CDs. But Marcus offers multiple term options, making it easier to find one that’s a good match. The most competitive no-penalty CD at Marcus is the 13-month term, which pays much more than other banks.

Term lengths: 7 months, 11 months, 13 months

What to look out for: Marcus’ no-penalty CD doesn’t have any major red flags. But if you’re looking for a longer CD term, you may find a slightly higher rate elsewhere.

Bank Trustworthiness and BBB Ratings

The BBB measures businesses by looking at customer complaints, honesty in advertising, and transparency about business practices. Here are the scores from the Better Business Bureau for each institution:

InstitutionBBB grade
Marcus by Goldman SachsA+
CIT BankA-
America First Credit UnionA+

CIT Bank has an A- rating because it has failed to respond to a customer complaint. Ally has an A rating because it has five unresolved complaints on the BBB website.

CIT Bank has also been involved in one recent public controversy.

In 2019, the Department of Housing and Urban Development sided with the California Reinvestment Coalition in its allegations against a division of CIT Bank called OneWest Bank. The CRC claimed that OneWest discriminated against Latinx and Black people in Los Angeles. Although OneWest never admitted to the discrimination, the bank did agree to pay over $7 million to homeownership programs for racial minorities in LA.


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