Certificates of deposit (CDs) often pay better returns than other savings options, and their fixed rates allow you to lock in a high APY for the term.

However, they typically don’t offer much liquidity because most traditional CDs won’t allow any withdrawals until the maturity date. You’ll likely face penalties if you need to pull your funds early.

The good news is you can enjoy the best of both worlds with a no-penalty CD, which allows you to cash out the account early fee-free while still earning a competitive, fixed interest rate. Also, most no-penalty CDs have terms of 12 months or less.

Our team of experts analyzed hundreds of data points and then used data-driven methodology and thorough fact-checking to come up with the best no-penalty CDs. We heavily emphasized APY because maximizing earnings is the most important feature of CDs. You can read more about our methodology below.

Kinecta Federal Credit Union Liquid Certificate

With the no-penalty CD from Marcus by Goldman Sachs, you can withdraw your money anytime after the first seven days of opening — no fees or questions asked.

The account pays an excellent APY of 4.70% over a 13-month term with a minimum opening deposit of $500.

Marcus offers a resource called the CD Maturity Center where you can instruct the bank on what to do with your CD once it matures — whether it be to renew, change or close the account. However, you can also call to give your instructions by phone if you prefer.

The bank offers a 10-day rate guarantee, meaning if you have deposited at least $500 into your CD and the rate goes up within 10 days of the day of purchase, you’ll get the higher APY.

The no-penalty CD is an excellent way to earn a great APY while enjoying 24/7 customer service hours and highly-rated mobile apps. The bank has limits to how much you can deposit ($1 million per CD), so another CD may be a better fit if you have a very large amount to invest.

USAlliance Federal Credit Union No Penalty Certificate Special

USAlliance Federal Credit Union No Penalty Certificate Special

USAlliance Federal Credit Union is currently running a special on a no-penalty certificate (CDs are generally called share certificates at credit unions) for an 11-month term. It pays a 4.80% APY — the highest rate on our list.

You must make a $500 minimum deposit to open the CD. Once you make the deposit, you can’t withdraw for the first seven calendar days.

Since it’s a credit union, you’ll need to be a member to open an account. Luckily, you can qualify by becoming a member of one of USAlliance’s partner associations when you apply if you’re not otherwise eligible.

The USAlliance Federal Credit Union No Penalty Certificate Special will earn an excellent rate for those who can meet the $500 opening deposit requirement and don’t mind the extra step of becoming a member of the credit union.

Ally Bank No Penalty CD

Ally Bank offers 4.00% APY on its 11-month no-penalty CD. It also gives a 0.05% loyalty reward when you renew a CD with Ally (although you should check back 30 days before maturity to see if Ally still offers the reward).

The bank has a 10-day best rate guarantee, meaning if Ally raises its rates within the first 10 days of opening your account, it will give you the better rate.

You can receive a great rate with the Ally Bank No Penalty CD and possibly an even better one when you renew with Ally.

CIT Bank No-Penalty CD

When you open the CIT Bank No-Penalty CD with a $1,000 minimum deposit, you can lock in 3.50% APY for the next 11 months.

Once you make your deposit, you must wait seven days before withdrawing your funds without penalty.

At maturity, CIT Bank will automatically renew your CD for the same term; however, you may receive a different rate. You have a grace period of 10 days after the maturity date to decide whether you want to change, renew or close your CD.

For those who have at least $1,000 to deposit, you can enjoy an excellent APY on your balance while still retaining access to your funds if you need them.

Kinecta Federal Credit Union Liquid Certificate

Kinecta Federal Credit Union currently offers two liquid certificates. The 9-month liquid certificate pays a robust 4.25% APY, but you need to deposit $10,000 to open it.

Those looking to make a smaller deposit can choose the 12-month liquid certificate that comes with a 3.00% APY and a $100 minimum deposit.

With 24/7 customer service availability by phone and the highest Trustpilot ratings on this list, Kinecta is also a strong pick for customer service.

If you’re not eligible to join Kinecta Federal Credit Union based on your employer or area of residence, you can join by becoming a member of the Consumers Cooperative Society of Santa Monica, which requires a one-time total of $15 in fees.

Who should use it

Kinecta Federal Credit Union’s two liquid certificates target two different types of customers. Those able to deposit a large sum will appreciate the 4.25% APY 9-month term. Those with less to deposit will like the $100 minimum 12-month term, which boasts one of the lowest minimums on our list.

What are no-penalty CDs?

A no-penalty (or liquid) CD is a type of CD that you can withdraw before the maturity date without paying penalties.

With a traditional CD, you typically deposit money into the account and leave it there for the term. If you withdraw your money before the CD matures, many financial institutions will charge you a fee for early withdrawal.

However, after the first week or so, you usually don’t have to pay anything to get your funds out of a liquid CD. They’re a great way to still earn an excellent rate while allowing access to your funds if necessary.

Liquid CDs are best for those who want to invest money into a CD, but they’re not completely sure if they won’t need the funds before the term ends.

What to look out for when choosing the right no-penalty CD

Before opening a no-penalty CD, there are a few things you should consider to ensure you choose the best one for you:

Interest rate: Finding a CD with a high APY ensures a greater return once it matures. Shop around at different financial institutions to find the best rate.

Term: When choosing a no-penalty CD, consider how long you want to keep the money invested. Signing up for a longer term may secure a higher yield, and you can still withdraw your money if you need it.

Insurance: Look for financial institutions federally insured by the Federal Deposit Insurance Corp. (FDIC) or the National Credit Union Administration (NCUA). This insurance protects the funds in your CD, typically up to $250,000, if the institution fails or experiences a bank run.

Minimum deposit: Many banks and credit unions require a minimum opening deposit on their CDs. Minimums are often around $500 to $1,000, but some banks require deposits of $10,000 or higher.

Pros and cons of no-penalty CDs

Pros

Flexibility: Unlike a traditional CD, you can withdraw your funds at any point (usually after the first week). That way, you can use the money for an emergency or reinvest if rates rise to switch to a higher-yield investment.

High APY: You can typically earn higher yields with a no-penalty CD than with a traditional savings account.

Fixed interest rate: Many no-penalty CDs offer a fixed APY, protecting you against falling interest rates for the entire term.

Safety: CDs are generally safe when held at a federally insured institution. Returns are virtually guaranteed at the end of the term because of the fixed interest rate.

Cons

Lower returns: While you may still enjoy a better interest rate with a no-penalty CD than you would on a regular savings account, you typically earn lower returns than a traditional CD.

Only one deposit: Oftentimes, financial institutions only allow you one deposit at the start of the term. If you have more money to contribute later, you may have to find a different investment option.

Only one withdrawal: Partial withdrawals are often not allowed on no-penalty CDs. If you need to take any money from your CD, the financial institution may require you to withdraw the total balance and close the account.

How to find high-yield no-penalty CDs

One of the simplest places to start is an online search for banks and credit unions offering no-penalty CDs. Consider banks and credit unions in your area, but if you’re comfortable using an online bank, you may be able to find a better rate with one of them.

Many financial institutions also offer promotional rates on CDs to entice depositors to keep their money there.

Read the terms and conditions thoroughly to ensure you understand the withdrawal policy. Some banks may limit the timeframe for withdrawing from your no-penalty CD.

Don’t forget to look at other important features offered by financial institutions, such as minimum opening deposits, customer service hours, digital banking tools and loyalty rewards.

No-penalty CDs vs. traditional CDs

Opening a no-penalty CD

Getting a no-penalty CD involves finding the CD you want to open, then applying for an account and funding it.

Find the right CD: Compare no-penalty CD options to find the right fit. Research each CD’s interest rate and terms, including whether there’s a minimum deposit and how interest is paid out.

Open your account: Once you’ve chosen the CD you want to offer, start your application. Often, you can apply online, or you may be able to open a CD over the phone or in a branch. You’ll need to provide identification such as a government-issued ID and your Social Security number. You’ll also need contact information and proof of address to open the account.

Also, if you plan to open a CD with a credit union, you’ll have to become a member before you can open your account.

Add funds: With your no-penalty CD account open, the next step is depositing funds. Banks and credit unions generally accept checks, wire transfers or bank account transfers. However, keep in mind that you generally can’t make multiple deposits, so you should plan to fund the entire CD at once.

CD rates by term and type

Methodology

CNN Underscored Money analyzed CDs from 10 financial institutions to come up with the rankings for the best no-penalty CDs. This included accounts from a mix of traditional banks, online banks and credit unions that are available nationally. We ranked each account on seven data points across five categories.

Here are the categories we analyzed and how we weighted each:

APY (70%)

APY is a critical factor for CD accounts because this determines how quickly your deposit will grow.

Minimum opening deposit (10%)

Minimum opening deposits determine how accessible a CD is and how easily you can employ strategies like CD laddering that require multiple CDs.

Customer experience (5%)

It’s important to have a bank that’s trustworthy and easy to reach when you need help. We considered customer service availability and Trustpilot ratings in this category.

Digital experience (5%)

You’ll want a bank with a usable app and plenty of online features so that it’s easy to bank from anywhere. We analyzed app reviews and the ability to bank online.

Compound interest schedule (5%)

This is an important factor to consider because the more frequently your interest compounds, the faster your deposit grows and the more frequently you will potentially have access to your interest earnings.

Membership requirement (5%)

Financial institutions may have membership requirements you must meet to join and get accounts. For example, some credit unions have eligibility based on a list of employers, counties of residence or membership in certain charitable organizations. We rewarded financial institutions that allow anyone to sign up.

We also considered other factors like renewal and early withdrawal policies.

Frequently asked questions (FAQs)

Alternatives to no-penalty CDs include standard CDs, savings accounts and money market accounts.

Standard CDs usually offer higher interest rates than no-penalty CDs, though these CDs have early withdrawal fees. If you’re fairly confident you won’t need to withdraw your funds early, a standard CD may be a better choice than a no-penalty CD.

Savings accounts make it easier to access your money, as you can withdraw and deposit funds more freely than you can with a CD. High-yield savings account interest rates may be competitive with no-penalty CD rates. Consider a high-yield savings account if you need more liquidity than a CD can offer.

Money market accounts have a high degree of flexibility, offering the ability to withdraw or deposit funds, usually with debit card and check-writing capabilities. High-yield MMAs may offer interest rates that are competitive with no-penalty CDs. An MMA can be a good choice if you want to regularly access your funds and can earn a good rate on your deposits.

CDs are considered very safe investments with fixed returns that don’t fluctuate with market rates during the CD’s term. While some CDs have an early withdrawal penalty, the penalty is generally a loss of interest earned. No-penalty CDs have no early withdrawal penalties.

Usually, CDs issued by banks and credit unions have deposit insurance from the Federal Deposit Insurance Corporation or National Credit Union Administration. FDIC and NCUA deposit insurance protects up to $250,000 per depositor, per bank for each ownership category. Your deposits are safe unless you exceed the insured amount.

No-penalty CD terms typically range from about six months to a year, though most no-penalty CD terms are about a year. You may have fewer choices in no-penalty CD terms than you would with a standard CD, as banks and credit unions may only offer one or a few choices in no-penalty CD terms.

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The best no-penalty CDs for November 2024