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Most CDs charge you a fee if you need to withdraw money from your account before the term ends. 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. The best no-penalty CD rate is 5.34% APY (annual percentage yield) on the Climate First Bank 6 Month No Penalty CD. If you want even more term options and are willing to consider banks that charge penalties, check out our overall best CD rates guide.
Best No-Penalty CD Rates
- Climate First Bank 6 Month No Penalty CD: 5.34% APY
- Mission Valley Bank 3 Month No Penalty CD, powered by Raisin: 5.15% APY
- Ponce Bank 4 Month No Penalty CD, powered by Raisin: 5.07% APY
- Technology Credit Union 5 Month No Penalty CD, powered by Raisin: 5.00% APY
- Farmers Insurance Federal Credit Union No-Penalty Share Certificate: 5.00% APY
- America First Credit Union Flexible Certificate: 4.90% APY
- USALLIANCE Financial 11 Month No Penalty Certificate: 4.80% APY
- Marcus 13 Month No-Penalty CD: 4.50% APY
Most of our top picks for no-penalty CDs have low minimum opening deposits, competitive interest rates, and/or a variety of term options.
Compare the Best No-Penalty CDs
The best no-penalty CDs offer high interest rates and low minimum opening deposit requirements. All of our top picks come from online banking options because these places have more competitive offerings than brick-and-mortar banks.
Our top picks for best liquid CD rates are protected by FDIC or NCUA insurance. 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. Learn more about the best no-penalty CDs, below.
No-Penalty CD Reviews
Climate First Bank No Penalty CD
Climate First Bank's strongest no-penalty CD is its 6-month no-penalty CD, but it also offers two other no-penalty CDs with strong rates.
All of its CDs have a relatively low minimum opening deposit of $500. You might also be interested in banking with Climate First Bank if you're interested in a bank that makes efforts to fight climate change.
Climate First Bank doesn't offer CDs with term lengths over 25 months, so if you're interested in opening a longer-term CD, you'll have to look elsewhere. In addition, Climate First Bank does not have any branches outside of Florida, so it might not be a good choice if you're hoping to bank in-person outside of Florida.
Term length: 6 months
APY: 5.34% APY
Mission Valley Bank 3 Month No Penalty CD
The Mission Valley Bank 3 Month No Penalty CD has one of the highest no-penalty CD rates from Raisin.
Raisin is a digital savings marketplace that connects you with fixed-rate CDs, no-penalty CDs, savings accounts, and money market accounts that pay some of the highest interest rates in the industry.
If you want to do all your banking with at one financial institution, you may prefer one of the other banks or credit unions on this list.
Term length: 3 months
APY: 5.15% APY
Ponce Bank 4 Month No Penalty CD
The Ponce Bank 4 Month No Penalty CD also has one of the top no-penalty CD rates on Raisin.
Not only does this CD pay a great interest rate, but you only need $1 to open an account. Raisin doesn't offer checking accounts, so it may not be the best option if you want to do all your banking with the same company.
Term length: 4 months
APY: 5.07% APY
Technology Credit Union 5 Month No Penalty CD
The Technology Credit Union 5 Month No Penalty CD completes the top rates on Raisin. It offers a slightly longer term than a 3-month or 4-month CD. You also might like this option if you want a CD with lower minimum opening requirements.
You'll prefer a different pick if you want to bank directly with only one financial institution.
Term length: 5 months
APY: 5.00% APY
Farmers Insurance Federal Credit Union No-Penalty Share Certificate
Farmers Insurance Federal Credit Union offers a great rate on its nine-month no-penalty share certificate. It's also a credit union that anyone can join by becoming a member of the American Consumer Council. People who work for Farmers or who are relatives of a current member can qualify without joining the American Consumer Council.
Keep in mind that this no-penalty CD only lets you withdraw money once per month, and it doesn't allow any withdrawals at all during the first month. If you're looking for a more flexible no-penalty CD, you might want to consider some of our other options.
Term length: 9 months
APY: 5.00% APY
America First Credit Union Flexible Certificate
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.
Like most credit unions, America First compounds your interest monthly rather than daily, which will limit how much you earn over time.
Term length: 12 months
APY: 4.90% APY
America First Credit Union Review
USALLIANCE Financial 11 Month No Penalty Certificate
You might like this account if you're eligible to meet one of the credit union's membership requirements and are looking for an 11-month no-penalty CD. USALLIANCE Financial Certificates also have a low minimum opening deposit of $500.
To join USALLIANCE Financial you must 1) live in a select area in Massachusetts, Connecticut, New Jersey, or New York 2) work for a select employment group, or 3) become a member of the American Consumer Council, Arco of Westchester, Tread Lightly! or the Council of Community Services.
Term length: 11 months
APY: 4.80% APY
Marcus No-Penalty CD
Most banks only have one term length for no-penalty CDs. But Marcus CDs are available in 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.
Marcus' no-penalty CD doesn't have any major red flags. Just remember that the 13-month term pays significantly better rates than the 7-month and 11-month terms.
Term lengths: 7 months, 11 months, 13 months
APY: 4.50% APY
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:
| Institution | BBB grade |
| Climate First Bank | A |
| Farmers Insurance Federal Credit Union | A- |
| Raisin | B+ |
| America First Credit Union | A+ |
| USALLIANCE Financial | D- |
| Marcus by Goldman Sachs | A+ |
Climate First Bank has an A rating from the BBB due to the length of time the business has been operating.
Farmers Insurance Federal Credit Union has an A- rating from the BBB due to a couple of complaints filed against it.
Raisin has a B+ rating due to the volume of complaints against the business.
USALLIANCE Financial received a D- rating from the BBB because it has failed to respond to several customer complaints.
Types of No-Penalty CDs
Fully Liquid CDs
Some no-penalty CDs are truly no-penalty; they let you withdraw however much you want from your CD, whenever you want. If this is the type of no-penalty CD you're interested in, double-check the terms and conditions that come with the CD that you're interested in; many no-penalty CDs put limits on how and when you can withdraw money without penalty.
CDs with Limited Withdrawals
It's common for no-penalty CDs to have limits on the types of withdrawals you're allowed to make. For example, some no-penalty CDs only let you withdraw the full amount of money in the CD; by necessity, this means that you can only withdraw from that CD once. Others might let you withdraw partial amounts from your CD without penalty, but put limits on how many times you can do that in a single term length. For example, a 2-year CD might only let you withdraw funds twice during those two years.
What Influences No-Penalty CD Rates
Market Competition
Ultimately, every bank and credit union will have to respond to market fluctuations when setting their rates. For example, if financial institutions are raising their rates, then your institution will have to raise rates too in order to stay competitive. And if financial institutions are lowering their rates, than your institutions' rates don't have to be as high for them to gain the same amount of customers.
Overall Economic Conditions
Other economic conditions also affect the prices that your bank or credit union sets. For example, banks are likely to raise or lower their rates around when the next Fed meeting is. The Federal Reserve, also known as the Fed, meets several times a year to decide on rate changes. When the Fed announces rate changes, banks and credit unions usually follow suit.
Should You Invest in a No-Penalty CD?
Whether no-penalty CDs are a good idea depends on your individual situation. If you're not sure whether you'll need the money you're putting in a CD, but you still want to lock in a good rate for an extended period of time, a no-penalty CD might be a good choice for you. But keep in mind that no-penalty CDs generally have lower rates than their non-specialty counterparts, and high-yield savings accounts offer great rates, too.
While you won't be able to lock in good rates for a certain term length with high-yield savings accounts, the best high-yield savings accounts have rates that are nearly as strong as short-term CD rates, which are currently better than long-term CD rates.
For more information, read our full breakdown of no-penalty CDs versus savings accounts.
Best No-Penalty CD FAQs
It largely depends on the financial institution you're interested in. While no-penalty CD rates do tend to be lower than standard CD rates within the same bank or credit union, there are high-paying no-penalty CDs out there too.
No, not all banks and credit unions offer no-penalty CDs. Check ahead of time with the financial institution you're interested in to make sure they offer no-penalty CDs.
The restrictions that no-penalty CDs have will depend on the bank or credit union you're interested in. Some no-penalty CDs only let you withdraw your whole account balance, some only let you withdraw a limited number of times, and many come with term lengths more limited than you'd find with standard CDs.
Always make sure to check the fine print of a CD you're interested in to see if it is truly no-penalty. If you can't figure it out from the bank's website, you could also call their customer support line or go into a branch to speak with someone who could tell you.
When comparing no-penalty CDs vs savings accounts, a high-yield savings account is better than a no-penalty CD if you want easy, frequent access to your savings. 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.
A no-penalty CD could be a good place to store an emergency fund, but a high-yield savings account or even a money market account is probably better. Some no-penalty CDs also require you to withdraw all your money if you need funds early. But with a savings or money market account, you can just take out what you need and leave the rest in the account to continue earning interest.
Why You Should Trust Us: Expert Advice on Choosing the Best No-penalty CD
To learn more about what makes a good CD and how to choose the best fit, four experts weighed in:
Here's what they had to say about CDs. (Text is edited for clarity.)
How do you know if you're choosing the right bank or credit union for your CD?
Make sure it's FDIC or NCUA insured. Also, keep your desired banking experience in mind. Do you like walking into a bank? You need a local branch. Is it OK if you never see your bank? Then you'll probably be happy with an online-only bank. Do you write checks? Do you not write checks? Thinking through how experience before you make that decision.
- Tania Brown, CFP® professional and vice president of coaching strategy at OfColor:
Create a list of what you prioritize most in a bank account. Some banks charge monthly service fees for accounts, so I would see what the requirements are to waive the monthly service fee and whether I think I could meet those requirements. If you're searching for an interest-earning bank account, pay attention to interest rates. The account should pay a higher interest rate than the average bank account.
- Sophia Acevedo, banking editor, Business Insider
How do you decide how long to keep your money in a CD?
Think about when you'll need the money, then compare that with the current CD rates. Consider what makes sense from a financial perspective, but also from the perspective of your own personal timing.
- Roger Ma, CFP® professional with lifelaidout® and author of "Work Your Money, Not Your Life"
Have a plan for your funds. If the money you're putting in a CD is supposed to be a house fund, and you want to wait for another two years to buy a house, that's when you should plan to have this money.
- Mykail James, MBA, certified financial education instructor, BoujieBudgets.com
How can someone decide if a no-penalty CD is right for them?
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.
- Acevedo, Business Insider
Methodology: How we Chose the Best No-Penalty CDs
Business Insider's personal finance team reviewed no-penalty CD offerings from around a dozen national banks using our CD rates methodology. For each account, we compared the minimum opening deposits and interest rates. We also considered the overall banking experience at each bank by assessing customer support availability, mobile app ratings, and ethics.
