As interest rates begin to climb, a lot of investors are eager to benefit from the most lucrative deposit rates they’ve come across in recent times. Given the unpredictability of these rates staying consistent, many are turning to Certificates of Deposit (CDs). These CDs allow individuals to secure current rates for extended periods, such as five years or more.
However, there’s a dilemma. If rates persistently rise, you wouldn’t want to commit to a CD only for the rate to surge following the next FOMC meeting. Plus, early withdrawal usually comes with hefty fines.
The answer? No-penalty certificates of deposit.
Such CDs permit you to retrieve partial or total funds before the stipulated maturity date, devoid of any early withdrawal charges. But always ensure you understand the terms before committing. This kind of CD grants you the versatility to cash out the certificate and later invest in a more profitable avenue.
The catch? With added flexibility often comes a slightly reduced rate than with typical CDs of equivalent maturity.
Yet, when you aim for an enticing rate merged with liquidity, no-penalty CDs are a top choice.
Curious about the potential interest from a no-penalty CD? Check out today’s leading rates.
Keen on earning between $100 and $300 just by initiating a bank account? If you’re able to direct deposit your salary, many banks offer sizable rewards for opening a new account. Banks such as Chase, Citi, Discover, and more might offer you between $100 to $300 if you initiate an account and direct deposit your salary.
No-Penalty CDs: A Quick Overview
Listed below are banks ordered generally by their rate offerings. However, rates constantly evolve, so this sequence may not always be precise.
Comparing can be tricky due to varied terms and rates. So, scan the entire list to spot the ideal fit.
Wondering if you should delay opening a no-penalty CD? After witnessing recent Federal Reserve rate surges, banks ramped up their no-penalty CD rates significantly. They likely anticipated further rate ascensions. However, post the latest hikes in December and February, these rates seem stagnant.
This may be because U.S. Treasury yields for extended maturities remain static. Currently, yields for 26-week bills hover around 5.27% with 2-3 year notes at approximately 4.80% (based on July’s auctions).
If you’re contemplating a no-penalty CD, it might be wise to secure one now. You can always transition later if necessary.
Current Bank Offers for CDs
| Bank Name | CD Term | CD Rate |
|---|---|---|
| Tech CU | 5 Month | 5.26% APY |
| Blue FCU | 9-Month | 5.25% APY |
| FVCbank | 12-Month | 5.06% APY |
| Ponce Bank | 1-Month* | 5.30% APY |
| mph.bank | 6-Month | 4.92% APY |
| First Mid Bank & Trust | 12-Month | 4.82% APY |
| Sallie Mae | 14-Month | 4.75% APY |
| CIT Bank | 11-Month | 4.90% APY |
| Ally Bank | 11-Month | 4.55% APY |
| Marcus by Goldman Sachs | 13-month | 4.35% APY |
| Citibank | 12-Month | 4.05% APY |
Top No-Penalty CD Rates
Here’s a compilation of banks proffering the premier no-penalty CD rates at present.
Note: Ensure to cross-check on the bank’s site as rates and terms might vary.
Several banks like BlueFCU and First Mid Bank & Trust offer attractive rates via the Raisin platform (previously named SaveBetter). When you utilize Raisin, you establish an account with them, gaining access to boosted rates. While Raisin manages your account, your funds remain with the bank and are FDIC insured. Even though you don’t possess a direct bank account number, your money is consolidated with other Raisin users, ensuring it’s still safeguarded. A primary advantage is the enhanced rates, and the ability to seamlessly shuffle funds among partner banks for even greater rates. Raisin can secure these preferable rates as they can attract deposits for banks more efficiently than banks’ own promotional endeavors.
Technology CU – 5 Month, 5.26% APY
Technology CU has a 5 Month no penalty CD yielding 5.26% APY right now, available through the Raisin platform.
Blue FCU – 9-Month, 5.25% APY
Blue Federal Credit Union is a credit union founded in 1951 with locations in Colorado and Wyoming but through the Raisin platform, anyone can take advantage of their high rates. Blue FCU traces its roots to the Air Force, having started as Warren Federal Credit Union on F.E. Warren Air Force Base.
They currently offer a 5.25% APY no-penalty CD with a rate of 9-Month, one of the highest available (only beaten by the 1 month offer above).
It is NCUA insured and you can close it at anytime (after the first 7 days) without paying a penalty. Minimum opening deposit is just $1 and interest is compounded daily and credit at the end of the month.
FVCbank – 12-Month, 5.06% APY
FVCbank, through the Raisin platform, has a 12-Month no penalty CD yielding 5.06% APY.
For a while, it was the top offer but First Mid Bank & Trust took over. Fortunately, if you had this CD, you can close it and move your money over to First Mid Bank & Trust without any hassles because they’re both available on Raisin.
With no penalty CDs, there’s no reason not to take a longer period because you’re guaranteed that rate. If they go up, just close it and open a new one.
You can open a CD with a minimum deposit of just $1 and no maintenance fees.
Ponce Bank – 1-Month, 5.30% APY
Ponce Bank offers several CDs worth knowing looking at.
– 1-Month, 5.30% APY CD
First, there is a 1-Month CD with an interest rate of 5.30% APY.
⚠️ This is NOT a no-penalty CD, it’s just a CD with a super short maturity and high rate, which makes it very similar to a no-penalty CD. That’s why we listed it. With a rate of 5.30% APY, it was higher than the field for some time but others have overtaken it.
– 4-Month, 5.06% APY No Penalty CD
Alternatively, if you prefer to stick with no penalty CDs, you can get the 4-Month CD with an interest rate of 5.06% APY.
You can open a CD with a minimum deposit of just $1 and no maintenance fees.
New York City-based Ponce Bank began operating in 1960. As a Community Development Financial Institution (CDFI), the Bank works as an investor in the future of underserved and under-banked communities. But they make their savings products available to consumers nationwide.
Ponce Bank also offers checking, savings, and retirement accounts, complete with access to online banking. They also provide business banking, residential mortgages, home equity lines of credit, and consumer loans.
mph.bank – 6-Month, 4.92% APY
mph.bank, through the Raisin platform, has a 6-Month no-penalty CD that yields a 4.92% APY. mph.bank is the online bank of Liberty Savings Bank, which also offers higher interest rates through Raisin, but separately has a bonus offer directly through mph.bank.
You can open a CD with a minimum deposit of just $1 and no maintenance fees.
CIT Bank – 11-Month, 4.90% APY
CIT Bank’s No-Penalty, 11-Month CD is paying 4.90% APY, compounded daily, and requires a minimum deposit of $1,000. There is no penalty if you access funds before the CD matures.
CIT Bank also offers their interest-bearing eChecking account, currently paying from 0.10% APY to 0.25% APY and a High-Yield Money Market account paying 1.55% APY. They also offer term CDs, which top off at 0.50% APY on a 60-month certificate.
First Mid Bank & Trust – 12-Month, 4.82% APY
First Mid Bank & Trust, through the Raisin platform, has a 12-Month no penalty CD yielding 4.82% APY. This is now the top offer because it has a slightly higher APY than FVCbank and is for the same term.
Since most of the top rates for no penalty CDs are on Raisin, you can easily move them around and chase the highest rate without having to deal with opening brand new accounts.
You can open a CD with a minimum deposit of just $1 and no maintenance fees.
Sallie Mae – 14-Month, 4.75% APY
Sallie Mae also offers banking services, including a 14-Month No Penalty CD with an outstanding 4.75% APY. You can open a certificate with as little as $1, and interest is compounded daily and credited monthly.
You can make a one-time full withdrawal of the CD with no penalty, you just have to wait until 7 days after opening.
They also have a 10-Month No Penalty CD with a yield of 4.70% APY but I don’t know why you’d pick that over the higher rate.
Sallie Mae also offers term CDs ranging from six months to 60 months, paying interest as high as 3.25% APY. Each of these CDs requires a minimum deposit of $2,500. Their High-Yield Savings Account pays 1.95% APY on all balances with no maintenance fees. They also offer a Money Market Account with no minimum balance and maintenance fees.
Ally Bank – 11-Month, 4.55% APY
Ally Bank offers has an 11-Month No Penalty Certificate of Deposit. The CD pays 4.55% APY, with no minimum deposit required to open a certificate. You can withdraw your entire balance, including interest, after the first six days of funding the CD.
Just as important, Ally Bank offers their Ten Day Best Rate Guarantee. You’ll get a better rate if rates rise within ten days of opening your CD.
Ally Bank offers interest checking, online savings, a money market, and their high-yield CD. But perhaps the most exciting CD product is their Raise Your Rate CD. They offer it in terms of two years and four years, but you’ll have an opportunity to raise the rate once during the two-year term or twice during the four-year term.
Ally is also a fully diversified financial firm, offering mortgages, personal loans, and some of the best auto loans in the business. But you can also benefit from self-directed or managed investments through Ally Invest.
Marcus by Goldman Sachs – 13-month, 4.35% APY
Marcus by Goldman Sachs offers their 13-month No-Penalty CD, currently paying 4.35% APY. The minimum deposit is $500, and there is no early withdrawal penalty beginning seven days after funding your certificate.
The No-Penalty CD is available in shorter durations but at lower rates. For example, the 7-month CD currently pays 0.45% APY, while the 11-month CD pays 0.35% APY.
Marcus by Goldman Sachs is another well-diversified financial service provider. Their Online Savings Account currently pays 4.15% APY, while they also offer a High-Yield CD paying 5.00% APY for a 12-month term.
Marcus by Goldman Sachs also offers self-directed and managed investment accounts, IRAs, credit cards, and personal and home improvement loans.
Citi – 12-Month, 4.05% APY
Citi offers their no-penalty CD for a full 12-Month. The certificate currently pays 4.05% APY, and the minimum initial deposit is just $500.
Citi is one of the largest banks in the US and provides full-service banking, including a full range of loan products and deposit accounts.
Their fixed-rate CDs have terms ranging between three months and five years. Rates vary based on maturities, but the best deal is on the 12-month CD, which currently pays 4.15% APY on all balance ranges.
Citi also offers their Accelerate Savings account, currently paying 3.40% APY, and is available as long as you open a Citi checking account.
Synchrony Bank – 11-Month, 3.90% APY
Synchrony Bank might have the widest selection of high-yield CDs in the banking industry. Their 11-Month, No-Penalty CD is currently paying 3.90% APY with no minimum deposit required and no maintenance fees. You can withdraw funds without penalty after the first six days following funding your certificate.
Synchrony Bank’s CDs range from 3 to 36 months and pay interest of up to 4.30% APY. Their Bump-Up CD has a 24-month term, no minimum balance, and yields a bit less. It provides one-time flexibility to request a higher rate during the term.
Synchrony Bank also offers High-Yield savings, money market, IRAs, and credit cards.
Crucial Information about No Penalty CDs
Before opting for a no penalty CD with any bank, it’s vital to be informed about certain aspects:
- Terms of Withdrawal – The rules for withdrawal vary from one CD to another. Some allow partial withdrawals without having to close the CD, while others necessitate withdrawing the entire sum. It’s essential to understand these distinctions.
- Minimum Deposit Requirement – While many digital banks allow you to start a CD with just a single dollar, others might ask for a minimum of $1,000. This matters because you might want to open several no penalty CDs with one bank, especially if the entry barrier is low.
- Maximum Deposit Limit – Few CDs set a cap on deposits to regulate the earnings from high-interest rates. Though this isn’t a common practice, it’s still something to consider.
Considering these features can be beneficial. For instance, if a bank offers a no penalty CD that permits only a full withdrawal and has a low minimum deposit, you can distribute your savings across multiple CDs. If a need arises, you can easily access funds from a single CD while the rest continue to earn interest.
For clarity, let’s say you have $5,000 to invest in no penalty CDs. By splitting it into five CDs of $1,000 each, you can access $1,000 anytime without disrupting the remaining $4,000.
No Penalty CD FAQs:
What’s a no penalty CD?
A no penalty CD allows you to access your funds and close the CD without incurring any penalties. Regular CDs typically charge a penalty for early withdrawals, often equal to a few months of interest. So, if you had a standard 12-month CD, withdrawing before the year ends would lead to a penalty. But with a 12-month no penalty CD, you can access your funds anytime without penalties.
How are early withdrawal penalties structured for CDs?
Different banks have different penalty structures, but most adopt a tiered system. The penalty usually depends on when you choose to make a withdrawal. For instance, a standard setup might deduct 90 days of interest as penalty for CDs of a year or less, while longer-term CDs might see a 180-day interest deduction.
Is investing in a no penalty CD a wise decision?
The answer hinges on the anticipated movement of interest rates. If you believe that the rates have plateaued, a traditional CD might offer a better rate. However, if you suspect you’ll be cashing out early, perhaps due to increasing interest rates, a no penalty CD offers flexibility.
Do no penalty CDs come with FDIC insurance?
Absolutely. Just like other CDs and bank deposits, FDIC insurance safeguards no penalty CDs, covering up to $250,000 per individual, per bank.
Are there penalties for partial withdrawals from no penalty CDs?
The answer varies based on the CD’s terms and the issuing bank. Some might allow a one-time penalty-free withdrawal, while others may allow multiple withdrawals. Always consult with the respective bank for clarity.
Is there any risk of losing money with CDs?
No. CDs are risk-free as they come under FDIC insurance, ensuring protection against fraudulent activities. Though with regular CDs, an early withdrawal might result in some interest loss, the principal remains intact.
Concluding Thoughts on No Penalty CDs:
To wrap up, here’s our take on the top no-penalty CD rates. If liquidity is your primary concern, and you want the flexibility to access funds before the maturity date, no penalty CDs offer a valuable solution.
Investing in a cashable CD with the sole intent of reinvesting if rates shoot up might not be the best strategy. Predicting interest rates is as uncertain as forecasting stock market movements. If you’re considering a no-penalty CD, now seems as good a time as any to dive in.
