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Ben Gran is a freelance writer based in Des Moines, Iowa. He has written for regional banks, fintechs, and major financial services companies. Ben is a graduate of Rice University.
With top CDs offering interest rates of 5.00% APY or higher and potential Fed rate cuts ahead, many are considering opening CDs in 2024. CDs provide a guaranteed interest rate for a set period and are among the safest investments.
However, typical CDs charge penalties for early withdrawals, reducing your interest earnings if you need to access your money before the term ends. A no-penalty CD allows withdrawals without penalties, making it a flexible alternative for your savings.
A no-penalty CD works like a standard CD, offering a set interest rate (APY) for a fixed term. However, you can withdraw your money without paying an early withdrawal penalty, providing more flexibility for emergencies.
Keep in mind, no-penalty CDs are not as liquid as savings or checking accounts, often requiring the money to stay in for six or seven days after opening. Some no-penalty CDs may also limit how often or how much you can withdraw.
Here are a few banks and credit unions that offer no-penalty CDs, as of Jan. 25, 2024:Ally Bank CD Rates
| Bank & CD Offer | APY | Term | Min. Deposit | Next Steps |
|---|---|---|---|---|
Member FDIC.
| APY: 4.70% | Term: 1 Year | Min. Deposit: $2,500 |
Open Account for Discover® Bank CD
On Discover Bank's Secure Website. |
Member FDIC.
| APY: 5.20% | Term: 10 Months | Min. Deposit: $2,500 |
Open Account for
On Secure Website. |
Member FDIC.
| APY: 5.00% | Term: 1 Year | Min. Deposit: $0 |
Open Account for Barclays Online CD
On Barclays' Secure Website. |
No-penalty CDs usually offer lower APYs than standard CDs. For the flexibility to withdraw funds without penalties, you must accept a slightly lower interest rate.
For example, as of Jan. 25, 2024, one of the best CD rates we found was a CIT Bank CD with a 6-month term at 5.00% APY. But if you want a no-penalty CD from CIT, the APY would be 3.50% for an 11-month no-penalty CD.
Every type of savings account or investment option can have some potential upsides and drawbacks. Let's look at a few pros and cons of no-penalty CDs.
If you want to open a CD to use as a safe place to keep your savings and earn a fixed rate of interest, but you don't want the risk of early withdrawal penalties, choosing a no-penalty CD could be a good move.
But keep in mind that not all no-penalty CDs offer the same level of flexibility -- some will only let you withdraw part of your money, or only allow withdrawals on certain dates.
If you want a good rate of interest and complete flexibility for using your cash, a high-yield savings account might be the best choice for your personal finances.
We've scanned the most popular banks to find CDs with high interest rates to make your money work harder for you. Get started by clicking below.
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