Best no-penalty CDs

Consider one of these banks if you want a penalty-free certificate of deposit

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If you withdraw money from a certificate of deposit (CD) before its maturity date, you’ll typically need to pay an early withdrawal penalty. However, some CD options allow you to withdraw your money without penalty before the CD matures.

Before selecting one of these options, carefully read the fine print. While some are truly penalty-free, others may have early withdrawal conditions that must be met to waive the penalty.

Compare top no-penalty certificates of deposit

To make our top picks for the best no-penalty CDs, we first considered more than 30 banks that offer certificates of deposit and then narrowed those down to the ones that have no-penalty CD options or CDs that have no-penalty withdrawal exceptions. After that, we compared the choices based on variables including minimum opening deposit, fees, terms available and starting annual percentage yield (APY).

Our picks may be Authorized Partners who compensate us. This does not affect our recommendations or evaluations but may affect the order in which companies appear.

Marcus by Goldman Sachs
  • APY: 0.35% to 3.85%
  • Minimum deposit: $500
  • Terms: 7, 11 and 13 months

Marcus by Goldman Sachs is an online bank known for its high-yield savings products. Its no-penalty CD allows you to withdraw your money seven days or later after funding.

The minimum deposit required to open a Marcus no-penalty CD is $500. You’ll lock in its highest APY of 3.85% if you open a 13-month CD. Marcus also offers two other no-penalty CDs, both of which have lower rates. The seven-month no-penalty CD earns 0.45% APY, and the 11-month no-penalty CD earns 0.35% APY (as of publication).

In addition to no-penalty CDs, Marcus provides high-yield CDs and rate-bump CDs. However, both of these have penalties for early withdrawal.

What we like
With a Marcus no-penalty CD, you’ll get:
  • One penalty-free early withdrawal
  • Competitive interest on at least one term (as of publication)
  • Low minimum deposit
What to consider
Be aware of these factors:
  • Only three term options
  • Low interest rates on some terms
  • No partial withdrawals
What reviewers say
Relatively few ConsumerAffairs readers have commented on the certificates of deposit that Marcus by Goldman Sachs offers. Many readers have expressed disappointment with Marcus’ customer service, and others were unhappy with its credit cards. However, Craig from New York City was pleased with Marcus and how one of its loans helped him improve his credit score, saying, “My one monthly payment along with not using these credit cards has made my credit score go from good to excellent in seven months!”

Comerica Bank
  • APY: 0.05% to 0.1%
  • Minimum deposit: $1,000
  • Terms: One year

Comerica Bank is based in Dallas and primarily serves customers in Arizona, California, Florida, Michigan and Texas.

One of its popular offerings is the flexible-rate CD, which allows customers to deposit an extra $100 or more at any time and comes with one penalty-free withdrawal of up to 50% of the CD’s principal balance. With a minimum deposit of $1,000, the flexible-rate CD is an accessible savings option for customers.

In addition to flexible-rate CDs, Comerica also offers traditional CDs, money market accounts, checking accounts and savings accounts. You can choose to automatically transfer the interest earned in your flexible-rate CD to your Comerica bank account on a monthly basis.

What we like
Comerica flexible-rate CDs offer:
  • Additional deposits at any time ($100 minimum)
  • One penalty-free early withdrawal of up to 50% of your principal balance
  • Interest transfers to Comerica bank accounts
What to consider
Pay attention to these drawbacks when considering a Comerica flexible-rate CD:
  • Low APYs
  • Compounds monthly
  • Only available in a one-year term
  • Must be opened in person at a branch
What reviewers say
Comerica is perhaps best known for its Direct Express debit card, which many people use to receive their federal benefit payments. However, some ConsumerAffairs readers have also praised Comerica’s customer service, small-town feel and simple bank accounts.

As Christopher from Tempe, Arizona , put it: “One of my colleagues banked at Comerica and I decided to give it a try. I have no regrets. Their customer service is excellent. The people and the branches are friendly, and they have a small-town bank feel that says ‘we can get things done.’”


Ally Bank
  • APY: 4.75%
  • Minimum deposit: $0
  • Terms: 11 months

Ally Bank is an online-only financial institution that offers a variety of banking products to its customers, including a high-yield savings account, an interest-bearing checking account, a money market account and auto loans. It offers customer support via phone, chat or email.

One of Ally’s popular offerings is its no-penalty certificate of deposit, which allows customers to withdraw their full account balance six days or later after funding the CD. It comes with a very high APY of 4.75% (as of publication) and has no minimum deposit requirement, making it an accessible option for all customers.

If Ally Bank's no-penalty CD APY increases within 10 days of your CD’s open or renewal date, Ally’s Best Rate Guarantee ensures that you’ll get the new, higher yield. Additionally, customers who renew their CD for another term receive a 0.05% Loyalty Reward rate bump (as of publication).

What we like
Ally Bank’s no-penalty CD comes with:
  • Very competitive APY
  • No minimum deposit requirement
  • Penalty-free withdrawal six days after funding the CD
  • Rate guarantee
  • Rate bump for CD renewals
What to consider
Be mindful of the following:
  • Only available in an 11-month term
  • No physical branches
What reviewers say
Many customers say that Ally Bank is easy and convenient, offering minimal fees and competitive rates that outrank other banks. Shawn of Arlington, Washington , had this to say: “Great rates, competent and responsive customer service and easy access via ATM. They also have an investing side to help research and invest in stock. The only downside we have experienced is having to deposit cash funds via mail. Overall great experience.”

Synchrony Financial
  • APY: 3.9%
  • Minimum deposit: $0
  • Terms: 11 months

Synchrony Financial is a financial services company that offers a range of banking products, including a high-yield savings account, a money market account and credit cards. Synchrony's no-penalty certificate of deposit allows customers to withdraw their full balance six days or later after funding the CD. The 11-month no-penalty CD offers a competitive APY of 3.9% (as of publication) and has no minimum deposit requirement.

In addition to its no-penalty CD, Synchrony also offers a bump-up CD, IRA CDs and regular CDs with varying terms and APYs. Synchrony's online platform and mobile app allow for easy, 24/7 account management. It’s a convenient option for customers who prefer online banking.

What we like
With a Synchrony no-penalty CD, you’ll enjoy:
  • One penalty-free withdrawal after six days
  • No minimum deposit
  • Competitive APY
What to consider
Keep these factors in mind:
  • 11-month term only
  • No physical branches
What reviewers say
Customers love Synchrony’s lineup of credit cards, as well as its high-yield savings account and CDs. Several reviewers mention switching to Synchrony for its competitive interest rates and easy online application process.”

A ConsumerAffairs reviewer, Tom from San Diego , said this about Synchrony’s CDs: “Opened two CD accounts for higher interest rates. Easy to transfer the money from your checking account in a local bank. The bank keeps me informed of activity by email on a regular basis. I will be investing with this bank again.”


Citibank
  • APY: 4.05%
  • Minimum deposit: $500
  • Terms: 12 months

Citibank is a global financial institution that offers a range of products and services, including personal banking, credit cards, investment platforms and wealth management.

Among its lineup of savings products is a 12-month no-penalty CD, which comes with an attractive 4.05% APY and a $500 minimum deposit requirement. While the no-penalty CD allows for one free early withdrawal, you must remove all your funds if you use it; partial withdrawals aren’t allowed.

Citibank also offers IRA CDs, a step-up CD and regular CDs, giving customers a range of options to choose from to help them meet their savings goals. With its diverse selection of financial products, Citibank is a popular choice for customers looking for a trusted financial institution with a global footprint.

What we like
With Citibank no-penalty CDs, you’ll get:
  • Competitive APY
  • Low minimum deposit requirement
  • One penalty-free withdrawal
What to consider
Be sure to pay attention to these factors:
  • No partial withdrawals
  • Only available as a 12-month term
What reviewers say
Although some ConsumerAffairs readers said they had difficulty communicating with Citibank’s customer support, many report a positive banking experience, citing strong branch service and a broad range of products as reasons they keep coming back.

Heather from Jamestown, New York , praised Citibank for the “features, ease of use and terms they provide.” Heather’s review ended with, “Personally, I find Citibank to be perfect for my needs and am really glad I decided to give them a try after credit union mishaps and ridiculous inconsistencies at other major banks.”

What is a no-penalty CD?

A no-penalty certificate of deposit allows you to withdraw your money before maturity without paying an early withdrawal penalty.

Here's how it works: When you open a no-penalty CD, you agree to keep your money in the account for a certain period of time. During that time, the bank pays you interest on your deposit, typically at a fixed rate. However, unlike a traditional CD, if you need to withdraw your money before the CD matures, you won't be penalized for doing so.

The main advantage of a no-penalty CD is its flexibility; you can access your money before maturity if you need it. But this flexibility comes at a cost. No-penalty CDs usually offer lower interest rates than traditional CDs. You’ll likely have fewer terms to choose from as well.

Like traditional CDs, no-penalty CDs are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per depositor per bank.

» MORE: Best CDs

Are no-penalty CDs worth it?

No-penalty CDs can be worth it, depending on your situation. Lyle Solomon, a principal attorney at Oak View Law Group in Auburn, California, says it's best to think about your savings goals when trying to decide between a traditional and no-penalty CD.

No-penalty CDs are good for uncertain goals. “If you intend to save some money for an emergency or a vacation, for example, it's best to go for a no-penalty CD because you can break it at any time,” said Solomon.

“On the other hand, if you want to save money for a definite purpose, like the down payment on a new car, and are sure you will not need it for the said period of time, a traditional CD will be a better option.”

How to choose a no-penalty CD

Considering these factors can help you choose the best no-penalty CD for you:

  • Interest rates: Interest rates can vary widely between different banks. Look for a no-penalty CD with a high interest rate to maximize your earnings.
  • Minimum deposit requirements: Some no-penalty CDs may require a higher minimum deposit than others. Consider your budget and choose an account that fits your financial situation.
  • Term lengths: No-penalty CDs come in different term lengths, generally ranging from about half a year to just over a year. Choose a term length that works for you based on your savings goals and financial needs.
  • Customer service: Every bank is different. Reading consumer reviews can help you get a sense of how satisfied customers are with a financial institution overall.
  • Withdrawal restrictions: Though no-penalty CDs permit early withdrawals in some form, banks may still have restrictions on when and how you can withdraw your money. Read up on these restrictions before opening an account.

Alternatives to no-penalty CDs

No-penalty CDs can be a good choice for those who want a safe, low-risk investment with some flexibility. However, there are other options available depending on your risk tolerance and investment goals.

Here are five alternatives to no-penalty CDs:

  1. High-yield savings accounts: If you may need to tap into your savings multiple times, a high-yield savings account might be a better option than a no-penalty CD. These accounts usually offer higher interest rates than traditional savings accounts, and you can typically withdraw your money up to six times a month without penalty. However, unlike CDs, interest rates on high-yield savings accounts can fluctuate over time.
  2. Money market accounts:Money market accounts are another low-risk option offering a higher yield than traditional savings accounts. They typically have higher minimum balance requirements than savings accounts, but they might come with checks and a debit card for easy access to your cash.
  3. Bonds: Bonds are generally considered to be a low-risk investment option, although they do carry some risk. They can be a good choice if you're looking for a higher yield than savings accounts or money market accounts but still want to minimize your risk. Bonds come in a variety of types and maturities, so you can choose the one that best fits your needs.
  4. Index funds: If you're investing for the long term and you’re willing to take on a bit more risk in exchange for potentially higher returns, index funds can be a good option. These funds track a specific market index, such as the S&P 500, and offer diversification across a range of securities. They are generally less risky than mutual funds.
  5. Stocks: Stocks offer the highest potential return of all the options listed here, but they also carry the highest degree of risk. If you're comfortable with the volatility of the stock market and are willing to invest for the long term, stocks can be a good way to build wealth. However, individual stocks can be risky, so it's critical to diversify your portfolio with mutual funds or exchange-traded funds (ETFs) too.

» MORE: CDs vs. savings accounts: Which is right for you?

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FAQ

Is a no-penalty CD a good idea?

A no-penalty CD can be a good idea if you want to lock in a competitive interest rate without incurring any penalties for early withdrawals. However, the interest rates may not be as high as those offered by traditional CDs.

Are no-penalty CDs safe?

No-penalty CDs are generally considered to be safe because they’re FDIC-insured up to $250,000 per depositor, per bank. Additionally, most CDs have fixed interest rates, so you’re typically guaranteed a certain amount of interest throughout your term.

Will a no-penalty CD lose money?

No-penalty CDs do not lose money, but they may not keep up with inflation or provide returns as high as other investment options. Additionally, if you withdraw funds before the CD matures, you miss out on the interest you would have earned if you had kept the funds in the CD for its full term.

Do no-penalty CDs have higher rates?

No-penalty CDs usually come with lower interest rates than regular CDs. So while you won't be penalized for withdrawing your money early, you may earn less interest overall.

Bottom line

A no-penalty CD can be a good option if you want the freedom to tap into your cash before maturity. It offers flexibility and peace of mind because you can withdraw all or part of your balance as soon as six days after funding your account without incurring a penalty.

However, most no-penalty CDs offer lower interest rates than regular CDs, and you’ll also have limited term options to choose from. If you don’t anticipate needing to make a withdrawal before maturity, you’ll probably see better returns by going with a traditional CD instead.


Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
  1. Consumer Financial Protection Bureau, “ What is a certificate of deposit (CD)? ” Accessed March 10, 2023.
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