Best no-penalty CD rates of July 2024

Best No-Penalty CD Rates

• CIT Bank No-penalty CD.
• Ally Bank No-penalty CD.
• USAlliance Federal Credit Union No-penalty CD.
• Marcus by Goldman Sachs No-Penalty CDs.

Best no-penalty CDs

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CIT Bank No-penalty CD

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Our ratings are calculated based on fees, rates, rewards and other category-specific attributes. All ratings are determined solely by our editorial team.

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Via CIT Bank’s Website

BLUEPRINT RATING

Our ratings are calculated based on fees, rates, rewards and other category-specific attributes. All ratings are determined solely by our editorial team.

CD APY 11 month

3.50%

Minimum deposit requirement

$1,000

What should you know

CIT Bank’s no-penalty CD has a competitive yield on an 11-month CD term. The tradeoff, though, is that it requires the highest minimum deposit of $1,000, which might be taxing for new savers. If that jibes with your financial plan, you can painlessly set up your account online. During set up, you’ll have the option to direct the monthly interest earned to remain in the CD or transfer to another account. Should events change and you need the money back, you can withdraw the total balance without penalty as long as it’s been at least seven days since you funded the CD. When the term is almost up (if you don’t divest early), you’ll receive a 30-day notice and you’ll have 10 days after the maturity date to make any changes. Otherwise, it will automatically renew for the same term at whatever the current rate is at that time. To withdraw your funds, you can log into your account and send a secure message or call the bank and speak to a representative.

Pros and cons

Pros

• High yield.
• Good customer experience scores.
• No fees

Cons

• High minimum balance requirement.
• No physical locations.

Ally Bank No Penalty CD

BLUEPRINT RATING

Our ratings are calculated based on fees, rates, rewards and other category-specific attributes. All ratings are determined solely by our editorial team.

BLUEPRINT RATING

Our ratings are calculated based on fees, rates, rewards and other category-specific attributes. All ratings are determined solely by our editorial team.

CD APY 11 month

4.00%

Minimum deposit requirement

$0

What should you know

Ally Bank, perhaps the most established online-only bank, has long been known for competitive rates, especially compared to its brick-and-mortar competitors. It’s no-penalty is no exception: you can lock in a 4.00% APY for 11 months. Why not just opt for a savings account? Well, Ally’s no-penalty CD yield is currently half-a-percentage point higher than its high-yield savings offering, and the 11-month term means you’ll benefit if Ally decides to cut rates in the interim. There are other benefits to consider, including daily compounding schedule, no minimum balance and a 0.05% loyalty bonus if you renew your CD. If the CD rate increases within 10 days of you opening it, you’ll automatically get the raised rate. You can withdraw all of your money any time after the first six days of funding your CD without facing a fee. However, you can’t make a partial withdrawal before the maturity date. If you need some cash early, you have to withdraw the whole amount. But nothing’s stopping you from reinvesting it in a new CD. When your CD does mature (if you don’t make an early withdrawal) you have a ten-day grace period to withdraw your funds, change how much you invest or pick a new CD. Otherwise, it’ll automatically renew.

Pros and cons

Pros

• High interest rate.
• No minimum deposit requirement.
• Renewal bonus on CDs.

Cons

• No physical bank branches.
• Not the highest interest rate on the market.

USAlliance Federal Credit Union No-penalty CD

BLUEPRINT RATING

Our ratings are calculated based on fees, rates, rewards and other category-specific attributes. All ratings are determined solely by our editorial team.

BLUEPRINT RATING

Our ratings are calculated based on fees, rates, rewards and other category-specific attributes. All ratings are determined solely by our editorial team.

CD APY 11 month

4.80%

Minimum deposit requirement

$500

What should you know

On first blush, USAlliance’s 11-month no-penalty CD doesn’t seem worth it. However the no-penalty CD allows you to skip the early withdrawal penalty that would otherwise cost you at least 180 days’ worth of interest. Therefore you should take the lower interest rate if you think you may have to pull out the cash early. Anyone can join the credit union through the application process by joining a partner association. You will also have to open a savings account and maintain a balance of $5 when you opt for a CD-you can leave it mostly unused or use it as a homebase to transfer money into and out of your CD. Besides a competitive, daily compounded interest rate, you can divest from this no-penalty CD at any time after the first seven calendar days of opening the account. Partial early withdrawals aren’t permitted though.

Pros and cons

Pros

• Competitive interest rate.
• Low minimum balance.
• Daily compounding interest.

Cons

• Few physical locations.
• Not the highest rate on the market.

Marcus by Goldman Sachs No-Penalty CDs

BLUEPRINT RATING

Our ratings are calculated based on fees, rates, rewards and other category-specific attributes. All ratings are determined solely by our editorial team.

BLUEPRINT RATING

Our ratings are calculated based on fees, rates, rewards and other category-specific attributes. All ratings are determined solely by our editorial team.

CD APY 13 month

4.70%

Minimum deposit requirement

$500

What should you know

Marcus, a consumer loan company from Goldman Sachs, offers a few different no-penalty CD options, a 7-month, 11-month and 13-month term each currently offering a competitive rate of 4.70% APY. As you might expect from a digital-focused bank, you’ll have access to 24/7 customer service (available by chat and phone) and a highly-rated mobile app (4.8 stars on the Apple App Store and 4.4 on the Google Play Store). Partial withdrawals aren’t allowed, but you can divest the entire no-penalty CD if it’s been at least seven days after opening the account. You can initiate a withdrawal through your Marcus account or your linked, external bank account. Note that if you have a lot of money to invest, CDs have a maximum balance limit of $1,000,000 per account.

Pros and cons

Pros

• High interest rate.
• Long term length.
• Low minimum balance requirement.

Cons

• No physical locations.
• No partial withdrawals.

Comparing the best no-penalty CDs

INSTITUTION	APY	MINIMUM DEPOSIT	TERM LENGTH
Ally Bank No-penalty CD	4.00%	$0	11 months
USAlliance Federal Credit Union No-penalty CD	4.80%	$500	11 months
Marcus by Goldman Sachs No-penalty CD	4.70%	$500	13 months
CIT Bank No-penalty CD	3.50%	$1,000	11 months

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Choosing a no-penalty CD vs. a traditional CD

In many ways, a no-penalty CD is similar to a traditional CD. Both are savings products that offer interest earnings over a set period of time. 

The appeal of a no-penalty CD however is that you won’t get slapped with an early withdrawal fee if you need to tap into your funds before the end of the CD’s term. 

“It makes sense to pick a no-penalty CD instead of a traditional CD when you are not certain you can part from the money during that period of time,” said Gary Grewal, CFP and author of Financial Fives. “If you value the flexibility of withdrawing at any time, such as in case you find the perfect house, a no-penalty CD makes perfect sense.” 

The catch is that no-penalty CDs tend to come with a lower interest rate than the best traditional CDs.

Finding the highest no-penalty CD rates

Whatever kind of CD you’re after, locking in the best interest rate is a big deal. You don’t want to leave money on the table. 

Savers looking for the highest no-penalty CD rates can start their search with the top options outlined above. But don’t be afraid to go off the beaten track if you find an FDIC-insured option that offers a phenomenal rate. 

To find the highest no-penalty CD rates:

• Shop around. The good news is that it’s easy to shop for the highest rates. A simple Google search can yield a whole list of the best CD rates. Taking a few minutes to shop around can make a big difference to your bottom line. 
• Read the fine print. Every CD comes with detailed information about fees and rates. Don’t blindly accept the fine print without reading through the details. Pay attention to any fees tied to the CD. If you don’t like what you see, move on to another option. 
• Be willing to work with a new bank. It’s unlikely that your current bank will be the one offering the highest interest rates; traditional brick-and-mortar financial institutions don’t need to offer competitive yields in order to gain consumer deposits. Consider branching out to tap into better rates. 
• Confirm the bank is insured. A great interest rate should be paired with insurance from the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). If the financial institution isn’t insured, you’re putting your money at risk. It’s best to stick with banks that offer insurance.  

If you get stuck trying to choose between a few CDs, consider CD laddering. 

For example, imagine you purchase three CDs: in one-year, two-year and three-year terms. As each matures, you reinvest it into a three-year CD. This way, all of your funds are eventually in a longer-term, three-year CD investment, but you’re never more than a single year away from having access to a stash of your funds.

Benefits and disadvantages of a no-penalty CD

Every financial product comes with pros and cons. Let’s start by taking a look at the benefits:

• Flexibility. The major selling point of a no-penalty CD is that you have the opportunity to pull out funds without paying an early withdrawal penalty. If you run into an emergency or move up the timeline on a big purchase, you can move forward without worries. 
• Locked-in rate of return. You don’t have to worry about changing interest rates lowering your overall earnings. Instead, you’ll know exactly how much your CD is scheduled to earn, which will only change if you withdraw funds early. 
• Low risk. You can choose a no-penalty CD that offers insurance, protecting your total deposits for up to $250,000 at each institution.

And we can’t forget the disadvantages:

• Generally lower rates than traditional CDs. “It’s important to note that no-penalty CDs often offer lower interest rates than traditional CDs,” said Joseph Carpenito, a financial advisor at Materetsky Financial Group. 
• Minimum balance requirements. Some no-penalty CDs require a minimum balance to get started. Depending on your situation, a minimum balance requirement could put a particular CD out of reach. 
• Cannot reinvest funds. “One of the drawbacks to these CDs is that once you take the money out, you cannot put it back into the CD and start earning interest on it again,” said Howie Wu, general manager of CD Valet at Seattle Bank. 
• Typically lower rates than other investment opportunities. While the stock market offers more risk, it also offers greater potential yields. The average annual return on the S&P 500 over the long term is about 10%. However, you can’t know what stocks will do over any given period of time.

Opening a no-penalty CD

Here’s what to do if you’ve decided that a no-penalty CD is the right fit for you:

Find the right CD

As you look at no-penalty CDs, keep these three things in mind: 

• Interest rates. If possible, you’ll want to find the CD with the highest interest rate attached.
• Minimum deposit requirements. Find a no-penalty CD that offers a deposit requirement that suits your situation. 
• Deposit insurance. You don’t want to accidentally open a CD that doesn’t come with FDIC or NCUA insurance. Coverage is limited to $250,000 at each insured institution, per depositor, per account ownership type. 
• Terms. The most popular CD terms vary from six months to five years.

Apply for an account

Once you’ve found the right CD, it’s time to make it official. If you’re already a customer of the bank or a member of the credit union, you’ll simply need to log in online or go to a branch. 

Here are some popular CD providers: 

• Citibank CDs.
• Bank of America CDs.
• Chase Bank CDs.
• Capital One 360 CDs.

If you don’t already have an account, sign up for one. Be prepared to provide basic personal information about yourself: your name, date of birth, address, Social Security number and contact details. 

Fund the CD

If you’re doing the transaction in person, you’ll simply need to write a check or deposit cash. If you’re online, you’ll typically need to link another account to make a transfer. Have the routing number and the account number of your funding account ready.

If you run into any issues, reach out to the bank’s representatives.