Using a certificate of deposit, or CD, to grow your savings can be a smart way to receive a guaranteed interest rate during the CD's term. However, one drawback to a traditional CD is that you can't access the funds during that term without getting a steep penalty.
A no-penalty CD, however, provides the guaranteed return of a traditional CD along with the flexibility to access some or all of your funds during the CD term without a penalty. This type of CD could be a welcome addition to your financial plan if you want to grow your savings faster than you could with a standard savings account but think you may need the cash before the term ends.
Below, we'll discuss what a no-penalty CD is, how it works, and if opening one is the right move for you.
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Bank/Institution | APY | Open Account | Bonus Offer |
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2025 award winner Best Checking and Savings Combo |
4.00
With $0 min. balance1 <p>SoFi members who enroll in SoFi Plus with Eligible Direct Deposit or by paying the SoFi Plus Subscription Fee every 30 days or SoFi members with $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. Members without either SoFi Plus or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. If you have satisfied Eligible Direct Deposit requirements for our highest APY but do not see 3.80% APY on your APY Details page the day after your Eligible Direct Deposit arrives, please contact us at 855-456-7634. Additional information can be found at <a href="http://www.sofi.com/legal/banking-rate-sheet">http://www.sofi.com/legal/banking-rate-sheet</a>. See the SoFi Plus Terms and Conditions at <a href="https://www.sofi.com/terms-of-use/#plus">https://www.sofi.com/terms-of-use/#plus</a>.</p>
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Limited-Time Offer: Up to 4.00% APY on Savings + $300 Bonus.2 <p>New and existing Checking and Savings members who have not previously enrolled in Direct Deposit with SoFi are eligible to earn a cash bonus of either $50 (with at least $1,000 total Eligible Direct Deposits received during the Direct Deposit Bonus Period) OR $300 (with at least $5,000 total Eligible Direct Deposits received during the Direct Deposit Bonus Period). Cash bonus will be based on the total amount of Eligible Direct Deposit. If you have satisfied the Eligible Direct Deposit requirements but have not received a cash bonus in your Checking account, please contact us at 855-456-7634 with the details of your Eligible Direct Deposit. Direct Deposit Promotion begins on 12/7/2023 and will be available through 1/31/2026. Full terms at <a href="https://www.sofi.com/banking/">sofi.com/banking</a>. SoFi Checking and Savings is offered through SoFi Bank, N.A., Member FDIC.</p><p>SoFi members with Eligible Direct Deposit can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Eligible Direct Deposit amount required to qualify for the 3.80% APY for savings (including Vaults). Members without Eligible Direct Deposit will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. Additional information can be found at <a href="http://www.sofi.com/legal/banking-rate-sheet" >http://www.sofi.com/legal/banking-rate-sheet</a>.</p> Terms Apply.3 <p>Earn up to 4.00% Annual Percentage Yield (APY) on SoFi Savings with a 0.20% APY Boost (added to the 3.80% APY as of 7/10/25) for up to 6 months. Open a new SoFi Checking & Savings account and enroll in SoFi Plus by 8/12/25. Rates variable, subject to change. Terms apply at <a href="https://www.sofi.com/banking/#2">sofi.com/banking#2</a>. SoFi Bank, N.A. Member FDIC.</p> | |
2025 award winner Best for Customer Service |
3.60
With $0 min. balance4 <p>The Annual Percentage Yield (APY) as advertised is accurate as of May 8, 2025. Interest rate and APY are subject to change at any time without notice before and after a High Yield Savings Account is opened. </p>
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4.25
With $1 min. balance5 <p>APY means Annual Percentage Yield. APY is accurate as of March 24, 2025. Interest rate and APY may change after initial deposit depending on the terms of the specific product selected. Minimum opening deposit is $1.00.</p>
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Use code BOOST to earn $75 for $10K, $250 for $25K, or $500 for $50K deposited6 <p>New customers only. Earn a cash bonus when you deposit and maintain funds with partner banks on the Raisin platform. Customers will receive $75 for depositing between $10,000 and $24,499, $250 for depositing between $25,000 and $49,999, and $500 for depositing $50,000 or more. To qualify for the bonus, your first deposit must be initiated by July 31, 2025, by 11:59 PM ET, and the promo code BOOST must be entered at the time of sign-up. Only funds deposited within 14 days of the initial deposit date and maintained with partner banks on the Raisin platform for 90 days will be eligible for this bonus. Bonus cash will be deposited by Raisin into the customer’s linked external bank account within 30 days of meeting all qualifying terms. This offer is available to new customers only and may not be combined with any other bonus offers. Raisin reserves the right to modify or terminate this offer at any time.</p> |
Key takeaways
- No-penalty CDs provide a guaranteed interest rate for the term of the CD.
- Traditional CDs generally have higher APYs than no-penalty CDs.
- Banks offering no-penalty CDs have specific withdrawal rules.
- No-penalty CDs are generally FDIC or NCUA insured.
- No-penalty CDs typically have minimum deposit requirements.
What is a no-penalty CD?
A no-penalty certificate of deposit (CD) is like a traditional CD, but it allows you to withdraw your money without penalty after a specific time. These accounts are sometimes called liquid, flexible, or flex CDs and can be an excellent way to earn guaranteed interest on money you won't need immediate access to.
However, they typically don't earn as high of an annual percentage yield (APY) as a traditional CD (although competitive rates are available). While liquid CDs allow you to access your funds during the CD term, each bank has specific rules about when and how you can access your money.
How does it work?
Like regular CDs, flexible CDs provide a fixed interest rate over a defined period, which is called the term of the CD. The term can range from a few months to a few years, although no-penalty CDs tend to have shorter terms, ranging from seven to 15 months. Like traditional CDs, most no-penalty CDs require a minimum opening deposit, and you typically can't add additional funds during the CD term.
One of the main drawbacks of a traditional CD is that it does not allow you to access your money during the account's term. If you must withdraw your money, you will pay a penalty ranging from three to six months of interest or more, depending on the length of your CD term and the bank's rules.
While a penalty of a few month's interest may not seem like much, it can quickly add up. For example, if you had $10,000 in a traditional CD earning 5% APY over a twelve-month term, you'd earn around $500 in interest.
But, if you withdraw your $10,000 six months into the term, you'd typically face a penalty of three months of interest, resulting in a loss of $121.98. You would also forfeit any future interest you would earn on the funds you withdraw.
On the other hand, a no-penalty CD does not impose a fine if you withdraw your money early, although each bank has specific rules you must follow. Some no-penalty CDs only allow you to withdraw the entire amount of the CD and do not permit partial withdrawals. Others only allow one withdrawal per quarter or CD term.
Pros and cons of no-penalty CDs
- Earn a fixed interest rate for the CD term.
- No-penalty CDs may have higher interest rates than high-yield savings accounts.
- Some banks allow you to make additional deposits into the CD account, up to a set amount.
- No-penalty CDs are generally protected by FDIC or NCUA insurance.
- Traditional CDs may pay higher interest rates.
- Banks may require you to withdraw the entire balance of your CD.
- No-penalty CDs are not available at every bank.
In addition to greater flexibility, no-penalty CDs offer multiple benefits that can help bridge the gap between a savings account and a traditional CD.
Fixed rates: Unlike a savings account, where the interest rate fluctuates based on the economy, the fixed interest rate of a no-penalty CD ensures you're earning a solid return while still having access to your funds if needed.
Higher APYs: Flexible CDs may offer higher interest rates than some high-yield savings accounts. For example, Marcus by Goldman Sachs provides 4.00% (as of 04/11/25) for its no-penalty CD but only 3.65% on its high-yield savings account7 <p class="">The APY of 3.65% is accurate as of 05/29/25. Rates are subject to change and may vary by account type and financial institution. </p> .
Additional deposits: Some flexible CDs allow you to make further deposits over the CD term, increasing the interest you earn. However, not every no-penalty CD offers this, and the ones that do may limit how much you can add.
Security: Like traditional CDs, no-penalty CDs are protected by the FDIC (Federal Deposit Insurance Corporation) or NCUA (National Credit Union Administration) insurance. The insurance covers up to $250,000 per account holder, per account category, and per institution and helps safeguard consumer money against the unlikely event of a bank failure.
Where to get a no-penalty CD
Not every bank or credit union offers no-penalty CDs, but some banks currently offering liquid CDs are:
Ally Bank: Ally Bank's no-penalty CD earns 3.40% (as of 07/07/25) APY for an 11-month term, and it is one of the rare banks that does not require a minimum deposit on CDs. Ally allows account holders to withdraw their entire balance at any time after six days of account funding but does not permit partial withdrawals.
Bank of America: Bank of America is a brick-and-mortar bank offering a flexible CD with a 3.25% (as of 05/02/25) and a 12-month term. You'll need a minimum deposit of $1,000 to open an account. Bank of America does allow partial withdrawals, but you'll pay a seven-day interest penalty if you withdraw funds within six days of account funding or six days after a previous withdrawal.
Marcus by Goldman Sachs: Marcus offers a no-penalty CD earning 4.00% (as of 04/11/25) for a seven-month term with a $500 minimum deposit. You can withdraw your account balance anytime after the first seven days of account funding.
America First Credit Union: If you prefer working with a credit union, the America First Flexible CD offers a 4.05% (as of 05/01/25) APY with a $500 minimum deposit. However, this 12-month term CD has strict withdrawal rules, allowing only one penalty-free withdrawal per quarter. It does allow additional deposits of up to $10,000 per month.
Before you open a no-penalty CD:
- Research multiple banks to find the best APY and term lengths.
- Read the account disclosures to understand the withdrawal rules.
- Ensure you have a healthy emergency fund to help with unexpected expenses so you can let your CD mature for the entire term without making a withdrawal.
How to open your account
Opening a CD account is straightforward and can be done in just a few steps.
1. Research your options: Research the banks and credit unions offering no-penalty CDs. Pay attention to the term length, APY, and the minimum deposit requirements. Be sure to read the withdrawal rules and other account disclosures before proceeding.
2. Fill out an application: Once you've selected the best no-penalty CD for you, fill out the bank's application. The application will ask for personal information to help the bank verify your identity, such as your full name and contact details, mailing address, Social Security number, and birth date.
If you are using a brick-and-mortar bank, you may be able to open an account in person. Otherwise, you can generally open an account online or over the phone.
3. Make the opening deposit: Once your application has been processed, the bank will give you instructions to fund the account. Unless you choose a bank that allows additional deposits on a CD, this is likely the only deposit you'll make into the account until the CD term ends.
4. Wait for the term to end: If possible, leave your money alone for the entire term. Although you can withdraw funds from a no-penalty CD, it's usually best to complete the term so you can earn the maximum interest. When the term is complete, you can withdraw your funds and earned interest or roll the money into a new CD with a new term and APY.
Alternatives to no-penalty CDs
If a no-penalty CD doesn't sound like the right way to grow your savings, don't worry. Other financial products can earn similar APYs and may provide easier access to your funds.
Alternatives to a no-penalty CD include:
A traditional CD: If you're sure you won't need the funds you're putting into a CD, using a conventional CD can be an excellent way to grow your savings. For the length of the term, you'll earn a fixed interest rate. You will face penalties if you withdraw the money early, so be sure you have enough savings to cover emergencies without tapping into your CD.
High-yield savings account (HYSA): A high-yield savings account is one of the best ways to earn as much interest as possible while keeping money available for emergencies. You may find rates lower than no-penalty or traditional CDs, but you can access your funds anytime. Some banks may limit the number of withdrawals you can make before charging a fee. Search for an HYSA that doesn't require a minimum balance or charge fees.
Money market account: Money market accounts (not to be confused with money market funds, a type of investment product) can generally help you earn a higher interest rate than a traditional checking or savings account. While you can usually access your money anytime, money market accounts may limit the number of monthly transactions you can make.
FAQ
Should I buy a no-penalty CD?
A no-penalty CD may be a good idea if you are willing to give up some interest in exchange for the ability to withdraw funds before the CD term ends.
How does a no-penalty CD work?
A no-penalty CD works much like a traditional CD, providing a fixed interest rate for the CD term. However, unlike a traditional CD, you won't have to pay a fine if you need to access your funds before the term is complete.
What are the benefits of a no-penalty CD?
The benefits of a no-penalty CD include a guaranteed interest rate for the term of the CD, more flexibility with withdrawals, and security through FDIC and NCUA insurance.
Bottom line
No-penalty CDs can be a great way to boost your savings, but before you open one, ensure you have enough funds in a high-yield savings account to cover any unexpected expenses. Then, thoroughly research your no-penalty CD options and choose the account that offers the best mix of APY, term length, and withdrawal rules to help you grow your money.