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One big drawback to CDs is that they generally charge fees if you withdraw money before the end of the CD's term length. If you want to avoid the chance of having to pay an early withdrawal penalty, no-penalty CDs let you avoid that risk.
We monitor and report on the best no-penalty CD rates currently available from nationwide financial institutions. We make sure to continue reporting the highest rates even as CD rates fall across the board due to the Fed cutting its interest rates.
No-penalty CDs aren't very common, so you only have a few strong banks to choose from. The best no-penalty CD rate is 4.50% APY from Farmers Insurance Federal Credit Union No-Penalty Share Certificate.
If you want even more term options and are willing to consider banks that charge penalties, check out our overall best CD rates guide.
Best No-Penalty CD Rates
- Farmers Insurance Federal Credit Union No-Penalty Share Certificate: 4.50% APY
- Mission Valley Bank 3 Month No Penalty CD, powered by Raisin: 4.35% APY
- Climate First Bank 6 Month No Penalty CD: 4.34% APY
- SkyOne Federal Credit Union 1 Year No Penalty CD, powered by Raisin: 4.25% APY
- Ponce Bank 4 Month No Penalty CD, powered by Raisin: 4.20% APY
- America First Credit Union Flexible Certificate: 4.20% APY
- MYSB Direct 13 Month No Penalty CD: 4.15% APY
- USALLIANCE Financial 11 Month No Penalty Certificate: 4.00% APY
Most of our top picks for no-penalty CDs have low minimum opening deposits, competitive interest rates, and/or a variety of term options.
Compare the Best No-Penalty CDs
The best banks and credit unions for no-penalty CDs offer high interest rates and low minimum opening deposit requirements. All of our top picks come from online banking options because these places have more competitive offerings than brick-and-mortar banks.
You might also want to consider using an eco-friendly bank or a community development financial institution. Both of these types of financial institutions use the money you put in your account for good. Eco-friendly banks help the environment, while CDFIs provide financial services to underserved communities. Using either of these types of banks is an easy way to contribute to causes you care for.
Our top picks for best liquid CD rates are protected by FDIC or NCUA insurance. Keep in mind money is safe at a federally insured financial institution. When a financial institution is federally insured, up to $250,000 per depositor is secure in a bank account. Learn more about the best no-penalty CDs below.
No-Penalty CD Reviews
Farmers Insurance Federal Credit Union No-Penalty Share Certificate
Farmers Insurance Federal Credit Union offers the current best rate for a no-penalty CD on its nine-month no-penalty share certificate. It's also a credit union that anyone can join by becoming a member of the American Consumer Council. People who work for Farmers or who are relatives of a current member can qualify without joining the American Consumer Council.
Keep in mind that this no-penalty CD only lets you withdraw money once per month, and it doesn't allow any withdrawals at all during the first month. If you're looking for a more flexible no-penalty CD, you might want to consider some of our other options.
Term length: 9 months
APY: 4.50% APY
Climate First Bank 6 Month No Penalty CD
Climate First Bank offers a 6-month no-penalty CD with a strong rate. It's also an eco-friendly bank, as well as a bank that offers LGBTQ-friendly banking accounts. If you're looking for a bank with a checking account that lets you use your chosen name, or if you want to bank with an insitution that will use your money to help the environment, Climate First Bank might be a good choice for you.
Climate First Bank doesn't offer very many CDs, and the other CDs it offers have low interest rates. If you're hoping to open multiple CDs with the same bank, you might prefer a different option.
Term length: 6 months
APY: 4.34% APY
Mission Valley Bank 3 Month No Penalty CD, powered by Raisin
The Mission Valley Bank 3 Month No Penalty CD, powered by Raisin pays a strong rate for a no-penalty CD on Raisin. It offers a short length compared to the other two top Raisin rates listed. You might like this option if you want a CD with low minimum opening requirements. CDs at Raisin can be opened with $1.
Raisin doesn't offer checking accounts, so it may not be the best option if you want to do all your banking with the same company.
Term length: 3 months
APY: 4.35% APY
SkyOne Federal Credit Union 1 Year No Penalty CD, powered by Raisin
The SkyOne Federal Credit Union 1 Year No Penalty CD, powered by Raisin is a high-rate no-penalty CD offered by Raisin. Not only does this CD pay a good interest rate, but you only need $1 to open an account.
This CD has a long term length compared to other high-interest Raisin no-penalty CDs, but it's still considered a short-term CD. That being said, most no-penalty CDs are short-term, so it might be difficult to find a no-penalty CD with a signficantly longer term.
Term length: 1 year
APY: 4.25% APY
Ponce Bank 4 Month No Penalty CD, powered by Raisin
The Ponce Bank 4 Month No Penalty CD, powered by Raisin is offered by Raisin. It has the middle term length of our top Raisin CDs, although all of Raisin's top CDs have short term lengths. You'll be able to open the CD with as little as $1, making it easy to open a CD no matter how much money you have.
You'll prefer a different pick if you want to bank directly with only one financial institution.
Term length: 4 months
APY: 4.20% APY
America First Credit Union Flexible Certificate
America First Credit Union gives you more flexibility with deposits and withdrawals than most banks. Unlike other institutions, America First lets you continue depositing money into your CD after you've opened it, up to $10,000 per month. Many banks make you take out all your funds if you need to make an early withdrawal, but America First lets you make partial withdrawals.
Like most credit unions, America First compounds your interest monthly rather than daily, which will limit how much you earn over time.
Term length: 12 months
APY: 4.20% APY
America First Credit Union Review
MYSB Direct 13 Month No Penalty CD
MYSB Direct offers a strong rate on its no-penalty CD. It's also a 13-month CD, which gives your interest more time to accrue. You'll be able to withdraw from the CD three times through the term length without penalty, but keep in mind that you'll have to withdraw all your money and close your account when you withdraw for the third time.
MYSB Direct requires a minimum opening deposit of $5,000 for its no-penalty CD. This is significantly higher than what other banks require; if you're planning on opening a CD with less money, you might want to go with another bank.
Term length: 13 months
APY: 4.15% APY
Bank Trustworthiness and BBB Ratings
The BBB measures businesses by looking at customer complaints, honesty in advertising, and transparency about business practices. Here are the scores from the Better Business Bureau for each institution:
| Institution | BBB grade |
| Farmers Insurance Federal Credit Union | A- |
| Raisin | A+ |
| Climate First Bank | A |
| America First Credit Union | A+ |
| USALLIANCE Federal Credit Union | D- |
| MYSB Direct | NR (rating of its parent bank, M.Y.Safra Bank) |
Farmers Insurance Federal Credit Union has an A- rating from the BBB due to a couple of complaints filed against it.
Climate First Bank has an A rating from the BBB. The BBB doesn't list the reason for this rating, but it's likely because the bank has only been operating for three years.
USALLIANCE Federal Credit Union received a D- rating because it has failed to respond to a couple of customer complaints.
MYSB Direct's parent bank, M.Y.Safra Bank, has an NR rating from the BBB because the BBB does not have enough information to rate the bank.
USALLIANCE Financial 11 Month No Penalty Certificate
You might like this account if you're eligible to meet one of the credit union's membership requirements and are looking for an 11-month no-penalty CD. USALLIANCE Financial Certificates also have a low minimum opening deposit of $500.
To join USALLIANCE Financial you must 1) live in a select area in Massachusetts, Connecticut, New Jersey, or New York 2) work for a select employment group, or 3) become a member of the American Consumer Council, Arco of Westchester, Tread Lightly! or the Council of Community Services.
Term length: 11 months
APY: 4.00% APY
Types of No-Penalty CDs
Fully Liquid CDs
Some no-penalty CDs are truly no-penalty; they let you withdraw however much you want from your CD, whenever you want. If this is the type of no-penalty CD you're interested in, double-check the terms and conditions that come with the CD that you're interested in; many no-penalty CDs put limits on how and when you can withdraw money without penalty.
CDs with Limited Withdrawals
It's common for no-penalty CDs to have limits on the types of withdrawals you're allowed to make. For example, some no-penalty CDs only let you withdraw the full amount of money in the CD; by necessity, this means that you can only withdraw from that CD once. Others might let you withdraw partial amounts from your CD without penalty, but put limits on how many times you can do that in a single term length. For example, a 2-year CD might only let you withdraw funds twice during those two years.
What Influences No-Penalty CD Rates
Market Competition
Ultimately, every bank and credit union will have to respond to market fluctuations when setting their rates. For example, if financial institutions are raising their rates, then your institution will have to raise rates too in order to stay competitive. And if financial institutions are lowering their rates, than your institutions' rates don't have to be as high for them to gain the same amount of customers.
Overall Economic Conditions
Other economic conditions also affect the prices that your bank or credit union sets. For example, banks are likely to raise or lower their rates around when the next Fed meeting is. The Federal Reserve, also known as the Fed, meets several times a year to decide on rate changes. When the Fed announces rate changes, banks and credit unions usually follow suit.
Should You Invest in a No-Penalty CD?
Whether no-penalty CDs are a good idea depends on your individual situation. If you're not sure whether you'll need the money you're putting in a CD, but you still want to lock in a good rate for an extended period of time, a no-penalty CD might be a good choice for you. But keep in mind that no-penalty CDs generally have lower rates than their non-specialty counterparts, and high-yield savings accounts offer great rates, too.
While you won't be able to lock in good rates for a certain term length with high-yield savings accounts, the best high-yield savings accounts have rates that are nearly as strong as short-term CD rates, which are currently better than long-term CD rates.
For more information, read our full breakdown of no-penalty CDs versus savings accounts.
Best No-Penalty CD FAQs
No-penalty CDs tend to offer lower interest rates than standard CDs with the same term lengths, although there are a few well-paying no-penalty CDs available.
No, not all banks and credit unions offer no-penalty CDs. Check ahead of time with the financial institution you're interested in to make sure they offer no-penalty CDs.
Yes, no-penalty CDs can come with extra restrictions. Some no-penalty CDs only let you withdraw your whole account balance, some only let you withdraw a limited number of times, and many come with term lengths more limited than you'd find with standard CDs.
Always make sure to check the fine print of a CD you're interested in to see if it is truly no-penalty. If you can't figure it out from the bank's website, you could also call their customer support line or go into a branch to speak with someone who could tell you.
When comparing no-penalty CDs vs savings accounts, a high-yield savings account is better than a no-penalty CD if you want easy, frequent access to your savings. A no-penalty CD doesn't charge you for withdrawing money, but institutions limit how often you can take out cash. In most cases, you have to withdraw all your funds if you want to access money early.
No-penalty CDs could be a good choice for you if you think there's a chance you'll need to withdraw your money before the end of a term length, and you can find a CD that offers a comparable rate to the traditional CDs you're interested in. Otherwise, you might prefer a high-yield savings account or a traditional CD.
Why You Should Trust Us: Expert Advice on Choosing the Best No-penalty CD
To learn more about what makes a good CD and how to choose the best fit, four experts weighed in:
Here's what they had to say about CDs. (Text is edited for clarity.)
How do you know if you're choosing the right bank or credit union for your CD?
Make sure it's FDIC or NCUA insured. Also, keep your desired banking experience in mind. Do you like walking into a bank? You need a local branch. Is it OK if you never see your bank? Then you'll probably be happy with an online-only bank. Do you write checks? Do you not write checks? Thinking through how experience before you make that decision.
- Tania Brown, CFP® professional and vice president of coaching strategy at OfColor:
Create a list of what you prioritize most in a bank account. Some banks charge monthly service fees for accounts, so I would see what the requirements are to waive the monthly service fee and whether I think I could meet those requirements. If you're searching for an interest-earning bank account, pay attention to interest rates. The account should pay a higher interest rate than the average bank account.
- Sophia Acevedo, banking editor, Business Insider
How do you decide how long to keep your money in a CD?
Think about when you'll need the money, then compare that with the current CD rates. Consider what makes sense from a financial perspective, but also from the perspective of your own personal timing.
- Roger Ma, CFP® professional and author of "Work Your Money, Not Your Life"
Have a plan for your funds. If the money you're putting in a CD is supposed to be a house fund, and you want to wait for another two years to buy a house, that's when you should plan to have this money.
- Mykail James, MBA, certified financial education instructor, BoujieBudgets.com
How can someone decide if a no-penalty CD is right for them?
Pay attention to the interest rate and see if it's significantly higher than other savings options. If it is almost the same as a high-yield savings account or money market account, you might prefer one of the latter because you can make additional deposits. With a no-penalty CD, you'll only be able to deposit money when you open an account or when the term ends.
- Acevedo, Business Insider
Methodology: How we Chose the Best No-Penalty CDs
Business Insider's personal finance team reviewed no-penalty CD offerings from around a dozen national banks using our CD rates methodology. For each account, we compared the minimum opening deposits, miscellaneous features, fees and interest rates. We also considered the overall banking experience at each bank by assessing customer support availability, mobile app ratings, security, and ethics.
We assign each category a rating between 0 and 5, and star ratings can be anywhere from one to five stars. We use a weighted average to get our star rating, which means we weigh certain features, like interest rates and fees, at a higher weight percentage than others. We understand that these areas can more heavily impact a person's overall banking experience.
