With rising inflation and the Fed increasing interest rates every meeting, where can you get the highest safe return on your money?
High yield savings accounts are one good option but there’s an ever better one.
No penalty certificates of deposit.
You get the higher rate of a certificate of deposit (CD) with the flexibility of a savings account.
With no penalty CDs, you can withdraw all of your money at any time without paying an early closing fee. You want this flexibility because rates tend to go up each time the Fed increases interest rates.
With a no penalty CD, you get a higher rate because it’s a CD with the flexibility to close it at any time and open up a new one with a higher rate.
There is often a trade-off though – the increased flexibility means that the rates may be slightly lower than for regular-term CDs of the same length.
But if you want to combine a competitive rate with liquidity, it’s hard to beat no-penalty CDs.
If you’re wondering what kind of interest you can earn on a no-penalty CD, here is our list of the best rates available today.
Table of Contents
| Bank Name | CD Term | CD Rate | |
|---|---|---|---|
| FVCbank | 12-Month | 4.80% APY | Learn more |
| Sallie Mae | 14-Month | 4.75% APY | Learn more |
| mph.bank | 6-Month | 4.50% APY | Learn more |
| Ponce Bank | 1-Month* | 4.50% APY | Learn more |
| CIT Bank | 11-Month | 4.15% APY | Learn more |
Best No-Penalty CD Rates
Below are some of the best banks currently offering the highest no-penalty CD rates.
All rate quotes and terms are accurate as of the publishing date but are subject to change, so confirm on the bank’s website.
FVCbank, mph.bank, Ponce Bank, Blue FCU and Sallie Mae offer these high rates through the SaveBetter platform. With SaveBetter, you open an account with SaveBetter and get the higher rate through them. Your account is managed through SaveBetter but the funds are still at the bank and get FDIC insurance. You don’t get an account number at the bank though, it’s all grouped together with other SaveBetter customers, but it’s still insured and protected. The benefit is that you get higher rates and can easily move it between partner banks to get even higher rates. SaveBetter negotiates these higher rates because they can get deposits for the bank much cheaper than their own marketing efforts.
FVCbank – 12-Month, 4.80% APY
FVCbank, through the SaveBetter platform, has a 12-Month no penalty CD yielding 4.80% APY.
It is now the top offer on our list because you are guarantied the 6-Month rate for 4.50% APY – a higher rate and a longer period than any other offer. With no penalty CDs, there’s no reason not to take a longer period because you’re guaranteed that rate. If they go up, just close it and open a new one.
You can open a CD with a minimum deposit of just $1 and no maintenance fees.
Sallie Mae – 14-Month, 4.75% APY
Sallie Mae also offers banking services, including a 14-Month No Penalty CD with an outstanding 4.75% APY. You can open a certificate with as little as $1, and interest is compounded daily and credited monthly.
You can make a one-time full withdrawal of the CD with no penalty, you just have to wait until 7 days after opening.
They also have a 10-Month No Penalty CD with a yield of 4.70% APY but I don’t know why you’d pick that over the higher rate.
Sallie Mae also offers term CDs ranging from six months to 60 months, paying interest as high as 3.25% APY. Each of these CDs requires a minimum deposit of $2,500. Their High-Yield Savings Account pays 1.95% APY on all balances with no maintenance fees. They also offer a Money Market Account with no minimum balance and maintenance fees.
mph.bank – 6-Month, 4.50% APY
mph.bank, through the SaveBetter platform, has a 6-Month no-penalty CD that yields a 4.50% APY. mph.bank is the online bank of Liberty Savings Bank, which also offers higher interest rates through SaveBetter.
You can open a CD with a minimum deposit of just $1 and no maintenance fees.
Ponce Bank – 1-Month, 4.50% APY
Ponce Bank offers a 1-Month CD with an interest rate of 4.50% APY.
⚠️ This is NOT a no-penalty CD, it’s just a CD with a super short maturity and high rate, which makes it very similar to a no-penalty CD. That’s why we listed it. With a rate of 4.50% APY, it trumps the field.
You can open a CD with a minimum deposit of just $1 and no maintenance fees.
New York City-based Ponce Bank began operating in 1960. As a Community Development Financial Institution (CDFI), the Bank works as an investor in the future of underserved and under-banked communities. But they make their savings products available to consumers nationwide.
Ponce Bank also offers checking, savings, and retirement accounts, complete with access to online banking. They also provide business banking, residential mortgages, home equity lines of credit, and consumer loans.
CIT Bank – 11-Month, 4.15% APY
CIT Bank’s No-Penalty, 11-Month CD is paying 4.15% APY, compounded daily, and requires a minimum deposit of $1,000. There is no penalty if you access funds before the CD matures.
CIT Bank also offers their interest-bearing eChecking account, currently paying from 0.10% APY to 0.25% APY and a High-Yield Money Market account paying 1.55% APY. They also offer term CDs, which top off at 0.50% APY on a 60-month certificate.
Important Facts about No Penalty CDs
Before you open a no penalty CD from a bank, it’s important to know these details about them before you open an account:
- Withdrawal terms – Each CD’s withdrawal terms are different. Some CDs will let you withdraw some of your balance without closing the entire CD. Others will only allow you to withdraw the whole balance – know the difference.
- Minimum deposit – Many online banks will let you open a CD with just $1 but some will require at least $1,000. This is important because you can open multiple CDs at a single bank – so if the minimum is low, you can open multiple no penalty CDs at once.
- Maximum deposit – Some CDs have a maximum deposit amount because they want to limit how much you can earn at the higher interest rate. This is rarer but still possible.
These features are important because let’s say you have a bank that offers a no penalty CD where you can only withdrawal the entire balance. If the minimum is low, say $1, then you could divided your savings across several no penalty CDs.
Then, if you need access to your money, you simply withdraw from one CD and leave the rest.
For example, you have $5,000 you want to put in a no penalty CD. Split it up into five separate $1,000 CDs. If you need your cash, just close one and get access to your $1,000 while the remaining $4,000 accrue interest.
No Penalty CD Frequently Asked Questions
The fee structure varies somewhat from bank to bank, but most use a tiered rates structure. That means how much you will pay for the penalty will depend on when you make a withdrawal against the CD.
For example, a typical arrangement is to charge a penalty equal to 90 days of interest on a CD with a term of one year or less. The bank may charge a penalty equal to 180 days’ interest on a CD with a term greater than one year.
There is no definitive answer to this question because it depends on the future direction of interest rates. If you are pretty certain rates have peaked, you’ll be better off with a regular-term CD. The rate will be higher than on a no-penalty CD, and you’ll want to lock in that rate for as long as possible.
But a no-penalty CD is the better choice if there’s a reasonable chance you’ll be liquidating the certificate early. That might be the case in a rising-rate environment, where you may want to cash in the CD to free up the funds for a higher-paying CD in the future.
Yes. Like other CDs and bank deposit products, FDIC insurance covers no-penalty CDs. That will protect your savings for up to $250,000 in total funds per financial institution, per depositor.
That depends on the terms of the CD and the bank issuing it. Many permit only a one-time penalty-free withdrawal, while others may accommodate partial liquidations. You should check with the issuing institution to ensure this is the case.
Final Thoughts on No Penalty CDs
There you have it, our list of the best no-penalty CD rates. Your number one consideration for purchasing a no-penalty CD should be liquidity. If there’s a possibility that you may require access to your funds before the maturity date, you’ll appreciate the peace of mind and flexibility no-penalty CDs offer.
I don’t recommend buying a cashable CD for the sole purpose of re-investing if rates increase. As with the stock market, no one can predict when interest rates will rise or how high. If you’re ready to buy a no-penalty CD, there’s no better time than the present.
