The Best No-Penalty CD Rates of 2023

Certificates of deposit offer savers a way to earn higher yields in exchange for locking their money away for a set period of time. The downside is that if you need your money early, you’ll pay an early withdrawal penalty. No-penalty CDs offer higher yields without the penalty for early withdrawal.

The trick is to find a no-penalty CD that pays the highest rates. We track the best offers we can find and list them below. If you are aware of a better option, please let us know.

Featured No-Penalty CDs

No-penalty | 3-Month | 6-Month | 1-Year | 2-year | 3-year | 4-year | 5-year

Best No Penalty CD Rates

Over the last six months, we’ve seen numerous banks introduce no-penalty CDs. What was not long ago a savings product offered by just two banks, now we have dozens of options. Here are the best no-penalty rates we can find available nationwide.

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The rates and length of term are very good when compared to online savings accounts and 1-year high-yield CD rates. Because rates can change without notice, be sure to confirm the rates and terms on the bank’s website before opening an account.

Raisen No-Penalty CDs

Raisen (formerly called Savebetter) is not a bank. Rather, it is a free service that allows you to open bank accounts at any one of dozens of FDIC-insured banks and NCUA-insured credit unions. If you find a better rate at one of Savebetter’s banks, you can switch your money without the hassle of opening a new account at a different bank.

We mention Raisen because its cornered the market on no-penalty CDs. Many of the highest rates come from banks through Raisen. In fact, you get a lower rate if you go to the banks directly.

Savebetter currently offers some of the highest rates on no-penalty CDs.

Bank or Credit Union	Term	APY
Ponce Bank	4 months	5.30%
Blue Federal Credit Union	9 months	5.10%
mph.bank	6 months	5.20%
First Mid Bank & Trust	12 months	4.82%
FVCbank	12 months	5.30%
Sallie Mae Bank	14 months	4.75%
Sallie Mae Bank	10 months	4.70%

More details on No-Penalty CD Offers

Technology Credit Union 5-month No-Penalty CD via Raisin

Technology Credit Union’s 5-month no-penalty CD offers 5.26% APY. This rate is only available through Raisin. The minimum opening deposit is $1 and deposits are NCUA-insured. TechCU has over $4.5 billion in assets with branches in the Bay Area, where it services some of the largest tech companies in the world.

mph.bank 6-month No-Penalty CD via Raisin

Earn 5.20% APY with a 6-month no-penalty CD from mph.bank via Raisin. The minimum deposit is $1 and deposits are FDIC-insured through Liberty Savings Bank.

FVCbank 12-month No-Penalty CD via Raisin

For a 12-month no-penalty CD, FVCbank offers a CD via Raisin at 5.30% APY. It’s FDIC-insured and the minimum deposit is $1.

CIT Bank 11-month No-Penalty CD

CIT is an online bank offering an 11-month no-penalty CD at 4.90% APY. The minimum opening deposit is much larger than the others on our top list at $1,000. Accounts are FDIC-insured.

First Mid Bank & Trust 12-month No-Penalty CD via Raisin

Earn 5.30% APY on a 12-month no-penalty CD from First Mid Bank & Trust via Raisin. As you might guess from the other Raisin CDs on this list, the minimum opening deposit is $1. Accounts are FDIC-insured.

Sallie Mae Bank via Raisin

Sallie Mae Bank offers two no-penalty CD options via Raisin. Earn 4.75% APY on a 14-month CD or earn 4.70% APY on a 10-month CD. The minimum deposit for both is $1 and the accounts are FDIC-insured.

Ally Bank 11-month No-Penalty CD

Ally is a well-known online bank offering an 11-month no-penalty CD at 4.55% APY. The minimum deposit to earn this rate is $1 and accounts are FDIC-insured.

CIT Bank No-Penalty CD

CIT Bank’s 11-Month No Penalty CD has been a competitive savings product for years. All deposits, no matter the size will receive a 4.90% APY. The primary difference between CIT on the one hand and Savebetter and Ally on the other is the minimum deposit. Ally and Savebetter have no minimum deposit required (well, Savebetter’s is $1), CIT requires a $1,000 initial deposit.

With CIT, the no-penalty CD kicks into full effect seven days after your deposit is made. CIT also offers a few other kinds of CDs including a Jumbo CD and a RampUp™ CDs. This allows you to increase your CD rate once per term.

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How No-Penalty Certificates of Deposit Work

No-penalty CDs work like traditional CDs with one important exception. They do not charge a penalty if you take out your money early.

As with all CD accounts, the money must remain in the account for seven days. After that, you can withdraw your money at any time.

Like CDs in general, you deposit a lump sum into a CD. If and when you withdraw the money, you must take all of it. Unlike a checking, savings, or money market account, you do not make multiple deposits and withdrawals to and from a CD.

No-Penalty CDs vs. Traditional CDs

The no-penalty feature does come at a cost. The best CD rates on a 1-year CD tend to be about 50 basis points higher (or more) than what you find on no-penalty CDs. If you think rates will rise the no-penalty CD may be worth the cost. The same is true if you believe you’ll need access to the money before the end of the term.

If not, a traditional CD may be the better choice.

No-Penalty CDs vs. Savings Accounts

We’ve found that the best no-penalty CD tends to pay a slightly higher APY than the best savings account rates.

No-Penalty CDs vs. Money Market Accounts

We’ve also found the same to be true of MMAs. No-penalty CDs tend to pay slightly higher yields. Keep in mind, however, that this is true only for the top-paying CDs. There are plenty of no-penalty CDs offered by well-known banks that pay below-market yields. Here it pays to shop around.

Beware of No Penalty CD Impostors

Some banks advertise CDs as no penalty when that’s not exactly accurate. For example, Discover Bank offered a CD with what it described as a penalty-free CD. So what are these benefits? Basically, if you invest in a 12-month CD, and during the CD’s term lose your job, you can withdraw the balance without penalty. Here are the details:

This penalty-free benefit is a nice feature. But it is not a true no-penalty CD, at least it’s not what most people think of as a risk-free CD.

Don’t Confuse a No Penalty Certificate of Deposit with a Savings or Money Market Account

Don’t confuse a CD with a savings or money market account. Once you invest in a CD, you can’t add to it. You can of course open another CD. When any CD matures, you can roll over the CD, adding funds to the account at that time. But CDs are not demand deposit accounts. As a result, if you exercise your right to withdraw money early without penalty, you must take all of your money and interest. In other words, you close the account.

What are the Downsides of No-Penalty CDs?

As great as “No Penalty” CDs sound, there are some downsides and limitations. For starters, the rates on no-penalty CDs may in some cases be lower than traditional CD rates. In some cases, they might be no higher than online savings account rates.

In terms of minimums, some banks require high minimum deposits for their no-penalty CDs, in some cases ranging as high as $5k-$25k. Fortunately, others don’t. Thus, it’s important to look closely at the terms when considering your options.

In addition, despite their “No Penalty” moniker, there might still be some limitations on how and when you can access your money. For example, while some banks allow you to pull your money back out within a week, others require up to 30-90 days.

Finally, these CDs are typically short-term CDs. In the vast majority of cases, we’re talking 9-12 months, or even less.

Why Do CDs Have a Term?

One common question is why risk-free CDs have a term. After all, if you can withdraw the money anytime you want, who cares about the term of the CD? It’s because CDs are generally fixed-rate deposit instruments. That’s why longer-term CDs generally pay higher rates. And so the point of the term is that’s how long the bank is willing to fix the rate. Once the term expires, the prevailing rate will apply if you roll over the funds into a new CD.

Are No Penalty CDs a Good Place to Keep Your Emergency Fund?

Yes, they can be. Because you can withdraw the money without penalty, the funds can be used for an emergency. In addition, as noted above, the rates on no-penalty CDs are very competitive with other types of deposit accounts.