Best No-Penalty CDs – Withdraw Your Money On Your Terms

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November 01, 2023

Best No-Penalty CDs – Withdraw Your Money On Your Terms

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Certificates of Deposits, or CDs, have remained a popular savings option for decades. And it’s easy to see why. They’re considered a lower-risk strategy when they’re held at a bank or credit union covered by the Federal Deposit Insurance Corp (FDIC), they’re simple to open and maintain, and in recent years, some have offered a higher annual percentage yield (APY) versus traditional savings accounts.

CDs require purchasing within certain terms, anywhere from three months to 10 years or longer. Traditionally, once you placed your savings into a CD with your selected term, you couldn’t withdraw the funds unless your CD had fully matured by the end of the term. If you did withdraw the money, then you’re facing a large early withdrawal penalty, which could wipe out any return or make you owe the financial institution money. However, no-penalty CDs mean you don’t face this penalty if you withdraw your funds before the term ends. It’s a fantastic option for anyone unsure when they need access to their funds, and we’re here to look at the best ones available today.

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Overview of the no-penalty CDs

Financial institution	Best for
Ally Financial	Digital tools
CIT Bank	High APY
Marcus by Goldman Sachs	Multiple term lengths
Synchrony Bank	Flexible deposit options
Sallie Mae Bank
USAlliance Financial	In-person service

Best no-penalty CDs

Ally Financial

Ally Financial offers three different CDs, including a no-penalty option. Because Ally is an online bank only, it also offers a full suite of digital tools for managing your CDs, such as its user-friendly mobile app, mobile deposit, and much more. You won’t have to worry about withdrawing your funds too soon with this account either since account holders can withdraw as soon as six days from account opening. Ally Financial offers the 10-Day Best Rate Guarantee, too, which lets you lock in a new APY if it increases within 10 days of account opening or 10 days of account renewal.

Pros

Withdraw six days after account opening without any penalties
Convenient digital tools for easier management
No monthly fees
No minimum opening deposit required

Cons

Only one 11-month term length option available
No in-person service, online only
APY isn’t as high as other CD options with Ally

Read a full review of Ally Financial.

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CIT Bank

CIT Bank is the online division of First Citizens Bank and doesn’t offer any branches for in-person service. If you’re comfortable with an online-only digital banking service, you may be interested in CIT Bank’s higher APY no-penalty CD option. With a few simple steps, you can open up an account online (there is a $1,000 minimum deposit required), and you can be on your way. Once funded, you have full access to multiple digital tools for easier CD management.

Pros

Withdraw seven days after account opening without any penalties
Convenient digital tools for easier management
No monthly or opening account fees

Cons

Only one 11-month term length option available
Minimum $1,000 opening deposit required
No cash deposit option

Marcus by Goldman Sachs

Marcus by Goldman Sachs is another online-only digital banking option. Unlike the first two banks on our list, this one offers three-term length options for a no-penalty CD: 7-, 11-, and 13-month. While the 13-month CD currently offers a competitive 4.60% APY, the other two terms offer a much less competitive 0.45% APY and 0.35%, respectively. The bank does offer 24/7 customer service, though, and live chat if you’re logged in to your account, which can be a major plus when you’re dealing with an online-only bank.

Pros

Withdraw seven days after account funding without any penalties
3 term lengths available for no-penalty CD
24/7 customer service available, including live chat

Cons

No mobile deposit
Minimum $500 opening deposit required
Some of the no-penalty CDs have relatively low APYs

Synchrony Bank

Synchrony Bank is another online-only option offering an 11-month no-penalty CD. Currently, this term length comes with a 4.50% APY, too, making it a competitive rate like others on our list. Synchrony Bank offers plenty of convenient tools for account management, including mobile deposit, so you can easily fund your CD when you set it up. And if you have any questions about your CD or need assistance, you can benefit from the 24/7 customer service option, including live chat.

Pros

Withdraw six days after account funding without any penalties
No monthly fees, no minimum deposit required
Mobile deposit available

Cons

No cash deposit available
No in-person service option

Read a full review of Synchrony Bank.

Sallie Mae Bank

Sallie Mae Bank is a familiar name in the student loan world, but it’s also a private enterprise offering a wide range of financial products and services. Salle Mae has a multitude of CD options, with varying terms and APY, but its no-penalty CDs are only offered through a third-party site—Raisin. Salle Mae offers two no-penalty CD options, a 10-month, and 14-month, and both offer competitive APYs and require very little for a minimum opening deposit. You’ll also enjoy no monthly fees, but you should note there is no app for money management.

Pros

2 CD terms available
Competitive interest rates
Low $1 opening deposit required

Cons

Only available through third-party online
No in-person service option
Limited customer service options
No mobile app

USAlliance Financial

For those of you who prefer the benefits of working with a credit union, USAlliance Financial offers one no-penalty CD option worth considering. Not only does it offer the highest APY among the no-penalty CDs reviewed, but membership is open to all as a credit union. USAlliance Financial is part of a greater co-op of credit unions, so that you can visit one of the shared 5,600 branch locations for any in-person needs. Or, you can open the account completely online in as little as five minutes and conduct all your account management needs online or through the app.

Pros

Highest APY among those reviewed
Access to 5,600 shared branches for in-person service
Quick online account opening process

Cons

$500 minimum deposit requirement
Must open a savings account and maintain a minimum $5
Must join credit union

Best no-penalty CD summary

Financial institution	APY*	Term length available	Minimum opening deposit required
Ally Financial	4.55%	11 month	None
CIT Bank	4.90%	11 month	$1,000
Marcus by Goldman Sachs	0.45%, 0.35%, 4.60%	7, 11, 13 month	$500
Synchrony Bank	4.50%	11 month	None
Sallie Mae Bank (via third party)	4.70%, 4.75%	10 month, 14 month	$1
USAlliance Financial	5.00%	11 month	$500

FAQs

How do I open a CD?

Once you’ve selected the type of CD you want and the length of the term, the next step is applying for a CD account. Most banks or credit unions offer an online application option. Whether you choose an in-person or online application, you’ll need to show a photo ID, supply personal information (name, address, phone number, etc.), social security number, and an opening deposit amount.

What are the advantages of a no-penalty CD?

A no-penalty CD allows you to withdraw funds before the end of the CD term without the penalties most financial institutions charge. This makes a no-penalty CD an even more flexible saving option versus other types of CDs and can give you greater peace of mind. These CDs typically come with fixed APYs too, versus the variable ones you often find with a traditional savings account.

What are the disadvantages of a no-penalty CD?

A no-penalty CD offers numerous advantages, but there are a few drawbacks, too. For starters, you usually have to withdraw all your money at once since partial withdrawals are not typically allowed. They also may have a lower APY versus other CD options or even versus other high-yield savings accounts. Also, no-penalty CDs are typically not offered in as many term lengths as other types of CDs, so your terms may be more limited.

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The bottom line

A no-penalty CD can be integral to your overall savings strategy, whether you’re a seasoned saver or just getting started. The key is choosing an option where the term length works for you and your savings goals, and the financial institution makes it as convenient as possible for managing your account.

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Sara Coleman is a former corporate gal turned creative entrepreneur. She began writing professionally several years ago and now contributes to multiple websites, blogs, and magazines. She’s also an avid reader and can’t resist a great historical fiction novel. Sara holds a BA in journalism from the University of Georgia and can be found supporting her Bulldogs every chance she has. She resides in Charlotte, North Carolina, with her wonderfully supportive husband and three children. When she’s not ushering her kids to sports and dance lessons, she can be found creating content for her own website, TheProperPen.com.

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