The Best No-Penalty CD Rates in August 2020

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Updated on Saturday, August 1, 2020

CDs, or certificates of deposit, work under an easy-to-understand premise: You agree to place your money with a bank or credit union for a set amount of time, during which it will earn interest. At the end of the period, you get your money back plus a nice chunk of interest earnings. But if you withdraw money from your CD before the term expires — or before the CD “matures,” in financial parlance — the institution will charge you a penalty fee for breaking the terms of your agreement.

Generally depositors understand that they can’t touch their funds while they’re in the CD account. But the accounts below are special CDs that let customers withdraw money from a CD account with no penalty charge at whatever time they want. No-penalty CDs aren’t generally widespread, but we’ve selected the best of these accounts available nationwide, based on the following criteria:

  • No penalties for early withdrawal of funds
  • Available across the nation

The best no-penalty CD rates in July 2020

1. Marcus by Goldman Sachs®

TermAPYMinimum balance to earn the APY
7-month0.90%
$500
11-month0.80%
$500
13-month0.70%
$500

Marcus by Goldman Sachs stakes a strong claim to offering the best no-penalty CDs around, requiring a mere $500 deposit for customers to start earning solid APYs beginning at 0.70%. Interested customers should be aware, however, that like other no-penalty CDs on this list, the accounts offered by this bank lock in your money for seven days after you deposit. You can’t open a 7-month no-penalty CD on Monday and take out your money on Wednesday (if you needed to for whatever reason).

In addition, these accounts don’t allow any partial withdrawals of the principal. If you deposited $1,000 in an account and want to withdraw money before that CD matures, you won’t be hit with any penalties — but you have to take out all $1,000 and your account will then be closed.

SEE DETAILS Secured

on Marcus By Goldman Sachs’s secure website

Member FDIC

2. CFG Bank

TermAPYMinimum balance needed for APY
13 months0.90%
$500

Headquartered in Baltimore, CFG Bank offers an array of financial products to consumers nationwide, both online and through its handful of branches across Maryland. It is the 12th-largest bank in Maryland, with over $1 million in assets.

The crown jewel of CFG Bank’s CD line-up is its 13-month CD, which you can open either online or at a branch. This CD is the bank’s only certificate of deposit that allows for a one-time, penalty-free withdrawal. There is a $500 minimum deposit for this product, which is also the amount that is required to earn its competitive APY of 0.90%. CFG Bank does not allow for additional deposits after the initial deposit, and all accounts face a seven days’ interest penalty if you make a withdrawal within six days of opening.

SEE DETAILS Secured

on CFG Bank’s secure website

FDIC Insured

3. Ally Bank

TermAPYMinimum balance to earn the APY
11 months0.90%None

Online-only bank Ally offers a single no-penalty CD account with an 11-month term because it has no minimum balance requirement, this account will attract consumers without a lot of money to spare who still want a no-penalty CD.

Similar to all of the other products listed, this Ally no-penalty CD account makes you wait for the seventh day after the initial deposit to withdraw your funds, and the bank doesn’t allow for partial withdrawals. The bank also offers what it calls its 10 Day Best Rate Guarantee, promising that if depositors fund this CD within 10 days of opening it, Ally will make sure the account earns the highest rate available should the bank change its rate within that 10 day period. It’s by no means a game-changer, but a nice bonus to avoid feeling left out if you deposit a pile of money in your CD on Thursday, only to discover on Friday that Ally hiked its rates.

SEE DETAILS Secured

on Ally Bank’s secure website

Member FDIC

4. My eBanc Flex Time Deposit

TermAPYMinimum balance to earn the APY
11 months0.65%$10,000
11 months0.80%$100,000

This Florida-based online savings bank may go by a somewhat generic name, but it’s a division of BAC Florida Bank, a financial institution with more than 45 years of history. The no-penalty CD offered here is called the Flex Time Deposit, and if customers who deposit at least $100,000 can earn an APY of 0.80%, which ranks at the top of the accounts on this list. Depositing at least $10,000 will earn you a decent APY of 0.65%.

Where this account truly shines is that it allows for two partial withdrawals of your funds without having to close your CD account entirely (as long as the balance still remains at $10,000 or more). All of the other no-penalty CD accounts on this list require you to withdrawal all of the principal and any interest earned.

SEE DETAILS Secured

on My eBanc’s secure website

Member FDIC

5. CIT Bank

TermAPYMinimum balance to earn the APY
11-month 0.50%$1,000

If you have the $1,000 minimum deposit for this no-penalty CD account, CIT Bank will give you a rate of 0.50% APY on an 11-month term. While that’s not as much as you can earn with a comparable CD term with some of the options above, the deal offered by CIT could provide a decent alternative.

6. Citizens Access Liquid CD

TermAPY Minimum balance to earn the APY
11 months0.75%$5,000

Another no-penalty CD hails from online-only bank Citizens Access. This bank is backed by Citizens Bank N.A., which has roots dating back 190 years and has over $150 billion in assets.

Citizens Access calls its no-penalty CD a Liquid CD, but it functions in the same way as the other products on this list. It only offers one Liquid CD, which has an 11-month term and a current APY of 0.75%. There is a $5,000 minimum deposit required for this CD, and it features no penalty for a one-time withdrawal of its entire balance as soon as seven days after funding.

SEE DETAILS Secured

on Citizens Access’s secure website

Member FDIC

7. PurePoint Financial

TermAPYMinimum balance to earn the APY
11-month0.50%$10,000
13-month0.45%$10,000
14-month0.40%$10,000

The online arm of Union Bank offers a great APY among the no-penalty CD accounts reviewed, which makes it a no-brainer — assuming you have the $10,000 needed for the minimum deposit. PurePoint’s sweet spot is the 11-month term no-penalty CD account, which offers an APY of 0.50%.

This no-penalty CD accounts come with the usual caveats — you can’t make any partial withdrawal of funds, and you have to wait seven days after your initial deposit before withdrawing. However, if you have the sizable chunk of change needed to open one of these accounts, you’ll earn some of the highest APY for your money.

SEE DETAILS Secured

on PurePoint Financial’s secure website

Member FDIC

8. Colorado Federal Savings Bank

TermAPY Minimum balance to earn the APY
11 months0.70%$5,000

Branchless bank Colorado Federal Savings Bank offers an array of financial products, including a number of certificates of deposit ranging from a 1-month to a 60-month. Among its CD offerings is a no-penalty CD that is worth highlighting.

The Colorado Federal Savings Bank features an 11 month no-penalty CD with an APY of 0.70%. This CD requires a minimum deposit of $5,000, with no maximum deposit limit. As a no-penalty CD, you’re able to withdraw the CD’s full balance – including interest and principal – with no penalty, seven days after you begin funding the account.

SEE DETAILS Secured

on Colorado Federal Savings Bank’s secure website

Member FDIC

9. Investors eAccess

TermAPYMinimum balance to earn the APY
6-month0.40%$500

Another no-penalty CD requiring a minimal balance is the 6-month CD offered by Investors eAccess. This New Jersey bank provides one of the most competitive products when it comes to short-term CDs in the no-penalty category, but it does come with a few caveats.

First of all, there are no partial withdrawals allowed by this CD. If you need to take money out, you have to liquify the entire account. You’ll also receive your funds via paper check sent first class mail, so don’t expect an instantaneous turnover of funds should you want to make an early withdrawal. That said, the APY and low minimum account balance make this an excellent choice for short-term savings.

SEE DETAILS Secured

on Investors EAccess’s secure website

Member FDIC

10. Chartway Credit Union

TermAPYMinimum balance to earn the APY
12-month share certificate0.10%
$500

This credit union may be based in Virginia Beach, Va., but you can potentially become a member, so long as they meet one of the following conditions:

  • You reside or go to school or a place of worship in one of the areas served by a local branch of the credit union. Currently, Chartway Credit Union operates branches in the states of Florida, Texas, Utah and Virginia.
  • You have a family member who’s already a Chartway member
  • You or someone in your immediate family works at a company that utilizes Chartway’s financial services for its employees
  • You make a $10 donation to the We Promise Foundation, a charity founded by the credit union.

Once you’re a member, you can open a 12-month share certificate. Doing so requires a minimum deposit of $500, on which you’ll earn an APY of 0.10%. As with all the other no-penalty CD accounts listed, you can’t make a partial withdrawal of your funds — it’s all or nothing.

SEE DETAILS Secured

on Chartway Federal Credit Union’s secure website

NCUA Insured

What to watch out for with no-penalty CDs

Although no-penalty CDs, like any certificate of deposit, carries with it minimal risk of losing your principal, it’s important you thoroughly understand the terms of the account and understand what circumstances you can withdraw funds. Otherwise, your supposedly no-penalty CD will start devouring your funds with fees.

One of the biggest differences between no-penalty CDs lies with whether you can make partial withdrawals or if you have to withdraw the entire amount. If the account allows for partial withdrawals, make sure you understand if the bank or credit union considers a full withdrawal (and closure of the account) count toward your withdrawal limit. It’s easy to imagine a scenario where you skim the fine print, read a CD allows for two partial withdrawals, make those two withdrawals, then get hit with a penalty when you later try to close the account early because the bank considers that a “third” partial withdrawal.

Another concern you should have when shopping for no-penalty CDs is whether or not the bank or credit union will continue to offer it. AgFed Credit Union, for example, occasionally offers competitive no-penalty share certificates but they’re only available for funding for a limited time. If you snooze on some of these no-penalty CDs, don’t be surprised if they have vanished by the time you are ready to pull the trigger and fund one.

Learn more: Is a no-penalty CD worth it?

According to Ken Tumin, our in-house savings expert and founder of LendingTree-owned DepositAccounts.com, no-penalty CDs aren’t a bad option since there isn’t really much risk to trying one out. Just aim to find the longest term no-penalty CD deal you can since the rates will generally be higher.

“When the bank has your money for longer, they’ll usually offer a higher interest rate — and that interest will have more time to compound,” Tumin says. “So if you open a no-penalty CD, you should go for the one with the longest term possible. The rates will likely still be higher, and after all, if you decide to take the money out early, it’s no problem.”

Also, look for no-penalty CDs that offer the benefit on full withdrawals. Some banks only allow penalty-free partial withdrawals, Tumin warns.

Building a CD ladder to avoid withdrawal fees

If you’re interested in using CDs while still maintaining access to your funds, there’s another approach you could consider: building a CD ladder.

It’s can be a complicated strategy, but in short, you split your deposit up into smaller chunks and open several CDs with various term lengths. When the CDs reach maturity, you can renew the account and lengthen the term or withdraw the money if you need to. This way, you can take advantage of higher interest rates while still avoiding early withdrawal fees.

For a step-by-step guide to building a CD ladder, check out our guide linked above. And for even more savings strategies and tactics, keep your eye on the blog. We’re always reviewing the latest financial products and accounts to help you find the best solutions for your money.

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