With interest rates rising, many investors want to take advantage of the highest deposit rates they’ve seen in years. Since there’s no guarantee that current rates will remain at their current level, many would are looking to Certificates of Deposit (CDs) because they offer an opportunity to lock in current rates for as long as five years.
But one of the dilemmas for savers in the current environment is the possibility of locking in a CD for several years, only to watch rates continue to rise.
The solution may be to take advantage of an attractive no-penalty CD rate.
A no-penalty CD lets you withdraw some or all your funds from the certificate before the maturity date without paying an early withdrawal penalty. The terms will dictate what you are able to do, so read those carefully. You may also liquidate the certificate in favor of a higher-yielding instrument at a future date.
There is a trade-off, however. The increased flexibility means that the rates are slightly lower than for regular-term CDs. But if you want to combine a competitive rate with liquidity, no penalty CDs are the way to go.
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
- No-Penalty CDs: Rate Summary
- Best No-Penalty CD Rates
- Ponce Bank – 36-Month
- Patriot Bank – 17-Month
- Sallie Mae – 14-Month
- Rising Bank – 15-Month
- Citi – 12-Month
- CIT Bank – 11-Month
- USAlliance Financial – 11-Month
- Ally Bank – 11-Month
- Synchrony Bank – 11-Month
- Marcus by Goldman Sachs – 13-Month
- No Penalty CD FAQs
- Final Thoughts on No Penalty CDs
No-Penalty CDs: Rate Summary
| Bank Name | CD Term | CD Rate | |
|---|---|---|---|
| Ponce Bank | 36-Month | 3.00% APY | Learn more |
| Patriot Bank | 17-Month | 2.70% APY | Learn more |
| Sallie Mae | 14-Month | 2.70% APY | Learn more |
| Rising Bank | 15-Month | 2.50% APY | Learn more |
| Citibank | 12-Month | 2.25% APY | Learn more |
| CIT Bank | 11-Month | 2.15% APY | Learn more |
| USAlliance Financial | 11-Month | 2.15% APY | Learn more |
| Ally Bank | 11-Month | 2.00% APY | Learn more |
| Synchrony Bank | 11-Month | 2.00% APY | Learn more |
| Marcus by Goldman Sachs | 13-Month | 1.95% 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 as of September 13 and are subject to change.
Ponce Bank – 36-Month
Ponce Bank offers a 36-Month No Penalty CD with an interest rate of 3.00% APY, currently the highest-yielding no penalty CD on this list. You can open a CD with a minimum deposit of just $1 and no maintenance fees.
You will be limited to one complete withdrawal of the CD during its term, which you can make seven days after purchase.
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.
Patriot Bank – 17-Month
Patriot Bank offers a 17-Month No Penalty CD, currently paying 2.70% APY. The minimum deposit is just $1 and there are no maintenance fees. Interest is compounded daily and credited monthly.
A one-time full withdrawal can be made penalty-free seven days after funding your certificate.
At maturity, the certificate will automatically renew at the prevailing interest rate. If you liquidate your CD before maturity, you’ll have only one opportunity to do it without penalty over the certificate term. You should also be aware that the maximum CD balance is $100,000.
Patriot Bank was founded in 1994 and is headquartered in Stamford, Connecticut. Though they provide deposit and lending products nationally, they have local branches in Connecticut and New York.
Sallie Mae – 14-Month
Sallie Mae also offers banking services, including a 14-Month No Penalty CD with an outstanding 2.70% 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 2.50% APY
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.
Rising Bank – 15-Month
Though it’s not one of the country’s better-known banks, Rising Bank offers one of the top no-penalty CDs. They currently have a 15-month No Penalty CD paying 2.50% APY on a minimum balance of $1,000. There is no penalty for a partial or full withdrawal of funds from the certificate, beginning seven days after you fund the CD.
The bank offers no-fee checking, a High-Yield Savings account, paying 2.10% APY, regular CDs with terms ranging from 1 to 5 years, and paying up to 3.25% APY.
Rising Bank is a community and online bank based in St. Louis. Though it’s not well known, the bank has been operating for over 100 years. They offer home loans, auto refinancing, insurance, and SBA loans for small businesses.
Citi – 12-Month
Citi offers their no-penalty CD for a full 12 months. The certificate currently pays 2.25% APY, and the minimum initial investment is just $500.
Citi is one of the largest banks in the US and provides full-service banking, including a full range of loan products and deposit accounts.
Their fixed-rate CDs have terms ranging between three months and five years. Rates vary based on maturities, but the best deal is on the 18-month CD, which currently pays 2.85% APY on all balance ranges.
Citi also offers their Accelerate Savings account, currently paying 2.00% APY, and is available as long as you open a Citi checking account.
CIT Bank – 11-Month
CIT Bank’s No-Penalty, 11-Month CD is paying 2.15% 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 1.40% APY. They also offer term CDs, which top off at 0.50% APY on a 60-month certificate.
USAlliance Financial – 11-Month
USAlliance Financial is a not-for-profit financial institution providing a full range of banking services. Since it is a credit union, customers have access to over 6,000 branch facilities and 30,000 surcharge-free ATMs across the US.
USAlliance currently offers their 11-month No Penalty CD, paying 2.15% APY, with a minimum balance requirement of $500.
The credit union has other CDs, ranging from three months to as long as 60 months. Current yields range from 0.65% on the 12-month term CD to as high as 3.50% on the 18-month term CD.
USAlliance also offers its High Dividend Savings account, paying 2.50% APY with a minimum balance of $500, and several money market accounts. The credit union also provides personal loans, credit cards, credit builder loans, auto loans, signature loans, and home loans.
Ally Bank – 11-Month
Ally Bank offers has an 11-Month No Penalty Certificate of Deposit. The CD pays 2.00% APY, with no minimum deposit required to open a certificate. You can withdraw your entire balance, including interest, after the first six days of funding the CD.
Just as important, Ally Bank offers their Ten Day Best Rate Guarantee. You’ll get a better rate if rates rise within ten days of opening your CD.
Ally Bank offers interest checking, online savings, a money market, and their high-yield CD. But perhaps the most exciting CD product is their Raise Your Rate CD. They offer it in terms of two years and four years, but you’ll have an opportunity to raise the rate once during the two-year term or twice during the four-year term.
Ally is also a fully diversified financial firm, offering mortgages, personal loans, and some of the best auto loans in the business. But you can also benefit from self-directed or managed investments through Ally Invest.
Synchrony Bank – 11-Month
Synchrony Bank might have the widest selection of high-yield CDs in the banking industry. Their 11-Month, No-Penalty CD is currently paying 2.00% APY with no minimum deposit required and no maintenance fees. You can withdraw funds without penalty after the first six days following funding your certificate.
Synchrony Bank’s CDs range from 3 to 36 months and pay interest of up to . Their Bump-Up CD has a 24-month term, no minimum balance, and yields a bit less. It provides one-time flexibility to request a higher rate during the term.
Synchrony Bank also offers High-Yield savings, money market, IRAs, and credit cards.
Marcus by Goldman Sachs – 13-Month
Marcus by Goldman Sachs offers their 13-month No-Penalty CD, currently paying 1.95% APY. The minimum deposit is $500, and there is no early withdrawal penalty beginning seven days after funding your certificate.
The No-Penalty CD is available in shorter durations but at lower rates. For example, the seven-month CD currently pays 0.45% APY, while the 11-month CD pays 0.35% APY.
Marcus by Goldman Sachs is another well-diversified financial service provider. Their Online Savings Account currently pays 1.90% APY, while they also offer a High-Yield CD paying 2.70% APY for a 12-month term.
Marcus by Goldman Sachs also offers self-directed and managed investment accounts, IRAs, credit cards, and personal and home improvement loans.
No Penalty CD FAQs
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.
The post Best No Penalty CD Rates (September 2022) appeared first on Best Wallet Hacks.
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