A no-penalty CD is exactly what it sounds like –  a certificate of deposit that doesn’t charge an early withdraw penalty.

If you’re familiar with CDs, you’ll know that they all have a term length – ranging from 3 months up to 72 months or more. Typically, if you want to withdraw your money early, you’ll be charged a penalty – interest you lose. On a short-term CD, it could be the full amount of interest!

Penalty-free CDs are changing that – in most cases, you can withdraw your money anytime without penalty. This makes these more akin to a high-yield savings account – and sometimes with higher annual percentage yields (APYs)!

Best Penalty-Free CD Rates For 2026

Here are the certificate of deposits that don’t charge early withdrawal penalties, that offer higher-than-average rates while allowing for some flexibility.

2. Technology Credit Union 5 Month CD

Technology Credit Union just launched a competitive 5-month CD that has a great interest rate and is better than most savings accounts. Like all no-penalty CDs, it has no early withdrawal penalties. This account currently offers 3.75% APY.

Plus, this account has no fees and just a $1 minimum balance requirement.

Open A Technology Credit Union 5-Month CD Here >>

3. Blue Federal Credit Union 9 Month CD

Blue Federal Credit Union has a 9-month CD that has a great interest rate and is better than most savings accounts. Like all no-penalty CDs, it has no early withdrawal penalties. This account currently offers 3.60% APY.

Plus, this account has no fees and just a $1 minimum balance requirement.

Read our full Blue Federal Credit Union review here.

Open A Blue FCU 9-Month CD Here >>

No penalty CDs are great tools to use for your savings. In fact, many people use these as an alternative to savings accounts since you can probably earn slightly more interest with them. However, there are things that you should know about opening a no withdrawal penalty CD.

• Withdrawal Terms – While we try to highlight the best no-penalty CDs here, you still should check the withdrawal terms. Some CDs may advertise themselves as “no penalty”, but in reality, there may be time limits before that takes place, or even factors like when it’s allowed. Read the fine print!
• Initial Deposit – Some CDs may require a large initial deposit. On our list, most are anywhere from $0 to $1,000, but it’s not uncommon to see $5,000 or more. Make sure you keep an eye out. If you have a large amount to deposit, consider a Jumbo CD.
• Max Limit – Some banks may offer promotional CDs that have maximum limits. Similar to minimums, you want to make sure you don’t exceed any maximums and lose interest.
• Term Limit – You might wonder why there is a term limit when there is no penalty? This is how long the bank is willing to pay that rate for. It could work in your favor when rates fall, or it could work against you when rates rise. 
• Funding – Make sure you understand how to fund your CD. With most online banks, you simply setup direct ACH withdrawal from your existing bank. However, depending on your bank, there may be other options.

While every person wants something different in a certificate of deposit, these are some features that make sense to consider.

• APY – This is the biggest factor to consider for most people. You want the account that is going to pay the highest interest rate (or APY, annual percentage yield). 
• Minimum Balance Requirements – Depending on how much money you have to deposit, you want to make sure that the CD aligns with your budget.
• FDIC or NCUA Insurance – You want to make sure that your money is protected. All of the banks on our list are FDIC-Insured. 
• Ease Of Use – Finally, you want to make sure that your account is easy to use and transfer money into (and out of when you need it).

We believe that all of no-penalty CD accounts have the best features you can find. But that doesn’t mean you shouldn’t shop around. 

Who Is This For?

No penalty CDs are a great hybrid product for those who are looking for a higher interest rate, and don’t mind a little bit of a lock up that doesn’t have a penalty. What’s the catch then? Well, it does have a time-frame, and if you do withdrawal your funds early, you cannot put them back into the CD. 

So, while you can pull your funds out without penalty, you can’t put them back in like a savings account. The risk, then, is that rates drop and you don’t earn as much. 

If you’re looking for a great savings alternative, a no penalty CD can be a good fit.

Why Trust Us?

I’ve been writing about banking products and CDs going back to 2017. I’m very passionate about earning the most you can with investments, and CDs are a natural fit. Over the last several years as more no-penalty CDs have emerged, I’ve continued to cover the space to highlight these products for our readers.

Furthermore, our compliance team checks the rates and offerings on these listings every weekday, so you can be sure you’re getting an accurate representation of what’s available.

The big benefit of a no-penalty CD is simply the fact that you can withdraw the money at any time. This basically operates like a high-yield savings account or money market.

As such, you want to compare the best CD rates with the best high yield saving or money market account rates as well. The goal is always to maximize how much interest you earn. We have a couple excellent guides to this here:

Another alternative that you may consider, especially if you have a lower balance, is a high-yield checking account. These accounts typically pay high interest, but only on limited balances (say, up to the first $5,000). However, the interest rates can be very high – upwards of 4% or more. If you have a lower balance, this can be a great alternative. Here’s our guide:

While no-penalty CDs might not have as good of interest rates compared to regular 12-month CDs, the fact that you can withdraw your money at any time is appealing. If you’re shopping around for a great savings product, these should be at the top of your list.

Common Questions

What exactly is a no-penalty CD?

A no penalty CD is a term deposit that has a set period of time to earn the specific interest rate. However, unlike traditional CDs, there is no penalty to end the term early. The only drawback is that you can add new funds.

How doe no-penalty CD rates compare to regular CDs?

No penalty CDs typically have a slightly lower rate than regular CDs, but the difference is so minimal many don’t notice.

Are no-penalty CDs better than high-yield savings accounts?

They can be if you’re looking at just interest rate over a specific period of time. But, if you want the flexibility of moving money in and out, high yield savings accounts are better.