Best no penalty CD rates for January 2026

A no-penalty CD is exactly what it sounds like – a certificate of deposit that does not impose an early withdrawal penalty.

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

Penalty-free CDs change that – in most cases, you can withdraw your money at any time without penalty. This makes these accounts more like high-yield savings accounts – sometimes with higher annual percentage returns (APYs)!

Best Penalty Free CD Rates of 2026

Below are certificates of deposit that do not impose penalties for early withdrawal, and that offer above-average rates while allowing some flexibility.

2. 5-month technology credit conference

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 penalty-free CDs, it has no early withdrawal penalties. This account is offered currently 3.75% my dad.

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

Open a 5-month Technology Credit Union 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 penalty-free CDs, it has no early withdrawal penalties. This account is offered currently 3.60% my dad.

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

Read our full Blue Federal Credit Union review here.

Open your FCU 9-Month Blue CD here >>

Penalty CDs are not great tools to use for your savings. In fact, many people use these accounts as an alternative to savings accounts since you can potentially earn a little more interest with them. However, there are things you should know about opening a no-withdrawal penalty CD.

• Withdrawal conditions – While we try to highlight the best penalty-free CDs here, you should still check the withdrawal terms. Some CDs may advertise themselves as “no penalty”, but in reality, there may be time limits before this happens, or even factors such as time allowed. Read the fine print!
• Initial deposit – Some CDs may require a large initial deposit. On our list, most range from $0 to $1,000, but it’s not uncommon to see $5,000 or more. Be sure to stay tuned. If you have a large amount to deposit, consider using a jumbo CD.
• maximum – Some banks may offer promotional CDs with maximum limits. As with the minimums, you want to make sure you don’t exceed any maximums and lose interest.
• Maximum duration -You may wonder why there is a term limit with no penalty? This is how long the bank is willing to pay this rate for. It can work to your advantage when interest rates fall, or it can work against you when interest rates rise.
• Finance -Make sure you understand how to finance your CD. With most online banks, you simply set up a direct ACH withdrawal from your existing bank. However, depending on your bank, there may be other options.

Although everyone wants something different in a certificate of deposit, these are some features to consider.

• my dad – This is the biggest factor to consider for most people. You want the account that will pay the highest interest rate (or APY, annual percentage return).
• Minimum balance requirements -Depending on how much money you have to deposit, you’ll want to make sure the CD matches your budget.
• FDIC or NCUA insurance -You want to make sure your money is protected. All banks on our list are FDIC insured.
• Ease of use -Finally, you want to make sure it’s easy to use your account and transfer money in (and out of it when you need it).

We believe that all penalty-free CD accounts have the best features you can find. But that doesn’t mean you shouldn’t shop.

Who is this for?

No-penalty CDs are a great hybrid product for those looking for a higher interest rate, and don’t mind a little non-penalty lock-in. So what’s the point? Well, it has a time frame, and if you withdraw your money early, you won’t be able to put it back in the CD.

So, while you can withdraw your money without penalty, you can’t put it back in like a savings account. The risk then is that prices will fall and you will not earn much.

If you’re looking for a great alternative to savings, a no-penalty CD might be the right solution for you.

Why trust us?

I’ve been writing about banking products and CDs since 2017. I’m very passionate about earning as much as I can through investments, and CDs are a natural fit. Over the past several years as more penalty-free CDs have emerged, I have continued to cover the space to highlight these products for our readers.

Furthermore, our compliance team checks the prices and offers on these listings every day of the week, 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 funds at any time. This basically works like a high-yield savings or money market account.

As such, you want to compare the best CD rates with the best rates for savings accounts or high-yield money market accounts as well. The goal is always to maximize the amount of interest you earn. We have two excellent guides for this here:

Another alternative you might 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 (for example, up to the first $5,000). However, interest rates can be very high – as high as 4% or more. If you have less credit, this could be a great alternative. Here is our guide:

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

Frequently asked questions

What exactly is a penalty-free CD?

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

How do rates for no-penalty CDs compare to regular CDs?

No penalty CDs usually have a slightly lower rate than regular CDs, but the difference is so small that many don’t notice it.

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

It can be so if you only look at the interest rate over a specific period of time. But, if you want the flexibility to move money in and out, high-yield savings accounts are best.