Key Takeaways
- If you need to cash in a CD early, you’ll likely pay a penalty—usually a set number of months’ worth of interest.
- These penalties vary widely, so it’s smart to find out before you open a CD what it would cost if you opt to cash out before maturity.
- Many of the best CD rates right now are 4.45% APY or better, and those rates are guaranteed for the duration of your CD term.
- While no-penalty CDs provide flexibility, they usually offer much lower yields, reducing what you can earn.
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Cashing In a CD Early Triggers a Penalty—And They Can Vary Widely
If you’re considering places to put cash and you’re lucky enough to not need immediate access to it, one option is a certificate of deposit (CD). In exchange for agreeing to leave your savings untouched for a set period, your bank or credit union will guarantee a fixed rate for the entire term—and some of the best CDs right now are offering 4.45% annual percentage yield (APY) or better. Unlike high-yield savings accounts, a CD’s APY won’t change, so you’ll know exactly how much money you’ll earn at the CD’s maturity date, regardless of how far away it is.
If you find that you need to cash out a CD before its maturity date, it’s not impossible. But you will pay an early withdrawal penalty. These are set by the financial institution, usually with different penalties for different CD terms. These penalties vary widely across the industry, so it’s important to know—before you commit to any certificate—what you’ll be charged if you need to break the CD early.
The penalties are often calculated as a number of months’ or even years’ worth of interest, and that amount generally increases as your CD term limit increases. A 1-year CD at one bank may charge a penalty equal to a few months of interest, while a CD of the same length at another bank might include a penalty of 9–12 months’ interest—or even more. And in some cases, especially if you break a CD before it has had time to accrue much interest, you may lose some of your initial deposit.
Here’s an example of what it might cost you to break a CD early: Let’s say that you have a 1-year CD with an early withdrawal penalty of three months of interest. If you cash in the CD after four months, you’ll lose three-quarters of the interest you earned (three out of the four months of earnings), and you’ll have earned just one month of interest. Had you closed the CD before the three-month mark, you would have lost more interest than you earned, eating into your initial investment.
The Best CDs With a Mild Penalty for Early Withdrawal
Fortunately, you can choose CDs that are friendlier with their penalty policy by doing some simple shopping around. And we’ve made that easy by compiling a list of today’s top-paying CDs that have what we consider a mild early withdrawal penalty. All of these appear in our daily rankings of the best CD rates across terms, so these are top-APY options. And the longest penalty included is six months. For shorter-term CDs, you can even find options charging just one to three months of interest.
| Institution | Term | APY | Minimum Opening Balance | Early Withdrawal Penalty |
| 6-Month CDs | ||||
| T Bank | 6 months | 4.45% | $500 | 1 month of interest |
| ableBanking | 6 months | 4.50% | $5,000 | 3 months of interest |
| Pacific National Bank | 9 months | 4.45% | $1,000 | 1 month of interest |
| 1-Year CDs | ||||
| Abound Credit Union | 10 months | 4.35% | $500 | 3 months of interest |
| T Bank | 12 months | 4.40% | $500 | 1 month of interest |
| Colorado Federal Savings Bank | 12 months | 4.40% | $5,000 | 3 months of interest |
| 18-Month CDs | ||||
| Liberty Federal Credit Union | 17 months | 4.15% | $1,000 | 3 months of interest ($50 minimum) |
| Elements Financial | 18 months | 4.35% | $1,000 | 6 months of interest |
| Mountain America Credit Union | 18 months | 4.25% | $500 | 6 months of interest |
| 2-Year CDs | ||||
| PenAir Credit Union | 21 months | 4.40% | $500 | 6 months of interest |
| Prime Alliance Bank | 24 months | 4.11% | $500 | 3 months of interest |
| Bank5 Connect | 24 months | 4.25% | $500 | 6 months of interest |
| 3-Year CDs | ||||
| Genisys Credit Union | 30 months | 4.32% | $500 | 6 months of interest |
| Prime Alliance Bank | 36 months | 4.00% | $500 | 3 months of interest |
| Mountain America Credit Union | 36 months | 4.15% | $500 | 6 months of interest |
| 4-Year CDs | ||||
| Utah First Credit Union | 48 months | 4.05% | $2,000 | Up to 6 months of interest |
| Greenwood Credit Union | 48 months | 4.00% | $1,000 | 6 months of interest |
| SkyOne Federal Credit Union | 48 months | 4.00% | $1,000 | 6 months of interest |
| 5-Year CDs | ||||
| Heartland Credit Union | 60 months | 4.25% | $500 | 6 months of interest |
| Utah First Credit Union | 60 months | 4.10% | $2,000 | Up to 6 months of interest |
| Greenwood Credit Union | 60 months | 4.00% | $1,000 | 6 months of interest |
Another Option Is a No-Penalty CD, But You’ll Likely Earn Less
If you are new to CDs or are concerned that you might need access to your money before your CD matures, you might want to consider another option: a no-penalty CD. The benefit of this type of CD is that it offers flexibility. You can cash it out at any time without paying anything extra. These CDs aren’t offered by as many financial institutions, and they aren’t offered in as many term lengths.
The biggest downside is that this flexibility comes at the cost of a great APY. You’ll earn a much lower yield, which means you’ll earn less over the life of your CD than if you opted for a standard certificate. And the difference in APY is more pronounced as you look at longer term lengths: Two of the shorter no-penalty CDs below have APYs that aren’t too different from their traditional counterparts, for example, but the longer-term CDs below offer rates around a percentage point lower than a comparable standard CD.
All of that said, these can be good options if you think you might need to withdraw cash before the CD matures but want a guaranteed rate of return.
Here are four currently available no-penalty CDs:
Daily Rankings of the Best CDs and Savings Accounts
If you think there’s a low chance you’ll need to take your money out before maturity, you may be better off with a top-earning CD that doesn’t necessarily have a soft early withdrawal penalty. We update these rankings every business day to give you the best deposit rates available:
How We Find the Best Savings and CD Rates
Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs and savings accounts to customers nationwide and determines daily rankings of the top-paying accounts. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account’s minimum initial deposit must not exceed $25,000. It also cannot specify a maximum deposit amount that’s below $5,000.
Banks must be available in at least 40 states to qualify as nationally available. And while some credit unions require you to donate to a specific charity or association to become a member if you don’t meet other eligibility criteria (e.g., you don’t live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.
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