On November 8th, 2017, CIT Bank raised the APY rate on its no-penalty 11-month CD product from 1.45% to 1.55%. This challenges the previous supremacy of Ally Bank’s no-penalty 11-month CD product which, as of February 1, 2018, yields 1.15%, 1.25%, or 1.5%, depending on the deposit amount.
- In early December 2017, Ally increased the rates on their no-penalty CD, leapfrogging CIT Bank for deposits of $25,000 and above with a 1.6% APY. At that time the rates on the lower tiers of their no-penalty CD were also increased to 1.15% and 1.35%.
- Then, in mid-December 2017, Ally increased the rate on just the top tier of their no-penalty CD from 1.6% to 1.75% for deposits of $25,000 or more, further distancing their lead for high deposits as compared to CIT’s 1.55% rate for all deposit amounts. This was a temporary promotional rate that ended on January 2, 2018. On January 3rd, 2018, the rate for the top tier of Ally’s no-penalty CD was reduced from 1.75% to 1.6%.
- In late January 2018, Ally again lowered the rates on the top two tiers of its no-penalty CD by 10 basis points, bringing the rate on the top $25K+ tier to just 1.5%, once again below CIT’s 1.55% APY on its competing product.
In many ways these two leading no-penalty certificates of deposit have the best features of all deposit account types rolled into one product in a way that’s relatively free of tradeoffs:
- Like a typical CD, they enable you to earn a relatively high interest rate that is guaranteed to not be reduced for the duration of the deposit term, which is 11 months in the case of these products. So there is no risk of a bait-and-switch teaser rate that gets lowered after you open the account, as sometimes occurs with savings and money market accounts.
- Unlike a typical CD, they have no early withdrawal penalty (e.g. 6 months worth of interest, even if you’re less than 6 months into the deposit period of the CD). So if you unexpectedly need to access your funds or just become aware of a better investment option you want to pursue, you can withdraw the entire amount of your deposit without incurring a penalty.
The no-penalty CDs covered in this post are not entirely free of constraints, however:
- No partial withdrawals are permitted: If you do choose to exercise the penalty-free early withdrawal option, you have to withdraw your entire deposit amount. It’s generally possible to open more than one CD of the same type at an institution, so you can probably mitigate this constraint to some extent by breaking your total deposit amount into separate tranches, each of which could be withdrawn without touching the other tranches.
- These are not add-on CDs: You are not allowed to add additional funds to a no-penalty CD during its deposit term. However, it should be possible to open additional no-penalty CDs so long as you meet the minimum deposit amount, which is detailed below.
CIT Bank No-Penalty 11-Month CD
CIT’s product is pretty simple. It has a superior 1.55% APY regardless of the deposit amount, a minimum deposit of $1,000, and you can withdraw your money in full after 7 days from the time of deposit. While the CIT no-penalty CD has no maximum deposit amount, we recommend limiting your aggregate CIT deposits to the federally insured maximum, currently $250,000.
You can read the fine print and apply for CIT Bank’s no-penalty CD here.
Ally Bank No-Penalty 11-Month CD
Ally’s product is tiered, with the rate depending on the deposit amount. It earns:
- 1.50% APY for deposits of $25,000 or more
- 1.25% APY for deposits between $5,000 and $24,999.99
- 1.15% APY for deposits of less than $5,000
With Ally’s product you can withdraw your money in full after 6 days from the time of deposit.
You can read the fine print and apply for Ally Bank’s no-penalty CD here.
Other No-Penalty CDs
No-Penalty CDs are fairly rare and the others I found were not at all compelling. For example, Swineford National Bank has a 9-month no-penalty CD with an APY of just 0.15%. The Columbia National Bank has a similar 9-month no-penalty CD with an APY of 0.05%, but with something called “Relationship Banking” the APY is 0.30% — still a pass, in my opinion. AgFed Credit Union previously had a 30-month no-penalty CD with a 1.85% APY, but, sadly, that ended in September.
Finally, to compare these leading no-penalty CD products to competing CD products and other types of deposit accounts, you can use our bank accounts tool.