A no-penalty CD, also known as a liquid CD, is a type of certificate of deposit that earns interest and you can withdraw your money early without paying a fee.
Read below to find out where to find a no-penalty CD.
How Does a No-Penalty CD Work?
A certificate of deposit is a low-risk investment opportunity, your investment is generally safe because it’s insured up to $250,000 by the Federal Deposit Insurance Corp. (FDIC) or National Credit Union Administration (NCUA).
The longer the CD term, the higher the interest rate you can earn. However, if you attempt to withdraw the money prior to its maturity, and federal law states there may be a forfeiture of a minimum of seven days of interest.
Since there is no regulation regarding capping the maximum early withdrawal penalty, many banks and credit unions have higher penalties for early withdrawal.
Is a No-Penalty CD Right For You?
It is important to carefully go over the terms of a no-penalty CD so you are aware of potential fees.
Before you sign up for a no-penalty CD, make certain to read all the terms and conditions of the account in order to make sure this is that the investment realistically fits your needs.
Check the fine print to know whether you’re allowed to withdraw a partial amount and how many partial withdrawals you’re allowed to make.
Author’s Verdict
No-penalty CD’s can be a great investment for your finances!
Hopefully the above information helps you understand how no-penalty CD accounts.
Also be sure to check out our own lists of bank promotions and CD tables!
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