No-Penalty CDs try to offer the best of both worlds – the liquidity of a savings account, and the higher fixed interest rate of a term CD. If rates go up, you can still move to the new higher rate. If rates drop, you are covered because the interest rate you earn can never go down during your term (usually around a year). When a financial crisis and/or recession hits, interest rates can drop quite quickly. Below is a historical chart of the Fed Funds rate since 1990. (Other times, a bank may just decide for any reason to drop their rate on a savings account.)
SaveBetter consistently offers some of the top interest rates on No-Penalty CDs. See my full SaveBetter review for more details on SaveBetter overall. Here are some details on the No Penalty CD specifically; their product is a bit unique in both good and bad ways.
- You cannot make any withdrawal within the first 30 days of opening a No Penalty CD, which is longer than usual. At CIT Bank, you can withdraw after 7 days. At Ally Bank, it’s six days.
- However, the minimum opening amount is only $1, which is much smaller than usual. At CIT Bank, it is $1,000. Ally also has no minimum. This means you can open multiple No-Penalty CDs in whatever amount you want, and only “break” the ones you need to. If, for example, the minimum at a competitor bank was $5,000, then you’d have to break an entire $5,000 CD even if you only needed $500.
Finally, I noticed that the website does not offer details about the actual process of how to make an early withdrawal from SaveBetter No-Penalty CD. I asked the Live Chat feature and this was the official reply provided:
Please email service@savebetter.com using the email address that you use to log into SaveBetter.com
In your email be sure to include the bank or credit union’s name and the current balance of the CD. If you have more than one CD from the same institution with the same balance, please specify the number of CDs you would like us to cancel.
Once we have processed your cancellation you will receive a note from the team letting you know the process has been completed.
If you have any questions please call Customer Service at (844) 994-3276. The team is available weekdays 9AM-4PM Eastern Time (excluding holidays).
So I sent them the following simple e-mail late on a Friday night:
Hello,
This is a request to close my No Penalty CD from Sallie Mae Bank with a current balance of $XXXX.XX.
Thank you,
Jonathan
On Saturday morning, I received the following reply:
Your cancellation request has been processed.
All available funds will be transferred to your linked bank account within 3 business days.
Please reach out if we can be of further service.
Regards,Mio
SaveBetter Customer Service
service@savebetter.com
The withdrawal amount arrived in my linked bank account on the third business day (Wednesday), but they did credit me with at least one additional day of interest because the final amount was higher than my Friday closing balance (I figure they initiated on the next business day of Monday, cash came out Tuesday).
I was still satisfied that a simple 100% online-only option exists. I just sent a single e-mail. I did not have to call in, go through a complicated confirmation process, or answer any “Are you sure?” type of questions.
With SaveBetter, all deposits and withdrawals have to go in and out through your linked external bank account. You can’t just transfer the money internally directly into another type of account at another partner bank. That means that if you wanted to cancel one No Penalty CD and immediately open another “new” No Penalty CD at a higher rate, you might lose a business day or two of interest on the way out to your linked account before transferring the money back in to purchase the new CD.
This contrasts with CIT Bank, where I you can directly fund a new No-Penalty CD (at higher rate) with an existing No-Penalty CD. Of course, if you were to move funds between two different banks, you’d also have to deal with some days of lost interest in transition.
Their No-Penalty CD rates are currently above 5% APY, but the specific rates and the banks offering them change all the time, so I won’t list it in this review. Click here to see current No-Penalty CD rates at SaveBetter.
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