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Keep Your Money Liquid with a No-Penalty CD

What if there was a CD option that combined a great interest rate and eliminated the early withdrawal fee? A no-penalty CD is what you're after.

June 14, 2023 | Madison Foster

Woman sitting at desk writing in notebook with jar of rolled banknotes in the foreground

Most of us are familiar with how a traditional CD works. You make an opening deposit, select a term, and the money sits and accrues interest at a set rate until the term expires. From there, you can either cash it out for the new balance or roll it over to continue accruing interest.

As a consumer, you really have just two important considerations when choosing a CD: Is the interest rate attractive and how long are you willing to go without access to the funds? The reason is because CDs typically have substantial fees for withdrawing the principal balance before it reaches the end of its term, also known as maturity.

But what if there was another option, one that combined a great interest rate and eliminated the early withdrawal fee?

What are No-Penalty CDs?

Some financial institutions are warming to the idea of a no-penalty CD. These often come with special terms and restrictions but allow customers to make a certain number of withdrawals - either partial or in full - prior to the maturity date without suffering penalties. In rising rate environments, like the one we’re currently experiencing, these can be a particularly effective savings tool by allowing customers to access their typically locked money at any time.

How Does a No-Penalty CD Work?

The liquidity offered by no-penalty CDs as opposed to traditional CDs are a great advantage since they allow you penalty-free access, whether it’s for an emergency or even more attractive rates become available. OMB’s new 4.44% APY* no-penalty 7-month CD allows you to make a one-time withdrawal of the entire balance without a fee after the initial six-day funding period, giving customers the best of both worlds: High yields and liquidity. Just remember - once you withdraw funds from the CD, you can't put them back in.

What are the Advantages of a No-Penalty CD?

CDs offer many advantages including fixed rates, security, and typically no monthly maintenance fees. With a no-penalty CD, they can be that much better. Savvy savers can also utilize additional wealth-building strategies with CDs such as laddering. You can check out OMB’s current CD rates and specials here.

No-penalty CDs often offer higher interest rates than traditional savings accounts, providing a better return on your investment. While rates may not be as high as those offered by long-term CDs, they are still an excellent option for short-term savings goals. They are also easy to manage and typically require minimal maintenance. You simply deposit the funds and watch the account accrue interest! At the end of the term, you can either keep the funds there for another term, funnel the funds to a different time deposit, or withdraw the entire amount (including interest earned).

Want another advantage? Saving with a no-penalty CD at OMB keeps your funds in a community bank while supporting the local economy. We'll help you grow your savings wisely with competitive rates and attractive terms.

OMB and its affiliates do not provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decision.

*APY = Annual Percentage Yield. Requirements include a minimum opening deposit of $1,000 and a minimum balance of $1,000 to earn APY. APY accurate as of 7.24.2023. Rate subject to change without notice; see Truth-in-Savings for complete account disclosure. Early withdrawals are not permitted within the first 6 days following account funding; after this period, balance must be withdrawn in full. No-penalty CD will renew as a penalty CD with a rate based on the 6-month board rate in effect at time of maturity. Offers are good for a limited time only and may be withdrawn at any time at the Bank’s discretion. Rates subject to change without notice; see Truth-in-Savings for complete account disclosures. Fees could reduce earnings. Available for consumer and commercial accounts. Member FDIC

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