Advertising Disclosure
  1. Home
  2. Community
  3. Ask
  4. Are There Ever "Catches" To A "No Penalty CD"?

Are There Ever "Catches" To A "No Penalty CD"?

paoli2
  |     |   2,641 posts since 2011

A local bank has a 15 month "No Penalty CD" for 1% and I am looking for a place to hold a large deposit to make a purchase at sometime in the future. I was looking at Money Market accounts but they only pay a bit over .30%, Does "No Penalty" mean I can withdraw the funds at any time when needed and still get 1% for the time it was in the CD or does one lose all of the interest if withdrawn before the 15 months is up? I have called the bank and asked this question but they seem questionable about how it really works. Has anyone on DA ever used one of these No Penalty CDs and can give me some insight as to how they really work and if there are any problems I need to know about them? Much thanks and appreciation for your help.

  Post an answer
2


Answers
Bozo
  |     |   1,375 posts since 2011
Paoli2, any number of financial institutions offer at or above 1% for garden-variety, totally liquid, savings accounts.
Reply
4
paoli2
  |     |   2,641 posts since 2011
Bozo, not in my city they don't. The best I could get was 1.20% but it is only for less than 4 months and then reverts back to regular 0.10%. I am in a fix because I don't know "when" I am going to need to withdraw the money to buy the property. That No Penalty CD would give me up to 15 months to earn the interest and if I need the money sooner for the purchase, it should not cost me any fees or penalty. Problem is that it happens to be with a bank I am not fond of but Bankrate and Bauers does give it 4 stars (for now!). Just wish I could feel better about leaving that much money with them. I also need to know the money is in town with me so I can't do Ally. Thanks anyway.
Reply
1
me1004
  |     |   1,379 posts since 2010
At that measly 1%, they don't need a catch. Gee, you can get more in a savings account, such as 1.1% at Alliant, which has branches in some cities around the country, such as Los Angeles and Chicago.

But that said, one thing to look out for is whether you can collect any interest that has not already been posted. Some banks do not pay out any of the accrued interest if you withdraw before it is posted. And posting on a CD can be monthly, quarterly -- or only at maturity.
Reply
2
paoli2
  |     |   2,641 posts since 2011
me1004: That is what I am concerned about. They only post and pay interest semi-annually which means if I need the money in-between posting, I will lose out. Unfortunately, we don't have an Alliant branch here. 1% sounds measly but 0.10% sounds even worse to me.
Reply
1
Bozo
  |     |   1,375 posts since 2011
Paoli2, while I am not shilling for Alliant (although I have accounts therein), it's easy to join over the internet. Point being, many "easy to join over the internet" financial institutions offer totally liquid savings accounts at or above 1% these days.

Alliant posts and credits interest monthly. Indeed, every month my interest from CDs and savings rolls into my savings account, like clockwork.
Reply
1
Kaight
  |     |   1,192 posts since 2011
Bozo right as usual. Excuses for not being an Alliant member become less numerous with each passing year. It is one of the "must join" credit unions, perhaps in first place on the list. There are so many good reasons to become a member neither Bozo nor I have time to list them all. Just join!!
Reply
1
Kaight
  |     |   1,192 posts since 2011
Ken nailed the answer here. That's no surprise. My only input would be to focus on Ken's final point. I probably would have put that first. Quick access to your funds once an early withdrawal decision has been made is, IMO, VITAL!!
Reply
2


The financial institution, product, and APY (Annual Percentage Yield) data displayed on this website is gathered from various sources and may not reflect all of the offers available in your region. Although we strive to provide the most accurate data possible, we cannot guarantee its accuracy. The content displayed is for general information purposes only; always verify account details and availability with the financial institution before opening an account. Contact [email protected] to report inaccurate info or to request offers be included in this website. We are not affiliated with the financial institutions included in this website.