Want a CD Without Commitment? These 3 No-Penalty CDs Could Be Right for You

A certificate of deposit, or CD, can be a great way to deposit money and get a guaranteed rate of return for a certain length of time. However, CDs have one major drawback -- you can't take money out until the end of the term, or else you will typically have to pay a penalty.

This isn't true in all cases, though. Many people don't realize, but some banks offer no-penalty CDs, which offer the guaranteed APY of a CD, but with the financial flexibility to withdraw your money before the term expires if you need it.

With that in mind, here are three of the best no-penalty CDs available right now, as well as the benefits and drawbacks of each one.

1. CIT Bank No-Penalty CD

If your priority is to get the highest yield possible, the CIT Bank No-Penalty CD could be the right choice for you. It offers a 3.50% APY on an 11-month term as of this writing, and this is competitive even with standard CDs with early withdrawal penalties.

If you aren't familiar, CIT Bank is the online arm of First Citizens Bank, and offers several different types of deposit accounts, as well as home loans.

The biggest drawback to the CIT Bank CD is that it has a $1,000 minimum to get started, which is on the higher end of the spectrum. But if you're looking to deposit at least this much, it could be a great choice for you.

2. Marcus by Goldman Sachs No-Penalty CD

The Marcus by Goldman Sachs No-Penalty CD is the only one on the list that comes in more than one term. It is offered in 7-month, 11-month, and 13-month terms, and has a $500 minimum initial deposit requirement. As of this writing, it has a 4.70% APY for all three term lengths.

The 13-month no-penalty CD is a major differentiator, as it is the best combination of financial flexibility and high yield in the market right now.

3. Ally Bank No Penalty CD

With a 4.00% APY as of this writing and an 11-month term, Ally's no-penalty CD is the lowest paying of the three on this list (although this is still a highly competitive yield for a no-penalty CD). However, there are some things to keep in mind.

First, Ally is the only one of the three that doesn't have a minimum deposit requirement. So, if you want to start a CD with just a few hundred dollars, Ally could be the only one for you.

Second, Ally Bank is a well-rounded financial institution, which can be a major asset for people who like keeping much of their financial lives in one place. While CIT Bank has savings accounts and eChecking, Ally offers some of our top-rated savings and checking accounts, as well as a brokerage platform, robo-advisor, a full range of lending products, and more.

Which is best for you?

The best no-penalty CD for you depends on a few factors, such as what your biggest financial priorities are, how much you have to deposit, and more. But the bottom line is that a no-penalty CD can be an excellent compromise if you're looking for a locked-in APY, but don't necessarily want your money to be unavailable for a certain amount of time.