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No-Penalty CDs: Overview and How They Work

By Lyle Daly – Updated Sep 4, 2025 at 5:28PM | Fact-checked by Frank Bass

Key Points

  • No-penalty CDs allow early withdrawal without fees, offering flexibility in unforeseen situations.
  • These CDs feature lower interest rates than traditional CDs, trading higher yields for withdrawal freedom.
  • No-penalty CDs are best used when future interest rates are uncertain or if funds may be needed soon.
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