91³Ô¹ÏÍø

Watch CBS News
MoneyWatch: Managing Your Money

Are no-penalty CD accounts worth it for 2025?

We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms.

By
Matt Richardson
Sr. Managing Editor, Managing Your Money
Matt Richardson is the senior managing editor for the Managing Your Money section for CBSNews.com. He writes and edits content about personal finance ranging from savings to investing to insurance.
Read Full Bio
Matt Richardson

/ CBS News

gettyimages-2141988223.jpg
If you you think you may need to withdraw your money in an emergency, a no-penalty CD may be worth opening in 2025. Getty Images

Certificate of deposit (CD) accounts have been both valuable and secure for savers for many years. But in the inflationary climate of 2022 to 2024, they become arguably mandatory. With a fixed interest rate that would remain unchanged for the full CD term and a rate that was many times higher than what was available as recently as 2020 or 2021, a CD account became a quick and efficient way for savers to grow their money. And that hasn't changed in 2025, even if interest rate cuts have slightly reduced what prospective accountholders can earn on their money.

But what about no-penalty CDs? These accounts offer a way for savers to boost their return without having to worry about the fees and early withdrawal penalties they'd otherwise have to pay if they elected to open (and withdraw funds from) a traditional CD account. But are no-penalty CDs still worth opening in the changed economic climate of 2025? That's what we'll break down below.

.

Are no-penalty CD accounts worth it for 2025?

Every saver's financial circumstances are different, so there is no blanket answer on whether no-penalty CD accounts are still valuable this year. Instead, it helps to know when they may – or may not – be advantageous. Here's when each could be applicable for 2025:

Why a no-penalty CD isn't worth it for 2025

No-penalty CDs sound attractive on paper, thanks to the flexibility they provide savers, but that flexibility comes with a cost in the form of a much lower interest rate. And that hasn't changed in 2025. Some would even argue it's become an even bigger detraction since rates on all savings accounts have declined over the past year. Right now, savers can easily secure a rate of 4.40% with a traditional, 1-year CD. And they may even be able to find a rate a bit higher by shopping around for CD accounts online. No-penalty CDs, however, are mostly topping out at around 4.20% for the same term, with many in the 3.50% to 4% range, according to . 

So, if you intend to earn as much interest as possible, especially before additional interest rate cuts are issued later in 2025, you'll be better served by skipping the no-penalty CD options and pursuing a traditional CD instead. Just be sure to do so with a deposit and term that you can easily afford to avoid paying the penalty, which often adds up to all or most of the interest earned on the account up to that point.

.

Why a no-penalty CD is worth it for 2025

A no-penalty CD can still be valuable, on the other hand, for those savers who want to lock in a fixed return, even if they're not sure of their ability to keep the funds intact for the full term. 

Rates on no-penalty CDs, while lower than what's available with top CDs and high-yield savings accounts, are still competitive. And they're fixed, meaning that savers can easily determine what they stand to earn upon account maturity. Compare that to high-yield savings accounts, which have rates in the 4% range, but are variable, meaning that they'll adjust as the rate climate does. And if additional interest rate cuts are issued, returns on high-yield savings accounts will inevitably decline while no-penalty CD rates will remain the same. 

So, for many savers, a no-penalty CD offers a rare win-win right now: They'll earn an elevated rate, thus taking advantage of today's still elevated rate climate, but they won't need to worry about changes in their rate (as they would with a high-yield savings account) or having to give all of the interest earned back to the lender (as they would if they took their money prematurely out of a traditional CD account). 

Just remember that these CD accounts aren't immune from rate changes, either – if the Federal Reserve issues additional reductions in the spring, no-penalty CD rates will fall, too. And, right now, that looks possible (the tool currently lists a rate cut at the May Fed meeting at more than a 40% likelihood). So it would behoove savers considering this account type to take action promptly.

The bottom line

Both traditional CD and no-penalty CD accounts are valuable in the rate climate of 2025, just for different reasons. Regardless of which type fits your unique financial situation, however, the key is to act aggressively and quickly. Today's CD rates are unlikely to be as high by the end of 2025, so acting now will allow you to lock in a high rate and, potentially, big earnings, for months or even multiple years.

.

Edited by Angelica Leicht

© 2025 91³Ô¹ÏÍø. All Rights Reserved.

View CBS News In
CBS News App Open
Chrome Safari Continue
const link = doc.createElement('link'); link.rel = 'stylesheet'; link.href = '/fly/fly/bundles/cbsnewscontent/css/cmp-banner.min.css?v=296763317a51cab90faa73f1bb146d5c'; doc.head.appendChild(link); doc.body.innerHTML = CONSENT_MESSAGE; } else { el.insertAdjacentHTML('afterend', CONSENT_MESSAGE); } }); } function hidePrivacyMessage() { // Remove from the main document document.querySelectorAll(`.${CONSENT_MESSAGE_CLASS}`).forEach(el => el.remove()); // Remove from inside any iframes document.querySelectorAll('iframe').forEach(iframe => { const doc = iframe.contentDocument || iframe.contentWindow.document; doc.querySelectorAll(`.${CONSENT_MESSAGE_CLASS}`).forEach(el => el.remove()); }); } function activateGatedScripts() { // Handle both new format (cmp-gated-script) and old OneTrust/Ketch format (optanon-category-4) const gatedScripts = Array.from(document.querySelectorAll('script.cmp-gated-script, script.optanon-category-4')); // Activate scripts sequentially with a small delay to avoid timing issues let delay = 0; gatedScripts.forEach(function(placeholder, index) { setTimeout(function() { // Skip if already processed if (placeholder.hasAttribute('data-cmp-processed')) { return; } placeholder.setAttribute('data-cmp-processed', 'true'); const newScript = document.createElement('script'); newScript.type = 'text/javascript'; // Try new format first (data-cmp-src), then fall back to old format (data-src) const src = placeholder.getAttribute('data-cmp-src') || placeholder.getAttribute('data-src'); if (src) { newScript.src = src; } else if (placeholder.textContent) { // Inline script - just copy the content newScript.textContent = placeholder.textContent; } // Handle new format attributes (data-cmp-attrs) - for both inline and external scripts const attrs = placeholder.getAttribute('data-cmp-attrs'); if (attrs) { const tempDiv = document.createElement('div'); tempDiv.innerHTML = '
<\/div>'; const tempAttrs = tempDiv.firstChild.attributes; for (let i = 0; i < tempAttrs.length; i++) { // For external scripts, allow defer/async. For inline scripts, skip them (not valid) if (src || (tempAttrs[i].name !== 'async' && tempAttrs[i].name !== 'defer')) { newScript.setAttribute(tempAttrs[i].name, tempAttrs[i].value); } } } // Copy other attributes from old OneTrust format for (let i = 0; i < placeholder.attributes.length; i++) { const attr = placeholder.attributes[i]; // Skip attributes we've already handled or don't want to copy if (!['class', 'data-src', 'data-type', 'data-cmp-src', 'data-cmp-attrs', 'data-cmp-processed', 'type', 'async', 'defer', 'src'].includes(attr.name)) { newScript.setAttribute(attr.name, attr.value); } } placeholder.parentNode.replaceChild(newScript, placeholder); // If external script, manually trigger window.onload handlers after it loads // This handles widgets that use window.onload for initialization if (src) { newScript.addEventListener('load', function() { // If page already loaded and script set a new onload handler, trigger it if (document.readyState === 'complete' && window.onload) { const originalOnload = window.onload; window.onload = null; // Clear temporarily to prevent loops originalOnload(); // Execute the handler } }); } }, delay); delay += 500; // 500ms delay between each script to allow full loading }); } cbsoptanon.onScriptsReady(function(cmp) { cmp.ot.targetingAllowed(function(allowed) { if (!allowed) { showPrivacyMessage(); } else { activateGatedScripts(); } }); cmp.ot.awaitInitialConsent(function(consent_model) { cmp.ot.addOnConsentChangedHandler(function() { cmp.ot.targetingAllowed(function(allowed) { if (allowed) { hidePrivacyMessage(); activateGatedScripts(); } else { showPrivacyMessage(); } }); }); }); });