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A certificate of deposit (CD) can be a great place to store your short-term savings. These accounts often have higher annual percentage yields (APYs) than standard savings accounts, though they might be lower than or on par with the best high-yield savings accounts. With a CD, though, you can’t access your funds for a set time—if you withdraw before the maturity date, you’ll pay a penalty, and those fees could offset or negate your earnings.
But if rates rise due to inflation and higher rates become available elsewhere, it might make sense to break your current CD and start from scratch. Here are three questions to ask before you decide.
Recommended High-Yield Savings Accounts
Bank | Account Name | APY | Minimum Deposit | Monthly Fee | Get Started |
---|---|---|---|---|---|
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UFB High Yield Savings Account |
5.25% |
$0 |
$0 |
Get Started |
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SoFi Checking and Savings |
0.50% – 4.50%
ⓘ |
$0 |
$0 |
Get Started |
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CIT Bank Platinum Savings Account |
Up to 5.05%
ⓘ |
$100 |
$0 |
Get Started |
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CIT Bank Savings Connect Account |
4.65%
ⓘ |
$100 |
$0 |
Get Started |
1. What Will the Early Penalty Cost?
With most certificates of deposit, making a withdrawal before your CD matures results in a
Early withdrawal penalties are
CIT Bank Term Certificates of Deposit
- Our Rating 3.5/5 How our ratings work Read the review
- Minimum
Deposit Required$1,000 - 1 Year APY0.30%
Annual Percentage Yield is accurate as of March 31, 2023. Interest rates for CIT Bank's term CDs are variable and subject to change at any time without notice
- 3 Year APY0.40%
Annual Percentage Yield is accurate as of March 31, 2023. Interest rates for CIT Bank's term CDs are variable and subject to change at any time without notice
- 6-Month APY5.00%
Annual Percentage Yield is accurate as of March 31, 2023. Interest rates for CIT Bank's term CDs are variable and subject to change at any time without notice
Many banks that offer CDs require customers to commit to lengthy terms of several years or more in order to earn the highest interest rates available. However, with CIT Bank's term CDs, the opposite is true. To get the best rates at CIT, you'll need to open one of its shorter-term CDs, such as its 6-month CD that pays 5.00% APY. If you want an easy way to save more money without having to wait years, CIT Bank's term CDs are a solid option.
Overview
If you’re looking for a dependable way to earn interest on your money in the short term, CIT Bank’s certificates of deposits may be an excellent choice for you. However, those looking to open a long-term CD may be better off looking elsewhere.
Pros
- Strong rates for 13- and 18-month terms
- FDIC insured
Cons
- Rates for longer terms unimpressive
Below is an overview of CD early withdrawal penalties at a variety of popular banks.
Financial Institution | 1-Year CD (Early Withdrawal Penalty) | 5-Year CD (Early Withdrawal Penalty) |
---|---|---|
60 days of interest |
150 days of interest |
|
3 months of interest |
6 months of interest |
|
6 months of interest |
18 months of interest |
|
180 days of interest |
180 days of interest |
|
90 days of interest |
365 days of interest |
2. Could I Earn More Interest by Reinvesting My Savings in a New CD?
If interest rates have gone up since you took out your certificate of deposit, it might be
Here’s how to calculate whether you might earn more by making an early CD withdrawal and reinvesting your savings in a new CD
- Calculate the amount of interest your CD earns each day or month.
- M
ultiply the interest by the number of days (or months) of interest you would lose if you made an early withdrawal. - Calculate the amount of interest you could potentially
earn from the new CD, but only for the duration of the old CD’s term. - Compare the potential
earnings from the new CD (for the duration of the old CD’s term) to the penalty.
If the penalty is less than the potential profits, it might make sense to break your CD early. But if your calculations result in a loss, it’s probably better to leave your cash in the existing CD until its maturity date. Then you can consider investing in a higher-rate CD or a high-yield savings account or money market account at a future date.
Recommended Savings Accounts
UFB Direct High Yield Savings Account
- Our Rating 5/5 How our ratings work Read the review
- APY5.25%
UFB Direct breaks balances into five tiers, but, currently, there is only one interest rate.
- Minimum
Deposit RequiredN/A - Intro Bonus N/A
The UFB High Yield Savings Account has one of the highest interest rates we’ve seen for a high-yield savings account at up to 5.25% APY. Plus, there are no monthly fees and no minimum balance to open.
Overview
With one of the strongest high-yield savings interest rates on the market, as well as no monthly fees or minimum opening deposit, UFB Direct’s High Yield Savings Account is an extremely attractive package.
Pros
- Strong interest rate
- No maintenance fees or minimum monthly balances
- Free complimentary ATM card
- Mobile app and SMS banking
Cons
- No signup bonus
- No associated checking account
CIT Bank Savings Connect Account
- Our Rating 4.5/5 How our ratings work Read the review
- APY4.65%
Annual Percentage Yield is accurate as of July 27, 2023. Interest rates for the Savings Connect account are variable and subject to change at any time without notice.
- Minimum
Deposit Required$100 - Intro Bonus N/A
CIT Bank's Savings Connect account is one of our top picks for high-yield savings accounts. Featuring a competitive flat APY on all balances, it can go head-to-head with most of the top savings accounts available. What's more, you don't have to do anything special to earn this high interest rate; many similar accounts (including some offered by CIT) only offer their highest interest rates to customers who complete certain requirements.
Overview
With extremely competitive interest rates and a host of convenient features, the CIT Bank Savings Connect account can go head-to-head with nearly any other savings account in the U.S.
Pros
- Competitive APY
- No monthly service fee
- Free electronic bank transfers to checking accounts (even if it isn't a CIT checking account)
Cons
- No fee-free ATM network
- Minimum opening deposit required
3. Do I Need to Access My Savings for Another Reason?
You might need to access the cash in your CD early for an emergency or other unplanned need. Many financial experts recommend setting aside at least
In general, it’s
It can be upsetting to face an early withdrawal penalty and lose a portion of the interest you worked hard to earn, but having those savings could help you out of a crisis, which is sometimes the most important thing. Once your financial situation improves, you can work to rebuild your emergency fund for the future.
Bottom Line
When you open a CD from an FDIC insured bank and remain within federal deposit limits, your savings is protec
Nonetheless, there are a few situations where an early CD withdrawal could make sense. Just be sure to take your time, crunch the numbers and examine your situation from all angles before you make a decision that you can’t reverse.