bank rates

5 Top Early Withdrawal Policies

hand holding a magnifying glassIf you think you might need your money for a financial emergency, or if you expect interest rates to rise enough in future years that it might be worth the cost to close your account and move your money elsewhere, choose a CD with a low early withdrawal penalty.

Every bank sets its own policies (including the right to refuse early withdrawal), which depend on the CD’s term and vary significantly.

Some banks are renowned for their generous early withdrawal penalties (Think Ally), but their rates aren’t quite as good as the top nationally available deals.

With that in mind, here are some of the best we’ve found at banks that offer competitive CD rates to savers nationwide.

AloStar Bank of Commerce

While 90 days’ interest is a common early withdrawal penalty for 1-year CDs, AloStar (www.alostarbank.com) – an online bank based in Birmingham, Ala. – charges just 30 days’ interest.

This bank also offers one of the highest interest rates on 1-year CDs. It currently pays 1.00% APY, while the national average, according to our latest survey of major lenders, is just 0.24%.

The penalty for 3-, 6- and 9-month CDs is also a competitive 30 days’ interest. AloStar has the top 3-month offer on our CD Rates Leaderboard.

AloStar’s penalty for CDs with 18- and 24-month maturities, which now pay 1.05% and 1.15% APY, is just three months’ interest versus competitors’ six-plus.

VirtualBank

The online division of Sabadell United Bank, VirtualBank’s (www.virtualbank.com) penalty stands out on 36- 48-, and 60-month CDs.

On these three terms, you’ll pay just six months’ interest if you withdraw your money early. Other top-paying banks charge nine or 12 months’ interest.

This bank currently offers the top nationally available 12-, 24- and 60-month CDs, which pay 1.07% APY, 1.26% APY and 2.31% APY, respectively.

Barclays

barclays logoBarclays (www.banking.barclaysus.com), the online American operation of the worldwide British bank, ties AloStar for one of the lowest EWPs on 3- and 18-month CDs at just three months’ interest.

Its EWP is also competitive on 12-month CDs (three months’ interest) and on 36-, 48- and 60-month CDs (six months’ interest).

Barclays offers some of the best rates on a number of these products, too.

You’ll earn 1.35% APY on 36-month CDs, while 48-month CDs pay 1.70% and 60-month CDs pay 2.25%.

GE Capital Retail Bank

GE Capital Retail Bank (www.gecrb.com), a subsidiary of GE Capital Corp., the financial services unit of the manufacturing giant, has lower EWPs than many competitors on 12-month CDs, charging just three months’ interest.

It’s also a top choice for 60-month CDs.

The early withdrawal penalty, like those of Barclays and VirtualBank, is just six months’ interest versus competitors’ nine, 12 and even 30 months’ interest.

On a 60-month CD, you’ll earn 2.25% if you deposit $2,000 to $24,999 and 2.3% if you deposit $25,000 or more.

CIT Bank

CIT Bank logoCIT Bank (www.bankoncit.com) is the online consumer bank of CIT Group Inc., which offers financing to small businesses and middle-market companies.

While many banks have an EWP of six or nine months’ interest on 1-year CDs, CIT charges just three months’ interest while paying 1.02% APY.

You’ll also find low EWPs of six months’ interest on 24- and 36-month CDs, where you’ll earn 1.17% and 1.27%, respectively.

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