Looking for a way to save? Certificates of deposit can be a great option. They’re a safe place to park your money, much like a traditional savings account, but typically with higher interest rates.
One thing to be aware of, though, is that traditional CDs don’t let you touch your money until the term ends, which could be months or even years, unless you’re willing to pay a penalty to withdraw money early.
However, there are a few ways (and reasons) you may be able to keep money in a CD and have access to funds without getting dinged by penalties. One way is to use a No-Penalty CD (more on that below). But that’s not your only option.
Some institutions allow you to schedule regular interest payments throughout the term of your CD, while leaving the principal untouched. Read the fine print in the CD’s terms to see if interest disbursements are an option.
Important to know and be clear about: receiving interest payments from your CD is not the same thing as withdrawing money.
This may seem obvious, but it’s an important difference because interest disbursements follow a schedule and keep your principal intact.
If you’re earning a nice amount of interest on a sizeable principal, it may be enough to cover expenses while not withdrawing funds from your principal.
Some CDs allow for early withdrawal penalties to be waived outright in extenuating circumstances, such as:
A No-Penalty CD gives you the freedom to withdraw funds before the CD term ends, without an early withdrawal penalty. There are some restrictions though. With a Marcus No-Penalty CD, for instance, you can withdraw your total deposit beginning seven days after you funded the CD. Just keep in mind – if you do withdraw funds from a Marcus No-Penalty CD before it matures, you’ll need to take out all of your money since a partial withdrawal isn't an option.
A Marcus No-Penalty CD is a great option. It can help you achieve your savings goals while leaving flexibility to handle the unexpected. Learn more about how Marcus could help.