New savers win with this no-penalty CD


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Early withdrawal penalties can be a real pain for investors. Luckily, there’s a product designed for folks looking to earn a higher yield without paying the price for ditching their accounts too soon: no-penalty CDs.

Bethpage Federal Credit Union is the latest institution to introduce this type of investment vehicle. And get this: It’s better than a similar CD offered by Ally Bank.

Its 11-month no-penalty CD pays 1.50 percent APY. A minimum deposit of $50 is all that’s required to qualify, making it a great deal for savers without hundreds of dollars to set aside.

To earn that much interest through Ally Bank’s no-penalty CD, you would need to lock up at least $25,000 for 11 months.

CIT Bank’s no-penalty CD requires a $1,000 minimum deposit but pays more interest (1.55 percent APY).

Compare Bethpage’s promotion to other top CD offers. Then calculate how much interest you could earn by the end of your term.

The tradeoff

In exchange for buying a no-penalty CD, you’ll have to make a couple of sacrifices. For example, while you won’t pay an early withdrawal penalty, you will earn less interest.

At 1.50 percent APY, the yield tied to Bethpage’s 11-month CD is three-tenths of a percentage point lower than the top 12-month CD rate. And it’s just as high as the country’s best savings account yield for new savers.

If you’d like more flexibility, you might as well go with a savings account.

Top nationally available savings account rates
Institution APY Minimum deposit
DollarSavingsDirect 1.50% $1
Salem Five Direct 1.50% $100
Live Oak Bank 1.40% $0
PurePoint Financial 1.40% $10,000
CIT Bank 1.35% $100

There are no partial withdrawals with the 11-month CD offered by Bethpage, so be prepared to withdraw your entire balance at once or leave the money in your account until maturity. This can only be done, however, at least seven days after your first deposit (otherwise you will pay some simple interest).

Nevertheless, biting the bullet and buying the no-penalty could pay off. You’ll earn a sizable amount of interest and you’ll easily be able to close the account if you spot a deal that’s more competitive. Plus interest compounds daily, giving you the opportunity to earn the highest amount of interest before exiting.

How to join

Anyone willing to open a savings account and deposit $5 can qualify for a CD at Bethpage Federal Credit Union. That’s the only membership requirement, making it one of the easiest credit unions to join.

The online membership application takes about five minutes to complete. You’ll need your:

  • Social Security number
  • Driver’s license or government-issued ID (or military ID if you don’t mind applying in a branch)
  • Funding for the savings account

How to buy Bethpage Federal CDs

Bethpage’s CDs are available for purchase online or over the phone. You can also buy one at one of its branch locations.

You can fund your CD via an electronic transfer or by mailing in a check to the credit union’s headquarters.

According to the credit union’s website, if you don’t claim your deposits at the end of your term, they will automatically roll over into a six-month CD.

About Bethpage Federal Credit Union

Bethpage Federal Credit Union is based in Bethpage, New York. Founded in 1941, it originally only served workers employed by the Grumman Corporation, an aircraft engineering company. In 2016, the credit union opened membership to allow anyone to join.

The credit union earned four out of five stars on Bankrate’s latest review of its financial health.