4. Liquid CD

If you’re worried you might need to withdraw funds from your CD before the term ends and you want to do everything in your power to avoid the penalty, then a liquid (or non-penalty) CD is the way to go.

In this case, the APY could be higher than the yield on a savings account. On the other hand, it will also be lower than that of a traditional CD. Basically, are you willing to sacrifice your returns or are you going to risk a penalty in case you’re in dire need of cash and need to withdraw?

That being said, financial institutions will require that the money stays in the account for at least a little while without incurring a penalty anyway, but this is typically a pretty short period. Other rules may apply, so don’t forget to read the fine print carefully. As for banks, they only require that the money stays in the account for at least 7 days. If you need it back earlier than that, you won’t be able to dodge a penalty.

To put it simply if you want to save with a CD that has a long term but you’re unsure if you might need the money back a couple of months after the start of the term, liquid CDs might be your best and safest options.