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Callable CDs: What They Are and How They Work

Your term might be over earlier than planned, but you might get a high APY in exchange.

Certificates of deposit (CDs) are deposit accounts that earn interest. They’re often called “locked” savings accounts since you can’t withdraw your deposit or the earned interest before the term ends without paying penalties.

Callable CDs give the bank more leverage, but you usually get a higher interest rate than standard CDs.

What is a CD?

CDs are deposit accounts with deposit insurance and are considered a safe way to grow your savings. Normally, you make a deposit, choose a term and earn interest on your deposit over the term’s duration. If you close the CD before the term is over, you’ll likely pay early withdrawal penalties.

The highest average rate for a CD is a 12-month term at 1.83%, according to the FDIC. A few CD types include traditional CDs, no-penalty CDs and callable CDs.(1)

What is a callable CD?

A callable CD is a type of savings account that allows the issuer (bank or credit union) to terminate the CD before its maturity date, a process referred to as “calling” the CD or using a call feature or call-away option.

In short, the issuer can close a callable CD before the actual term is up, unlike a traditional CD, which offers guaranteed returns if you keep it open the whole time.

When the issuer “calls” the CD, you get your initial deposit plus any interest earned up to that point, but you lose out on the future interest you would have earned if the CD had matured as scheduled.

To compensate for the bank’s ability to terminate the CD early, they typically offer high interest rates — usually exceeding those of traditional “non-callable” CDs.

How often are callable CDs called?

Most callable CDs include a “call protection period” or a “noncallable period,” which is a set time frame during which the bank cannot call the CD. This period usually ranges between six to 12 months, depending on the CD’s terms.

After the protection period is over, the CD enters into the callable date, which is when the bank can terminate it. In most cases, the issuer can call the CD once every six months to end it, but it depends on the issuer.

In most cases, issuers call away CDs if rates drop so they can stay competitive and avoid offering higher rates than other banks. Conversely, if rates are going up, the issuer is less likely to terminate your callable CD’s term.

Callable vs. noncallable CDs

Callable CDs often offer higher interest rates than traditional CDs to compensate for the risk that the bank may call the CD early, especially if market interest rates drop.

If you expect market rates to be steady, a callable CD might be worth the risk. If you’re seeing big ups and downs in CD offerings, that might be a sign that a callable CD might be terminated early. If you’d prefer to avoid that risk, a regular CD might be more for you.

What banks offer callable CDs?

Callable CDs aren’t a very common CD type, but here are three institutions that offer them:

  • Raisin. A savings marketplace, Raisin is partnered with a few banks that offer callable CDs, such as Mph.Bank and SkyOne Federal Credit Union.
  • Fidelity. This comprehensive financial institution is known to offer a wide selection of brokered CDs, including callable options.
  • E*TRADE. Mostly known for its stock trading as a brokerage, E*TRADE offers brokerage CDs that may come with a callable option.

Pros and cons of callable CDs

Callable CDs have their positives, but like most investing and saving methods, they have downsides to consider.

Pros

  • May offer higher rates than regular CDs
  • Might get your deposit and interest earnings early without penalty
  • The call protection period offers some stability

Cons

  • Interest earnings not guaranteed
  • Riskier when rates are dropping
  • More complicated terms than traditional CDs

Compare Callable CDs options

Narrow down top Callable CDs accounts by APYs and minimum deposit. For a better comparison, tick the Compare box on multiple accounts to see their benefits side by side.

1 - 3 of 3
Product USFSA-CDS Finder Score 36-month APY 48-month APY 60-month APY Minimum deposit to open Offer
mph.bank 36-month callable CD through Raisin
Raisin logo
Finder score
4.38%
N/A
N/A
$1
Go to site
SkyOne FCU 48-month callable CD through Raisin
Raisin logo
Finder score
N/A
4.25%
N/A
$1
Go to site
mph.bank 60-month callable CD through Raisin
Raisin logo
Finder score
N/A
N/A
4.42%
$1
Go to site
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What is the Finder Score?

The Finder Score analyzes hundreds of CDs from more than 100 institutions. It takes into account the product's interest rate for available terms and opening deposit requirements - this gives you a simple score out of 10.

Different banks and credit unions offer CDs for various lengths of time, ranging from as short as seven days to as long as 20 years. For our ratings, we consider the term lengths that the FDIC uses in its monthly updates on national rates.

If a bank or credit union doesn’t offer a CD for a specific term used by the FDIC, we don’t penalize it: Instead, we simply don’t rate it. Each of the standard term lengths has its own APY rating based on the FDIC’s average rates.

Read the full Finder Score breakdown

Bottom line

Callable CDs aren’t very commonly offered. In most cases, you’ll have to opt for a brokered CD with a callable option.

For other ways of growing your nest egg, compare more savings accounts and options.

Holly Jennings's headshot
To make sure you get accurate and helpful information, this guide has been edited by Holly Jennings as part of our fact-checking process.
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Written by

Editor, Banking

Bethany Hickey is the banking editor and personal finance expert at Finder, specializing in banking, lending, insurance, and crypto. Bethany’s expertise in personal finance has garnered recognition from esteemed media outlets, such as Nasdaq, MSN, Yahoo Finance, GOBankingRates, SuperMoney, AOL and Newsweek. Her articles offer practical financial strategies to Americans, empowering them to make decisions that meet their financial goals. Her past work includes articles on generational spending and saving habits, lending, budgeting and managing debt. Before joining Finder, she was a content manager where she wrote hundreds of articles and news pieces on auto financing and credit repair for CarsDirect, Auto Credit Express and The Car Connection, among others. Bethany holds a BA in English from the University of Michigan-Flint, and was poetry editor for the university’s Qua Literary and Fine Arts Magazine. See full bio

Bethany's expertise
Bethany has written 460 Finder guides across topics including:
  • Personal finance
  • Banking
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