Liquid CDs

These CDs allow you to withdraw money without being penalized before the term is over. You usually have to maintain a minimum in the CD, and many times the number of withdrawals is limited.

The rates on liquid CDs are usually higher than savings or money market rates, but lower than traditional CDs.

One thing to keep in mind: once you deposit the money, federal law requires that it stays in the account for at least 7 days before it can be withdrawn. Some banks place their own limits on the amount of time the money needs to be in the account before it can be withdrawn.

The Liquid CD does help provide some liquidity, which is nice, but it does so at the expense of a higher CD rate.