One of the major drawbacks of certificates of deposit (CDs) is that you can't get to your money until the CD matures. So a CD that allows you to withdraw your money early, without fear of penalty, would be an easy choice, right? The problem is, deciding between a no-penalty and a conventional CD is a bit more complicated than it might seem.

Early-withdrawal fees on conventional CDs typically will cost you a few days to a few months worth of interest, depending on the term of the CD. But banks do offer no-penalty CDs -- also called liquid CDs or risk free CDs -- because customers have made it clear they want them. "Customers find no-penalty CDs an attractive product," says Doug Johnson, senior vice president with the American Bankers Association. "And many banks do it as a way to bring other business into the bank."

In fact, some banks require customers to open another account to avoid a penalty. The reason: banks need your deposit dollars. No-penalty CDs that require a second account encourage a consumer to develop a relationship with a single institution, instead of simply chasing the best CD rates from bank to bank. Even so, it pays to shop around, especially since no-penalty CDs come in all shapes and sizes.

For instance, Bank of America ( BAC) offers a nine-month risk free CD with a 1.75% annual percentage yield (APY). You can withdraw the money anytime after six days, provided that the money is withdrawn into another Bank of America deposit account. Provident Bank ( PBKS) offers its own type of no-penalty CD, a 14-month CD with a 1.65% APY, and doesn't charge a penalty for the first two early withdrawals -- standard penalties apply after that. Meanwhile, Virginia Commerce Bank's ( VCBI) 12-month, no-penalty CD offers a 2.0% APY, but only waives the penalty on the first withdrawal.

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