by The Team at Simple

Interest rates: Simple No-Penalty CDs vs. Protected Goals Accounts

The interest rate for No-Penalty CDs right now is lower than our current rate for Protected Goals Accounts. Find out why so you can make the best decision for your budget.
Quizzicle Man Man in a striped sweater.

Simple is excited to be launching No-Penalty CDs! Right now, the interest rate for our CDs is lower than the rate for Protected Goals Accounts—and we’d like to help you understand why so you can make the right choice for your savings. Because a CD gives you a guaranteed return, it may be a smart choice right now if knowing how much interest you’ll earn is important for your financial goals. (Never had a CD? Learn how they work in this other blog post.)

What’s the difference in rates for Simple No-Penalty CDs vs. Protected Goals Accounts?

One of the main differences between these savings options is whether the APY (annual percentage yield—how much your money will earn in one year) is fixed or variable. Simple CDs have a fixed rate—the APY offered at the time you open one is locked in for a full year. Protected Goals Accounts have a variable rate—it may go up or down at any time.

Current rates (as of September 11, 2020):

Wait, I thought the rate for a CD was supposed to be higher than other savings options?

While it’s often true that CDs offer a higher rate in exchange for keeping your money in the account for a set period of time, the current interest rate environment affects what rates banks can offer.

Just like you need to balance your own budget, businesses have to make responsible choices to be sustainable—and that means making interest rate adjustments in reaction to the changing financial landscape. That’s especially important at Simple, where we don’t charge fees on checking accounts.

We’re offering a rate on CDs that we believe helps our customers grow their savings—even in an uncertain market—while keeping our business healthy and responsible. Simple’s current No-Penalty CD rate is more than 2.7 times the national average 12-month CD rate.** The rate on Protected Goals Accounts is higher at the moment, but like any variable rate, it may change in the future.

What’s happening with interest rates right now?

A number of factors affect interest rates (you can get a detailed overview in this blog post), but one of the most important is the rates set by the US central bank—aka, the Fed. A couple actions by the Fed factor into how Simple determined our current CD rate:

  • The Fed cut rates on March 3—a rare “off-cycle” interest rate reduction
  • The Fed lowered rates further on March 15—reducing them to the record low rate last seen in 2008

What’s an “interest rate environment” and how does it affect different kinds of accounts?

In a falling rate environment (which we’re in now), there’s a good chance that interest rates will go down. In that situation, locking your savings into a fixed account like a CD guarantees your rate won’t go down. For companies that offer banking services, it’s important to offer fixed rates that balance offering good value to customers while supporting their business sustainability.

In a rising rate environment, chances are that interest rates will stay the same or go up. That means you might want to keep your savings in a variable-rate account so you can take advantage of the possibility that your rate will increase. At the same time, banks need to make sure the rates they offer make sense for sustainable business practices.

We were in a rising rate environment from December 2015 through July 2019 (prior to that, the Fed hadn’t lowered rates since 2008)—so the current change might feel a little disconcerting. It might be helpful to check out this chart showing how rate environments have gone up and down over time.

What does all this mean for me?

You’ll want to look at a few factors to decide whether a CD or Protected Goals Account makes the most sense for you right now.

Return—how much interest your money will earn

  • No-Penalty CD: The fixed rate means you’re guaranteed a certain return—a good choice if earning interest is an important financial consideration for you
  • Protected Goals Account: Because the variable rate may go up or down at any time, this option works well if you’re not counting on earning a specific amount of interest

Liquidity—how easy it is to access your money

  • No-Penalty CD: You’re committing not to touch your savings for 12 months—which works well if you don’t need quick access to your savings (That said, you do have the ability to close the CD early without any penalties***)
  • Protected Goals Account: You can take money out any time, so it’s very “liquid”—easy to withdraw at a moment’s notice if you need that flexibility


  • No-Penalty CD: You’ll know exactly how much your money will earn in a year—a smart idea if you need a reliable return on your savings
  • Protected Goals Account: If you’re comfortable with the uncertainty of changing rate environment, this savings option could work well for you

What will happen with rates on Simple’s No-Penalty CDs and Protected Goals Accounts in the future?

Although we don’t have a crystal ball that tells us the future of the economy and the Fed’s decisions (we wish!), what you can count on is this: Simple will always offer our customers the best rates we can while being responsible about our business decisions so we can keep supporting you in growing your financial confidence. And we’ll always be transparent with you and offer resources and education to help you make the financial decisions that are right for you.

Save money with the right option for you

Once you’ve weighed your options, start working toward your financial goals with a savings approach that works best for you (and maybe that means stashing away a little in each one!).

Learn more about No-Penalty CDs at Simple!
Learn more about Protected Goals Accounts!

*The rate is effective as of September 11, 2020 and is subject to change without notice.

** Check it out for yourself here.

*** You may not close your certificate of deposit within seven (7) days of opening your CD. After the seventh (7th) day, you may close your certificate of deposit without penalty. Accrued interest is credited on a monthly basis. If you close your CD before accrued interest is credited, you will not receive accrued interest.

In order to open a No-Penalty CD, you must already have a Simple Checking Account open, or apply for and open a Simple Checking Account first. Accounts subject to approval.

Disclaimer: Hey! Welcome to our disclaimer. Here’s what you need to know to safely consume this blog post: We do our best to make sure information is accurate as of the date of publication, but things do change quickly sometimes. Any outbound links in this post will take you away from, to external sites in the wilds of the internet; neither Simple nor our partner bank, BBVA USA, endorse any linked-to websites; and we didn’t pay/barter with/bribe anyone to appear in this post. Individual situations will differ; consult your favorite finance, tax or legal professional for specific advice. And as much as we wish we could control the cost of things, any prices in this article are just estimates. Actual prices are up to retailers, manufacturers, and other people who’ve been granted magical powers over digits and dollar signs.

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