A certificate of deposit (CD) that allow its holder to withdraw his/ her money before its maturity date (end of its term) without being charged any penalty (on account of early withdrawal). In this sense, this certificate is considered liquid: it can be converted back into cash at a zero conversion cost. Liquid CDs carry higher annual percentage yields (APYs) than that on a savings or money market account. However, the yield is likely lower than the rate attached to a traditional certificate (traditional CD) with a comparable term. In other words, liquidity comes at a price: part of the return that the holder will sacrifice in return for the ability to liquidate at no cost.

Irrespective of the ability of a holder to early withdraw money penalty-free, a liquid CD may still have withdrawal limitation during a specific period after opening the account. Most banks require that the deposited funds remain untouched at least seven days. Generally speaking, financial institutions are at some degree of liberty to define their own penalty-free withdrawal rules, which means that there are no clear-cut, unified rules that govern such a non-withdrawal policy for liquid CDs.

Liquid CDs are also known as no-penalty CDs.