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CD Early Withdrawal Penalty Calculator

Calculate the exact cost of breaking your CD early. Compare penalties, net interest, and break-even rates to decide if switching is worth it.

%
Interest Earned
$246.95
Penalty
-$122.72
Net Interest
$124.23
Refund Amount
$10,124.23
Break-even APY for remaining term
2.45%

Recommendation: Hold the CD—net interest remains positive.

About Early Withdrawal Penalties

Withdrawing funds from a Certificate of Deposit (CD) before the maturity date usually incurs a penalty. This fee is typically calculated as a number of months' worth of interest (e.g., 3 or 6 months). Our calculator helps you estimate this cost and determine if the remaining interest justifies holding the CD versus switching to a higher-yielding option.

How Penalties Are Calculated

Banks often charge a fee based on simple interest. For example, a 6-month interest penalty means you forfeit the interest you would have earned in 6 months. If you haven't earned enough interest yet, the penalty might eat into your principal.

Strategies to Avoid Penalties

  1. CD Laddering: Split your investment across multiple terms so funds mature regularly.
  2. No-Penalty CDs: Choose CDs that allow penalty-free withdrawals (usually with slightly lower rates).
  3. Wait it out: If the break-even APY is too high, it might be better to keep your current CD.

Frequently Asked Questions

What is an early withdrawal penalty?
A fee charged by banks if you withdraw money from a CD before its maturity date. It's usually calculated as a few months of interest.
How is the penalty calculated?
Most banks take a set number of months of interest (e.g., 3, 6, or 12 months) from your account. If you haven't earned that much interest yet, the penalty may reduce your principal.
Can I avoid the penalty?
Generally, no, unless you wait until maturity. Some 'No-Penalty CDs' allow early withdrawal but often offer lower interest rates.
Is it worth breaking a CD for a higher rate?
It depends. Use our calculator to find the 'break-even rate.' If the new CD's rate is higher than this break-even rate, switching might be profitable despite the penalty.

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