CD Early Withdrawal Penalty

Estimate the cost of closing your CD account before it matures.

Banks typically charge a penalty if you withdraw funds from a Certificate of Deposit (CD) before the agreed-upon term. Use this tool to calculate how much interest you will forfeit and see if the withdrawal will impact your initial principal.

Withdrawal Penalty Estimator

Determine the financial impact of an early CD closure.

CD Principal Amount ($)

APY (%)

Months Held

Penalty (Months of Interest)

Estimated Payout

Interest Accrued

Penalty Loss

Actual Return

How Early Withdrawal Penalties Work

When you invest in a CD, you commit to keeping your money in the account for a specific timeframe. In exchange for this commitment, the bank offers a fixed interest rate that is usually higher than a traditional savings account. Breaking the term early triggers a penalty, which is generally calculated as a loss of interest for a set number of months.

Important Considerations

Principal Safety: If you withdraw money shortly after opening the CD, the penalty amount may be larger than the interest you have earned. In these cases, the bank will subtract the difference from your original principal investment.

Penalty Tiers: Penalties often vary by term length. For example, a 12-month CD may have a 90-day interest penalty, while a 5-year CD could have a 365-day interest penalty.

Frequently Asked Questions

Is the penalty always based on interest?

Yes, most standard early withdrawal penalties are expressed as a specific number of days or months of interest. The bank uses your current interest rate to determine the dollar value of that time period.

Can I avoid CD penalties?

You can avoid penalties by waiting until the CD reaches maturity or by choosing a No-Penalty CD, which allows for early withdrawals without a fee, though these typically offer lower APYs.