CD Early Withdrawal Penalty Calculator

Quick start

1. Enter your CD's deposit amount and APY.
2. Enter the original CD term (in months or years).
3. Enter how much time is remaining or has elapsed.
4. Select your bank's penalty type from your CD disclosure.
5. Enter the specific penalty terms (days, months, or percentage).
6. See your penalty amount and amount you'll receive instantly.

Your results — what they mean

• Penalty Amount: The fee your bank charges for early withdrawal. This is deducted from your balance.
• Amount You'll Receive: Your original deposit plus interest earned to date, minus the penalty. This is what you'll actually get back.
• If Held to Maturity: What your CD would be worth if you waited until the maturity date.
• Cost of Early Withdrawal: The total amount you're giving up by withdrawing early (penalty plus forgone interest).
• Effective Loss: The percentage of your potential maturity value that you lose by withdrawing early.

How this calculator works (plain English)

• CDs are time deposits that pay fixed interest for a set term. Banks lock your money to offer higher rates.
• If you withdraw before maturity, banks charge an early withdrawal penalty.
• Penalties are typically calculated as a certain number of days or months of interest.
• We use your CD's APY and term to calculate how much interest would be earned, then apply your bank's penalty formula.
• The penalty can exceed interest earned, potentially reducing your principal balance.
• All calculations use daily compounding (ACT/365 basis) for accuracy.

Understanding CD Early Withdrawal Penalties

• Why penalties exist: Banks count on having your money for the full term. Penalties discourage early withdrawal and compensate for lost opportunity.
• Common penalty structures:
  • • Short-term CDs (3-12 months): 90-180 days of interest
  • • Long-term CDs (2-5 years): 180-365 days of interest
  • • Very early withdrawal: Some banks enforce minimum penalties (e.g., 7 days)
• Penalties can reduce principal: If you withdraw very early and haven't earned much interest, the penalty may exceed your interest, dipping into your deposit.
• Grace periods: Most CDs offer a grace period (typically 7-10 days) after maturity to withdraw without penalty.

How to Find Your Bank's Penalty Terms

• CD Truth in Savings Disclosure: This document provided when you opened the CD contains penalty details.
• Account agreement: Look for sections titled "Early Withdrawal Penalty" or "Withdrawal Before Maturity."
• Common disclosure language:
  • • "90 days of interest" → Use Fixed Days (90)
  • • "3 months of interest" → Use Fixed Months (3)
  • • "All interest earned or 90 days, whichever is less" → Use Minimum type (penalty capped at interest earned; safer for early withdrawal)
  • • "All interest earned or 7 days, whichever is greater" → Use Maximum type (enforces minimum penalty even if you earned less; may reduce principal)
  • • "25% of total interest for the term" → Use Percent type (25%)
• Contact your bank: If penalty terms aren't clear, call customer service or visit a branch for clarification.

When Early Withdrawal Might Make Sense

• Rate arbitrage: If current CD rates are significantly higher, the new rate might offset the penalty over time.
• Emergency needs: If you need funds urgently and have no other options, paying the penalty may be necessary.
• Better investment opportunities: If you can invest elsewhere with significantly higher returns that exceed the penalty cost.
• Near maturity: If you're very close to maturity, the penalty may be minimal compared to the inconvenience of waiting.

FAQs

Assumptions

• Full withdrawal only (partial withdrawals not supported).
• APY remains constant for the full CD term.
• Daily compounding (ACT/365 basis) used for interest calculations.
• Penalty calculated using simple interest (no compounding on penalty).
• If APR not provided, it's approximated from APY (see disclosure note in results).
• Month-to-day conversions use standard banking conventions.
• Results rounded to cents for readability.
• Grace period not factored in (set time remaining to 0 for maturity).

Glossary (all terms used)

Certificate of Deposit (CD):

A time deposit offered by banks that pays fixed interest for a specified term. Funds are locked until maturity.

Early Withdrawal Penalty:

A fee charged by banks when you withdraw funds from a CD before the maturity date. Typically calculated as days or months of interest.

APY (Annual Percentage Yield):

The effective yearly return with compounding included. Used to compare CD rates.

APR (Annual Percentage Rate):

The nominal yearly rate without compounding. Some banks use this for penalty calculations.

Maturity Date:

The date when the CD term ends and you can withdraw funds without penalty.

Grace Period:

A short window (typically 7-10 days) after maturity during which you can withdraw without penalty before the CD automatically renews.

Principal (or Deposit Amount):

The original amount of money you deposited when opening the CD. Also called initial deposit. This is the base amount before any interest is earned.

Amount Returned:

The total amount you'll actually receive after the penalty is deducted. This is your original deposit plus all interest earned to date, minus the penalty amount. May be less than your original deposit if the penalty exceeds interest earned.

Fixed Days/Months Penalty:

A penalty calculated as a specific number of days or months of simple interest (e.g., "90 days of interest").

Minimum/Maximum Penalty:

A penalty that's the lesser (or greater) of interest earned to date or a fixed number of days of interest.

No-Penalty CD:

A CD that allows early withdrawal without penalty after a short lock period (usually 6-7 days).

Truth in Savings Disclosure:

A document required by federal law that discloses CD terms, including penalty information.