Does anyone know the penalty for taking money out of a CD account?

Question

I need some money out of a CD accoun and the account has not matured, my family member keeps telling me that they are going to charge almost $300?, could that be true?

Answer 1

There will be a penalty - the amount depends on the amount of the CD, and where you have it. Frequently it's one quarter's interest, but can be more. You should have gotten some paperwork from the lending institution when you opened the CD that tells you what penalties are for early termination.

Answer 2

it depends on the agreement you opened the cd with. for example, at citibank, it is 30 days simple interest if the cd term is a year or more. for some cds all you lose is some of the interest, but I have seen some business cds where you could actually lose some of the principal (what you put in yourself) if you don't honor the agreement you made. the reason is, banks use that money to loan to other people, which is why they pay the better interest, and they are required to keep a certain percentage of deposited funds in reserve--if you take the money early, you are costing the bank money.

Answer 3

You need to talk to your issuing bank for full details. Fees for early withdrawel can be a flat amount or a percentage.

In the future, consider keeping the cash in an online savings account like IngDirect, HSBC or others that give you a CD comparable rate (often times higher) with no early withdrawel penalties.

Answer 4

Your CD agreement should give you a clear accounting of the cost for early withdrawal. A CD is an investment that is meant to gain in value over time. Cashing it in early will lessen its value and some banks charge an early withdrawal fee.

Answer 5

You lose the interest accrued from the last renewal date to the time of withdrawal.