CD Early Withdrawal Penalty Calculator
Calculate the penalty for early CD withdrawal. See how much you'll lose and whether it makes sense to break your CD early based on your specific situation.
CD Details
Early Withdrawal Penalty
You will lose $250.00 in penalties if you withdraw early.
Break-Even Analysis
You would need to hold the CD for approximately 6 more months to earn back the penalty amount.
Hold vs Early Withdrawal Comparison
Difference: $509.54 less if you withdraw early
Penalty Impact by Structure
What is CD Early Withdrawal Penalty?
An early withdrawal penalty is a fee charged by banks when you withdraw money from a certificate of deposit before its maturity date. This penalty compensates the bank for the lost interest income and helps discourage premature withdrawals.
Our CD early withdrawal penalty calculator helps you understand exactly how much you'll lose if you break your CD early, so you can make an informed decision.
How Early Withdrawal Penalties Work
Penalties are typically calculated as a multiple of the interest you would have earned:
Example:
$10,000 CD at 5% APY
Annual Interest: $500
Monthly Interest: $41.67
6-Month Penalty: $250
The penalty is deducted from your principal and earned interest when you withdraw early.
Common Penalty Structures by Bank
| CD Term | Typical Penalty | Example Banks |
|---|---|---|
| 3-6 months | 3 months interest | Most banks |
| 12 months | 6 months interest | Chase, Bank of America |
| 24+ months | 12 months interest | Wells Fargo, Citi |
Note: Always check with your specific bank, as penalty structures can vary. Some banks offer penalty-free CDs with slightly lower rates.
When Does Breaking a CD Make Sense?
1. Emergency Financial Need
If you face a true emergency and need funds immediately, paying the penalty might be better than high-interest credit card debt or personal loans. Calculate the net cost to make sure.
2. Significantly Better Rate Available
If you found a CD offering 1%+ higher rate, breaking your current CD and reinvesting might make financial sense. Use our calculator to compare net returns.
3. Near Maturity
If your CD is close to maturity (within 1-2 months), the penalty impact is minimal, and breaking it might be acceptable for urgent needs.
How to Avoid Early Withdrawal Penalties
- Plan Ahead: Only invest money you won't need before maturity
- CD Laddering: Spread investments across multiple CDs with different maturity dates
- No-Penalty CDs: Some banks offer penalty-free CDs (usually with lower rates)
- Emergency Fund: Keep 3-6 months expenses in a regular savings account
- Check Bank Policies: Some banks allow penalty-free withdrawals for hardship cases
The best strategy is to never need to break a CD early. Use our calculator to see the true cost before making a decision.