CD Penalty
Calculator

Certificates of Deposit (CDs) offer higher interest rates than savings accounts in exchange for locking your money up for a fixed term. If you withdraw before the term ends, the bank charges an early withdrawal penalty — usually a set number of months' worth of interest on the amount withdrawn.

Standard penalties are typically:

• CD terms under 12 months: 3 months of interest
• CD terms of 12-60 months: 6 months of interest
• Some banks: 90 days of interest regardless of term
• Federal Regulation D: 30 days of interest in certain cases

The penalty is calculated on your current balance (principal + earned interest), not just your original deposit. This calculator estimates your net proceeds after penalty so you can decide if early withdrawal is worth it.

Breaking a CD early only makes sense if you need the money urgently — or if you can reinvest at a significantly higher rate. Here's when to consider it:

It might make sense if:

• You have an emergency and need cash immediately
• Interest rates have risen dramatically and reinvesting (after penalty) yields more than keeping your current CD
• The opportunity cost of leaving money locked up is high (e.g., you found a much better investment)

It rarely makes sense if:

• You're in the first few months of a long-term CD — penalties eat all your earned interest and then some
• You only need the money for a short time — a CD isn't an emergency fund
• You're breaking a CD with a high rate just to move to a slightly higher one — the penalty may wipe out the benefit

You deposit $20,000 in a 24-month CD earning 5% APY. After 10 months, you need the money for a down payment on a house.

Interest earned: ~$833
Penalty (6 months interest): ~$508
Net proceeds: ~$20,325

You keep $325 of the $833 interest you earned — the bank takes the rest as a penalty. If you had waited just 2 more months, the penalty might have dropped to 3 months ($254), leaving you with ~$579 in interest.

Bottom line: Breaking a CD early is expensive. Only do it when necessary.