Early Withdrawal

Archive for the ‘Penalties’ Category

Question: How does this Certificate of Deposit penalty for Early Withdrawal work?

There is a 5 year Certificate of Deposit offering 6% interest. Penalty is .75% (so 5.25% interest) for every year that the money is withdrawn early.
Does this mean that withdrawl in say, the 3rd year would give you 6% for the first 2 years and 5.25% for the 3rd, or would it be 5.25% for all 3 years?

Answer: Consider buying cd’s through a discount broker in the future.
Such as Schwab or Fidelity.
Their cd’s don’t have a penalty for selling early –
they simply sell at market price – usually you make a profit.

Could it be that they will be charging you 75% of the interest you earned during the last year? That would sound about right for a bank.
I would call the bank- this is new.
Usually they just charge 6 or 9 months interest -
banks are getting more clever at confusing people.
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