CD early withdrawal penalties: what they cost and how to avoid them

Last reviewed Oct 29, 2026 · CompareCDRate editorial team · General education, not financial advice

How penalties are calculated

Most institutions express the penalty as a number of days or months of interest on the amount withdrawn — for example, 90 days of simple interest. Others use a flat percentage of the amount withdrawn, or a combination. The penalty usually applies whether or not you’ve already earned that much interest.

Example: you withdraw $10,000 from a CD paying 4.50% that charges 180 days of simple interest. The penalty is about $10,000 × 4.50% × 180/365 ≈ $222.

Typical penalties by term

Every institution sets its own schedule, but a common pattern is roughly 60 to 90 days of interest for terms of a year or less, about 180 days for terms of one to three years, and a year’s interest or more for longer terms. Some banks charge much more. In our rate tables, we show a penalty only when a source reported it; otherwise we tell you to confirm with the institution.

Federal rules

Under federal Regulation D, a time deposit withdrawn within six days of being deposited must carry a penalty of at least seven days’ simple interest. Beyond that, there’s no federal cap — the institution decides, and it must disclose the penalty before you open the account.

Should you ever break a CD?

Sometimes it pays. If rates have risen sharply, you could come out ahead by paying the penalty and reinvesting at the higher rate for the remaining time. Compare the penalty with the extra interest you’d earn. Our calculator can help you estimate both sides.

How to avoid penalties

• Match the term to when you’ll need the money.
• Keep an emergency fund in savings, not in long CDs.
• Use a no-penalty CD for money you might need.
• Build a CD ladder so some money matures regularly.
• Consider brokered CDs, which can be sold instead of broken (at market price).

Frequently asked questions