🏦 Banking Tool
CD Penalty Calculator
Early Withdrawal Cost
Calculate exactly how much you'll lose by breaking a CD early — and decide if it's worth it.
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Early Withdrawal Penalty
Standard penalty for a 12-month CD: 6 months of interest
CD Penalty Calculator: Is It Worth Breaking Your CD?
A Certificate of Deposit (CD) offers a guaranteed interest rate in exchange for locking up your money for a fixed term. But life is unpredictable. Our free CD penalty calculator helps you figure out exactly how much an early withdrawal will cost, how much interest you've already earned, what you'll walk away with, and whether it makes financial sense to break the CD now or wait until maturity.
CD Penalty Formula
Penalty = Principal × (APY ÷ 100) × (Penalty Months ÷ 12)
Net Payout = Principal + Interest Earned − Penalty
Interest Earned = Principal × (APY ÷ 100) × (Months Elapsed ÷ 12)
Standard CD Penalty by Term
| CD Term | Typical Penalty | Example (5% APY, $10k) |
|---|---|---|
| 3 months | 3 months interest | $125 |
| 6–12 months | 6 months interest | $250 |
| 13–24 months | 12 months interest | $500 |
| 24+ months | 18 months interest | $750 |
Note: Penalties vary by institution. Always check your CD agreement for the exact terms.
When Does Breaking a CD Make Sense?
Emergency Need
Unexpected medical bills or job loss may make breaking the CD necessary regardless of penalty.
Rates Have Risen Sharply
If APYs have risen 2%+ since you opened, the gain from reinvesting may outpace the penalty.
Better Opportunity
An investment returning 10%+ might justify a 6-month penalty on a 5% CD.
Early in the Term
A small penalty on a long-term CD may cost less than you think compared to a better rate elsewhere.
Frequently Asked Questions
What is a CD early withdrawal penalty?▾
A CD early withdrawal penalty is a fee charged by a bank or credit union when you withdraw funds from a Certificate of Deposit before its maturity date. The penalty is typically calculated as a certain number of months of interest (e.g., 3, 6, or 12 months of interest), which reduces your total payout. In some cases, if you haven't earned enough interest, the penalty can dip into your principal.
How is the CD early withdrawal penalty calculated?▾
The penalty is typically calculated as: Penalty = Principal × (APY / 100) × (Penalty Months / 12). For example, a $10,000 CD at 5% APY with a 6-month penalty would incur a penalty of $10,000 × 0.05 × (6/12) = $250. Most banks use 3 months of interest for short-term CDs (under 6 months), 6 months for 6–12 month CDs, 12 months for 13–24 month CDs, and 18 months for longer-term CDs.
Can a CD early withdrawal penalty reduce my principal?▾
Yes. If you withdraw very early before you've earned enough interest to cover the penalty, the bank will deduct the remainder from your principal. For example, if you open a 12-month CD and withdraw after just one month, you may have only earned one month of interest, but owe a six-month interest penalty — meaning the bank takes the remaining five months' worth from your deposit.
When should I break my CD early?▾
Breaking a CD early makes sense when: (1) you have an urgent financial need, (2) you can reinvest at a significantly higher interest rate and the gain outweighs the penalty, or (3) the penalty cost is small relative to the opportunity. Calculate the penalty first, then compare against what you'd earn by holding to maturity or reinvesting elsewhere. Our CD penalty calculator shows you the exact numbers.
Which banks have the lowest CD early withdrawal penalties?▾
Online banks typically charge lower CD penalties than traditional banks. Ally Bank charges 60 days of interest for CDs under 24 months and 150 days for longer terms. Marcus by Goldman Sachs and Discover Bank also tend to have competitive, lower penalties. Some banks offer "no-penalty CDs" that allow early withdrawal without any fee, though these usually offer slightly lower APYs.