BANKING AFFAIRS

Detailed explanation-1: -Federal law sets a minimum penalty on early withdrawals from CDs, but there is no maximum penalty. If you withdraw money within the first six days after deposit, the penalty is at least seven days’ simple interest. Review your account agreement for policies specific to your bank and your account.

Detailed explanation-2: -If you withdraw money from the CD before the term is over, you’re breaking the promise you made to keep your money in the account. For breaking that promise, you usually have to pay a fee called an early withdrawal penalty.

Detailed explanation-3: -You might be charged the equivalent of three months’ interest for an early withdrawal from a CD that matures in six months or less. If you have a five-year CD, the penalty might be 12 months’ worth of interest or more.

Detailed explanation-4: -You may be able to withdraw a partial amount or the full amount from a CD before its maturity date, depending on your institution’s early withdrawal policies. For example, some CDs will allow you to access some or all of the interest you have earned without touching the principal.