ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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. 3.

Detailed explanation-2: -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-3: -If you want to withdraw a portion (or all) of the principal amount, you’ll face early withdrawal penalties. For terms less than 12 months the penalty is 90 days’ simple interest, terms of 12 months to five years cost 270 days of interest and terms longer than five years penalize 365 days of simple interest earned.

Detailed explanation-4: -A certificate of deposit (CD) is a savings account that holds a fixed amount of money for a fixed period of time, such as six months, one year, or five years, and in exchange, the issuing bank pays interest. When you cash in or redeem your CD, you receive the money you originally invested plus any interest.