CD Early Withdrawal Penalty Calculator

Estimate the penalty for cashing out a CD before maturity

CD principal amount ($)

Interest rate / APY (%)

Penalty period (typical by term)

Penalty (months of interest)

Compare to Breaking & Reinvesting (optional)

Months remaining until original maturity

New CD's rate / APY (%)

Frequently Asked Questions

How is a CD early withdrawal penalty calculated? ▼

The standard formula is: penalty = principal × (annual rate ÷ 12) × penalty months. Most banks express their penalty as a number of months' worth of interest — for example, "6 months of interest" — rather than a flat fee.

How many months of interest do banks typically charge? ▼

It varies by CD term and bank, but common patterns are around 90 days (about 3 months) of interest for CDs of 1 year or less, and 6-12 months of interest for longer terms (2-5 years). Always check your specific CD's disclosure — this varies significantly by institution.

Can the penalty exceed the interest I've earned? ▼

Yes — if you withdraw very early (before you've earned enough interest to cover the penalty), the penalty can eat into your original principal, not just your earned interest. This is more likely with CDs that have a long penalty period relative to how long you actually held the CD.

Is this exact? ▼

This uses the standard, most common penalty formula, but some banks use slightly different methods (e.g., a flat number of days rather than months, or a minimum dollar penalty). Check your specific CD's account disclosure for the exact terms.

Is it ever worth breaking a CD to reinvest at a better rate? ▼

It can be, if the new rate is high enough relative to your remaining time and penalty size — use the reinvestment comparison below. If the extra interest from the new rate over your remaining term outweighs the penalty, breaking and reinvesting comes out ahead; if not, it's better to just wait out the original CD.

How a CD early withdrawal penalty is calculated

Banks set the penalty as a number of months (or days) of interest on the amount withdrawn. The calculator uses simple interest:

Penalty = principal × (annual rate ÷ 12) × penalty months

It then compares two paths over the months left until maturity: keeping the CD, or paying the penalty and moving the rest into a new CD at a different rate.

Example

You have $10,000 in a CD paying 4.5% with a 6-month interest penalty and 18 months to go. The penalty is $10,000 × 0.375% × 6 = $225, leaving $9,775. Keeping the CD grows it to about $10,675 by maturity. Moving $9,775 into a 5.0% CD for 18 months grows it to about $10,508, so staying is about $167 better. The new CD would need to pay about 6.2% or more before breaking the old one pays off.

Typical penalties

CD term	Common penalty
Under 1 year	1 to 3 months of interest
1 year	3 months (90 days)
2 to 3 years	6 months
4 to 5 years	12 months or more

Federal rules only require a minimum penalty of 7 days of simple interest for withdrawals in the first six days; above that, each bank sets its own terms, so check your account disclosure.

Things to know before breaking a CD

The penalty can reach principal. If you withdraw early in the term, before enough interest has accrued, the bank takes the shortfall from your deposit.
Penalties are tax deductible. The bank reports the amount on Form 1099-INT, and you deduct it as an adjustment to income on Schedule 1 even if you do not itemize.
Exceptions exist. Many banks waive the penalty after the owner's death or a court-declared incompetence, and for required minimum distributions from IRA CDs.
No-penalty CDs trade a slightly lower rate for free early access.

To keep part of your savings available without penalties, consider a ladder built with the CD laddering calculator, and compare quoted rates with the APY calculator.