CD early withdrawal penalties

If you want to get out of a CD before it matures, you’ll need to pay the penalty.

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Why do banks impose CD penalties?

The fixed nature of a CD has benefits for banks as well as for customers. When you agree to invest a specific amount of money with a bank for a set period, the bank is more than happy to receive those funds because it can lend them out to mortgage and loan borrowers until your term is up.

However, when you decide to break your CD and withdraw funds ahead of schedule, you’re breaking the agreement you have with your bank, and it will impose fees to help cover any funding shortfall.

How much will I have to pay?

Individual banks set their own early withdrawal penalties, and it’s a good idea to check what they are before opening an account. Some of the most popular banks and the penalties they charge are:

Chase

If you open a personal CD with Chase and need to withdraw early, you’ll pay 1% of the amount withdrawn for CDs with terms of less than 24 months and 2% of the amount withdrawn for CDs with terms of more than 24 months. In both cases, the penalty will not be greater than the total amount of interest earned.

If you withdraw your money within seven days of opening the account, you’ll be charged at least seven days’ interest.

Bank of America

If you open a CD account with Bank of America, the amount you’ll need to pay depends on the length of the CD term.

  • Terms under 90 days. The penalty is seven days’ interest or all interest earned, whichever is greater, on the amount withdrawn.
  • Terms from 90 days to 12 months. The penalty is 90 days’ interest on the amount withdrawn.
  • Terms from 12 to 60 months. The penalty is 180 days’ interest on the amount withdrawn.
  • Terms of 60 months or more. The penalty is 365 days’ interest on the amount withdrawn.

Wells Fargo

If you open a CD account with Wells Fargo and make a withdrawal either within the first seven days or during the grace period, you’ll have to pay seven days’ interest. After that period, the amount you’ll need to pay depends on the length of the CD term.

  • Terms under 90 days. The penalty is one month’s interest.
  • Terms from over 90 days to 12 months. The penalty is three months’ interest.
  • Terms from over 12 months to 24 months. The penalty is six months’ interest.
  • Terms of 24 months or more. The penalty is 12 months’ interest.

Citibank

If you open a personal CD with Citibank and need to withdraw early, you’ll need to pay 90 days’ simple interest for CDs with terms of one year or less and 180 days’ simple interest for CDs with terms of more than one year. The penalties only apply to withdrawing from the principle — you can withdraw from your interest earned at any time without penalty.

Capital One

If you open a personal CD with Capital One and need to withdraw early, you’ll need to pay three months’ interest for CDs with terms one year or less and six months’ interest for CDs with terms of more than one year. Capital One doesn’t cap their penalty at the amount of interest earned, which means that if you withdraw early you could potentially lose all of your earned interest and part of your principle.

American Express Personal Savings

If you open a CD account with American Express, the amount you’ll need to pay depends on the length of the CD term.

  • Terms under 12 months. The penalty is 90 days’ interest on the amount withdrawn.
  • Terms over 12 but under 48 months. The penalty is 270 days’ interest on the amount withdrawn.
  • Terms over 48 but under 60 months. The penalty is 365 days’ interest on the amount withdrawn.
  • Terms of 60 months or more. The penalty is 540 days’ interest on the amount withdrawn.
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Penalty-free CDs

Some banks offer CDs with no penalty fees if you need to withdraw your money early, though the interest rates tend to be less competitive. For example, Ally Bank’s No Penalty CD lets you withdraw your money fee-free at any time after the first six days your account has been open. However, it offers lower interest rates than their other CD options.

Name Product 11-month APY 13-month APY
Ally No Penalty CD
1.85% on CDs of $25,000+
1.7% on CDs of $5,000 to $24,999
1.65% on CDs of $0 to $4,999
CIT Bank No-Penalty CD
1.75%
PurePoint No-Penalty CDs
1.65%
1.9%

Compare up to 4 providers

Top tips about CD penalties

  • Plan ahead. Consider your future financial needs and whether you’ll likely need to access your money before maturity. It’s a bad idea to put your entire savings into a CD — if possible, set aside an emergency fund in a more accessible account before opening a CD.
  • Make use of introductory periods. Some providers will let you withdraw your money during the first week or two without incurring a fee. If you invest in a CD and have immediate buyer’s remorse, check to see if your bank lets you opt out during an introductory period.
  • Pay attention to the minimum balance. If you try to withdraw a partial amount and your account balance goes below the minimum limit, your account could be automatically closed and the interest rate reduction could apply to the entire balance.
  • Read the fine print. Many banks don’t allow partial withdrawals at all— if you want access to your money, you’ll have to withdraw all of it and close the account.
  • Consider other opportunities. While it’s impossible to predict the future and the emergencies that may arise, you may decide that you may be better off opening an online savings account that provides easy access to funds whenever you need them. Even if you do decide to use a CD, it’s a good idea to have a savings account, too.

Bottom line

Before you open a CD, be aware of any penalties that will apply if you need to make an early withdrawal. Consider a penalty-free CD for peace of mind if you think you might need to access your money before the term ends.

Frequently asked questions

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