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Most banks waive the CD early withdrawal penalty under extreme circumstances, such as when the owner retires, dies, becomes disabled or is legally incompetent. If you’re facing a situation like this, contact your bank to see if you qualify for a waiver.
If your situation isn’t extreme enough to warrant a waiver, it still doesn’t hurt to call and ask the bank if there’s any way to waive the penalty. Sometimes smaller institutions — or bigger institutions that you’ve been with for a while — will waive the penalty if you’re facing an emergency and need cash now. Call them up, explain your situation and see if there’s anything they can do to help. The worst they could say is no.
If you haven’t opened a CD yet and want to avoid future penalty fees, consider laddering your CDs. When you ladder CDs, you stagger your money across various terms, so you have access to funds on a rolling basis. For example, let’s say you have $10,000 to stash away in a CD. Instead of putting all $10,000 in one CD, you put $2,000 each in a one-year, two-year, three-year, four-year and five-year CD. Now you can withdraw funds for free once a year. If you wanted to have even more access, you could buy CDs in six-month increments. That way you have access to funds twice a year.
Some banks offer no-penalty CDs, which don’t ding you for pulling your money out early. For example, Ally Bank’s No Penalty CD lets you withdraw your money for free at any time after the first six days your account has been open. But as with most no-penalty CDs, the APY is lower than what you’d earn with other CD options.
Use the table to compare CDs with no early withdrawal penalties. Once you’ve chosen your top picks, click the “Compare” box next to each one for a side-by-side comparison view.
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.
Individual banks set their own early withdrawal penalties, and it’s a good idea to check what they are before opening an account. Here are what some popular banks will charge you if you withdraw your CD early:
Financial institution | 6-month CD | 1-year CD | 3-year CD | 5-year CD |
---|---|---|---|---|
Chase | 180 days’ interest | 180 days’ interest | 365 days’ interest | 365 days’ interest |
Bank of America | 90 days’ interest | 180 days’ interest | 180 days’ interest | 365 days’ interest |
Wells Fargo | 90 days’ interest | 90 days’ interest | 365 days’ interest | 365 days’ interest |
Citibank | 90 days’ interest | 90 days’ interest | 180 days’ interest | 180 days’ interest |
Capital One | 90 days’ interest | 90 days’ interest | 180 days’ interest | 180 days’ interest |
American Express | 90 days’ interest | 270 days’ interest | 365 days’ interest | 540 days’ interest |
Ally Bank | 60 days’ interest | 60 days’ interest | 90 days’ interest | 150 days’ interest |
Marcus by Goldman Sachs | 90 days’ interest | 270 days’ interest | 270 days’ interest | 270 days’ interest |
These tips will help you choose the right CD based on your needs and goals:
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.
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