CD Early Withdrawal Penalty Calculator
Estimate the penalty for cashing out a certificate of deposit early — months of interest forfeited — the interest earned so far, what you get back, whether principal is lost and when the CD breaks even.
How it works
Penalty = deposit × annual rate × (penalty months ÷ 12) · interest earned = deposit × [(1 + rate/12)^months held − 1] · amount received = deposit + interest earned − penalty · break-even months = ln(1 + penalty ÷ deposit) ÷ ln(1 + rate/12)
Most banks charge an early withdrawal penalty on a certificate of deposit equal to a set number of months (or days) of simple interest on the amount withdrawn — for example 3 months of interest on CDs under a year and 6–12 months on longer terms. If you withdraw before you have earned that much interest, the penalty comes out of your principal. US federal rules require at least 7 days of simple interest for withdrawals in the first six days; everything else is set in the deposit agreement. Interest here compounds monthly; daily-compounding CDs earn very slightly more.
Worked example
A 10,000 CD at 4.5% with a 3-month-interest penalty, cashed out after 6 months of a 12-month term, has earned 227.12. The penalty is 10,000 × 0.045 × 3/12 = 112.50, so you keep 114.62 of interest and receive 10,114.62. Held to maturity it would have earned 459.40, and it needed 3.0 months to cover the penalty.
Sources: HelpWithMyBank.gov (OCC) — What are the penalties for withdrawing money early from a CD? · eCFR 12 CFR 204.2(c) — Time deposit minimum early withdrawal penalty
Frequently asked questions
Can a CD penalty take my principal?
Yes. If you withdraw before the interest earned covers the penalty — for example in the first months of the term — the bank deducts the shortfall from your deposit.
How much is a typical CD early withdrawal penalty?
Commonly 90 days of interest for terms under a year, 180 days for 1–3 years and 365 days or more for longer CDs, but every bank sets its own rule in the account agreement.
Is it worth breaking a CD to get a higher rate?
Compare the penalty with the extra interest the new rate earns over the remaining term. If the gain is bigger than the penalty, switching can pay; this calculator gives the penalty side of that comparison.
Are there CDs without an early withdrawal penalty?
Yes, no-penalty (liquid) CDs let you withdraw after the first week at no cost, usually at a lower rate. Some CDs also waive the penalty on death or disability.
Related calculators
Educational estimate, not financial advice. Banks set their own compounding, day-count and penalty rules in the account agreement — check your deposit or loan terms for the exact figures.