Penalties on cashing out a CD (cert. of Dep) (1 Viewer)

[Jay H]

What kind of penalties would I incur if I wanted to cash out a CD before it's maturity? I got a 9 month CD in late '04 that I missed the renewal cause I was on vacation when the maturity came. It got automatically renewed to another CD but for 1 year this time in early august. What penalties would I incur if I was to cash it out. I'm buying a house and would love to use some of it for my downpayment and closing costs...

Thanks,
Jay

 

[BrianB]

Completely down to the terms of the contract on the CD, Jay. Check your paperwork or call your bank.

 

[Jay H]

Thanks Brian, I will do that when they're open..

Jay

 

[Chris Lockwood]

My guess is that the worst case is you'll at least get your principal back.

 

[Bryan X]

I'd be shocked if you get all of your principal back. I would guess you'll take a 10% hit.

 

[Michael_K_Sr]

I suppose it depends on the bank that issued it. I looked at two banks today and for CD's issued for 6 months-3 years, the early withdrawl penalty is only the interest accrued over the past 90 days.

 

[BrianW]

The 10% penalty is common for retirement investments, but it's confiscated by the IRS, not by the bank. And since Jay gave no indication that this CD is for some kind of retirement fund (right, Jay?), then there would be no such penalty, unless Jay happened to pick the worst bank ith the worst terms in Western civilization. (Hey, I used to bank there myself. :b)

 

[Bryan X]

Yes you're right BrianW. I had retirement on the brain for some reason.

 

[Jay H]

I just checked the disclosure sheet tonight, it says:

For CDs that mature in 3-1 year: 3 months interest
For CDs that mature in +1 year: 6 months interest

So, since my renewed CD is for 1 year, looks like 90 days or 3 months it is..

Michael_K_Sr is the winnah!!!

Jay