Accidentally opened a year term CD account, then realized I need the money sooner. What to do?
I opened a year term CD account two business days ago and just found out that I would need that money this year. I searched around the web and it looks like there is a federal law saying that a bank can only penalize only up to six days worth accumulated interest. Is there a truth to that?
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I did find this information from the US Department of the Treasury:
What are the penalties for withdrawing money early from a Time Certificate of Deposit (CD)?
Federal law stipulates that all time certificates of deposit (CD) that are cashed out early are subject to a minimum penalty. If you withdraw an amount within the first six days after deposit, the penalty consists of at least seven days' simple interest. Other than that, national banks can set their own penalties; there is no maximum.
Additionally, you may want to review the Account Agreement that the bank provided when you opened the account, as it explains the early withdrawal penalties.
Check the paperwork to see if there is a short period at the start where the penalty is minimal. Each bank can set their own rules for the maximum penalty. Some base it on x months interest, some as a percentage of the CD, others may use a more complex formula.
In my experience, the only penalty to breaking a CD is to lose a certain amount of accumulated interest. Your principal investment will be fine.
Close the CD. A few days of interest is nothing.
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