CD Early Withdrawal Penalty Calculator
Penalty, interest, and payout when a CD is broken early.
What it does
Certificates of deposit pay a fixed rate for a fixed term, and breaking them early costs months of interest. The disclosure names how many months the bank takes, so the only math is interest earned to date minus that penalty slice.
The defaults show a $10,000 CD at 4.5% broken after 8 months with a 6 month penalty. Earned interest is $300.00, the penalty is $225.00, and the proceeds are $10,075.00. The saver keeps $75 of the $300.
Terms shape the outcome. Short CDs often charge 3 months, mid terms 6 months, and long terms up to 12 months, so withdrawing in month two can take principal where withdrawing near maturity barely stings. Always read the disclosure before acting.
This page uses simple interest for clarity. Real CDs may compound daily, which adds a few dollars over a year but does not change the decision. Treat the result as a close estimate.
How to use
- Enter the CD principal.
- Enter the APY percent.
- Enter months held so far.
- Enter penalty months from the disclosure.
- Read penalty first, then earned interest and proceeds.
Formula
- principal
- Deposit amount in dollars.
- APY
- Yearly rate in percent.
- held
- Months the money stayed in.
- penalty months
- Months of interest taken as penalty.
Banks disclose the real rule: often 90 days interest for short terms and up to 12 months for long terms, sometimes with a floor. This page models the common months of interest shape with simple interest so the steps stay checkable.
Worked example
Example: $10,000 CD, broke at 8 months
Principal $10,000, APY 4.5%, held 8 months, penalty 6 months of interest.
- Earned: 10,000 x 4.5 / 100 x 8 / 12 = $300.00.
- Penalty: 10,000 x 4.5 / 100 x 6 / 12 = $225.00.
- Net interest: 300 - 225 = $75.00.
- Proceeds: 10,000 + 75 = $10,075.00.
- Tool shows $225.00 penalty, $300.00 earned, $10,075.00 proceeds.
Reference table
| CD term | Common penalty | On $10,000 at 4.5% |
|---|---|---|
| 3 to 6 months | 3 months interest | $112.50 |
| 1 year | 6 months interest | $225.00 |
| 2 to 3 years | 9 months interest | $337.50 |
| 5 years | 12 months interest | $450.00 |
Limits
- Simple interest estimate. Compounding adds a little.
- One penalty shape only. Flat fees need a separate pass.
- Ignores taxes and fees on the payout.
- Disclosure controls. Bank rules differ.
Common mistakes
- Reading APY as monthly instead of yearly.
- Using term length instead of months held.
- Forgetting the penalty can top earned interest.
- Ignoring the disclosure floor (some banks take a minimum).
- Comparing CDs by rate without matching penalty terms.
Try it yourself
Quick checks. Answers sit tucked under each question.
$5,000 at 4% for 12 months, 3 month penalty?
Penalty $50.00, earned $200.00, proceeds $5,150.00.
$20,000 at 3% for 6 months, 3 month penalty?
Penalty $150.00 (20,000 x 3 / 100 x 3 / 12), earned $300.00 at 6 months.
Questions
How is the penalty figured?
Multiply principal by APY by penalty months over 12. Here 10,000 at 4.5% for 6 months is $225.00.
How is interest earned figured?
Principal by APY by months held over 12. Here $300.00 for 8 months.
What do I get back?
Principal plus earned minus penalty. Here $10,075.00.
How many months do banks charge?
Often 3 to 12 months of interest, rising with term. The disclosure controls.
Can the penalty eat principal?
Yes, when the penalty tops earned interest the proceeds drop below principal.
Is this exact to the cent?
No. It uses simple interest as a clear estimate. Daily compounding would add a few dollars.