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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    The double negative makes it hard to understand the question. Commented Feb 7, 2012 at 13:07
  • @mhoran_psprep I don't not understand. :-) You're welcome to rephrase that part of the question; use the "edit" link above. It's acceptable to do so .. refer to the faq Commented Feb 7, 2012 at 14:25
  • I have edited several questions, but the problem with this question is that the double negative may actually be a triple negative. Which then goes to the heart of what the OP thinks is the issue. Commented Feb 7, 2012 at 14:49
  • @duk - if this (my edited sentence on your behalf) is not what you meant, please advise. You believe the maximum penalty is 6 days interest, correct? Commented Feb 7, 2012 at 16:23
  • @JoeTaxpayer yes. Thanks. And it turned out that the penalty was 3%. So I decided to leave it as it was.
    – Duk
    Commented Feb 8, 2012 at 17:26

2 Answers 2


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.

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    It might be worth it to point out that 7 days' worth of simple interest on a typical 1yr CD in Feb 2012 would amount about be about $19 if you put a full $100,000 dollars in the CD. If you took it out in 3 days, it would only be $8. But chances are you didn't put $100k in your CD. On a $10k CD, a 3 day mistake sets you back a whopping 82 cents.
    – Chelonian
    Commented Feb 7, 2012 at 19:14

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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