what if i need to withdraw my money early 
even though opening a cd involves agreeing to keep the funds on deposit without withdrawals for the duration of the term that doesn t mean you lack options if your plans need to change whether you encounter an emergency or a change in your financial situation or you simply feel that you can use the money more usefully or lucratively elsewhere all banks and credit unions have stipulated terms for how to cash your cd out early the exit won t be free of course the most common way that financial institutions accommodate a premature termination is by assessing an early withdrawal penalty ewp on the proceeds before your funds are distributed according to specific terms and calculations that were set out in your deposit agreement when you first opened the certificate this means that you can know before you agree to the cd if the ewp is acceptable to you most typically the ewp is charged as a number of months interest with a greater number of months for longer cd terms and fewer months for shorter cds for instance a bank s policy might be to deduct three months interest for all cds with terms up to 12 months six months interest for those with terms up to three years and a full year s worth of interest for its long term cds these are just examples of course every bank and credit union sets its own ewp so it s important to compare ewp policies whenever you are deciding between two similar cds it s especially wise to watch out for ewps that can eat into your principal the typical ewp policy described above will only cause you to earn less than you would have if you had kept the cd to maturity you will generally still have earnings as the ewp will usually only eat up a portion of your earned interest but some particularly onerous penalties exist in the marketplace where a flat percentage penalty is applied since this percentage can outweigh what you ve earned on a cd that you haven t kept very long you could find yourself collecting less in proceeds than you invested as a result these ewp types are best avoided always check a bank s ewp policy before committing to a cd if it s especially aggressive or if you can find another cd with a similar rate and a milder term then you ll be wise to stay away from the toughest penalties frequently asked questions faqs 