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CD Early-Withdrawal Penalty

Author: External Author | | Categories: Accounting Firm , Accounting Services , Small Business Accountant , Tax Services

A CD early-withdrawal penalty is a fee that's often charged when you take money out of a certificate of deposit (CD) before the agreed-upon end date. Here is how these penalties work and what you can do to avoid them.

When you buy a certificate of deposit (CD) from a bank or credit union, you are making an agreement—you will leave your money there for a specified period of time and the financial institution will pay you a certain rate of interest in exchange. That rate is typically higher than you'd receive from a savings or checking account. The trade-off is that the CD is less liquid than those other types of accounts (that is, less able to be converted into cash easily at any time).

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Original Article Source Credits:   Investopedia , https://www.investopedia.com/

Article Written By:  Matt Webber

Original Article Posted on:  April 22, 2022

Link to Original Article:  https://www.investopedia.com/cd-early-withdrawal-penalty-5225111