My credit union ran a free webinar on CDs last week at 6pm, aimed at people wondering whether to break one early. I’ve been going back and forth on this for a month, so I went.
The number that stuck with me: the penalty on my 12-month CD is 3 months of interest, not the whole 3% I’ve earned. I’d assumed I’d lose everything I’d made so far, which made the decision feel much more expensive than it actually is.
A few other things from the slides:
– the penalty comes out of the interest, never the original deposit
– some banks waive it if the account holder dies, or the CD matures within a short grace window
– laddering, splitting savings across CDs with different end dates, is the usual fix, but only going forward
None of this tells me whether to actually break mine. Freelance income means some months I have cash to spare and some months I’m short, and a CD doesn’t know the difference.
But knowing the real number helped. I’d been treating early withdrawal like a wall. It’s closer to a toll.