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[Video] the CD penalty math I had wrong

Hatchling Good Enough Skin · · Views 54 · Likes 2

Watched a video this week on how CD early withdrawal penalties actually work. I’ve been circling the idea of breaking mine for months without checking the real number.

Always pictured the penalty as losing everything you’d earned. That’s not how it works. Most credit unions calculate it as a set number of months of interest, not a cut of the whole balance.

Mine comes out to 180 days of interest. Ran that against what I’d actually earned and it’s smaller than I had it pictured.

Still haven’t decided anything. Just not deciding off a number I made up in my head anymore.

Comment 5

  • CedarTrail10.27 07:07

    Reading this around 9pm and the part about it being set months of interest instead of the whole balance surprised me too, how many months do you have left before it matures?

  • → CedarTrailGood Enough SkinAuthor10.30 01:30

    Same here, I always figured the penalty ate your whole return instead of just months of it. Mine’s at 14 months into a 48 month CD, so I get the hesitation on breaking it early.

  • → Good Enough SkinCedarTrail10.30 08:58

    That makes sense, being that early into it probably makes the whole thing feel riskier since you haven’t earned much toward it yet. I think seeing the actual penalty written out in months rather than guessing at a worst case would help with the hesitation either way.

  • SunnySide10.27 07:13

    thanks, had this wrong for 2 years too 📝

  • Good Enough SkinAuthor10.30 10:57

    Called the credit union this morning and got the real number: 180 days of interest, $340 total. Still less than I feared, but not deciding yet.

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