Rate Unlocker — Moving savings and CD balances to a | rateunlocker.com
The penalty is quoted in months of interest; this page converts it to dollars and shows when paying it still wins.
Every fixed-term CD disclosure names an early-withdrawal penalty, and the market norm is 3 to 12 months of interest. Banks set their own schedules, but a common pattern is about three months on terms up to a year, six months on multi-year terms and up to twelve months on the longest terms — the disclosure for your specific CD controls.
The dollar cost scales with balance and rate. Three months of interest on $10,000 at 1.00 % APY is about $25; six months on the same balance at 4.50 % is about $112; twelve months at 5.00 % is about $500. The same six-month penalty can be trivial or serious depending on what the CD pays.
Short-term CDs carry a special risk: the penalty can exceed all the interest earned, and some banks then deduct the difference from principal. If your term is under a year and you opened recently, check the disclosure for language allowing the penalty to invade principal before assuming you will at least get your deposit back.
On narrow screens, swipe or scroll the plate sideways.
Break-even math decides whether paying the penalty is worth it. Take the extra interest the new APY pays over the months remaining on the old term and subtract the penalty. Example with assumed rates: $10,000 in a 12-month CD at 1.00 % APY, six months left, penalty of three months, about $25. Six months at 5.00 % APY earns about $250 versus about $50 for staying — roughly $175 ahead after the penalty, so the move pays.
The same math fails when little time remains. With two months left on the term, even a large rate gap rarely clears a three-month penalty, and the rational move is to wait for maturity and use the 7-10 day grace period instead.
Once the penalty is paid and the money lands, the next decision is how to park it so the next exit is cheaper — the five-rung ladder on the ladder page and the vehicle choice on the CD-versus-savings page cover exactly that.
Further reading