How to Close a CD

How to Close a CD - usually offers the choice of...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Closing a CDWithdrawals before maturity are usually subject to a substantial penalty. For a five-year CD, this is often the loss of six months' interest. These penalties ensure that it is generally not in a holder's best interest to withdraw the money before maturity unless the holder has another investment with significantly higher return or has a serious need for the money. Banks will charge a penalty fee if the money is withdrawn from the CD before it matures. Commonly, institutions mail a notice to the CD holder shortly before the CD matures requesting directions. The notice
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: usually offers the choice of withdrawing the principal and accumulated interest or "rolling it over" (depositing it into a new CD). Generally, a "window" is allowed after maturity where the CD holder can cash in the CD without penalty. In the absence of such directions, it is common for the institution to roll over the CD automatically, once again tying up the money for a period of time (though the CD holder may be able to specify at the time the CD is opened not to roll over the CD)....
View Full Document

Ask a homework question - tutors are online