The Real Cost of Breaking a CD Early — With the Calculation

A 180-day penalty sounds abstract; here is what it costs in dollars at common CD sizes and rates.

CD early-withdrawal penalties are almost always expressed in days of interest. '90 days' means you forfeit 90 days' worth of the CD's interest. For a $50,000 CD at 5.00% APY, one day of interest is $50,000 × 5.00% / 365 = $6.85. Ninety days of penalty: 90 × $6.85 = $616.44.

Standard penalties by term (varies by institution):

1-year CD: 90–180 days of interest. On $50,000 at 5.00%: $616–$1,233.

2-year CD: 90–180 days. Some banks use 180 days uniformly; others scale by term.

3-year CD: 180 days. On $50,000 at 4.80%: $1,184.

5-year CD: 150–365 days. On $50,000 at 4.50%: $925–$2,260.

Capital One's penalty schedule is notably generous: 3-month CD, 3 months of interest; 60-month CD, 6 months. Wells Fargo's 5-year CD penalty is 365 days of interest — substantially higher.

Three scenarios where breaking makes sense despite the penalty:

A rising emergency (job loss, medical bill) that requires the principal. No calculation needed; access the funds.

A large rate increase with significant remaining term. Use the breakeven formula: penalty / (monthly gain from rate increase). If breakeven < remaining term, break.

An auto-renewal you missed, into a rate you do not want. Many banks allow a grace period (typically 10 days) to break a renewed CD penalty-free. Check your agreement.

One scenario that never makes sense: breaking a CD purely to move the funds to a savings account that pays 0.10% more. The penalty will almost never be recovered in the remaining months.