Watch Out for CD Early Withdrawal Penalties

I was just talking about CDs earlier this week and they provide an easy way to safely put away some cash cash. Usually they pay a slightly better interest rate than a regular savings account, but the downside of the higher interest is the fact that these are time deposits. That means you buy a CD with a specific term, usually anywhere from a month to five years. While you can almost always cash out of a CD before the term expires, there is a penalty for doing so. So, if liquidity is what you're after, a CD may not be the best choice. Here are the details on how early withdrawal penalties work so you can understand when you can cash out and what the damage will be.