In order to earn the higher returns that CD investments provide over other comparable secure investments, the account holder is required to keep the deposit at the bank for a fixed period of time. Banks generally charge a penalty fee if the money is withdrawn from the CD before it matures. Since the early withdrawal penalty can be a sizeable burden, a bank CD account holder should know the CD term in advance of opening the account as well as how to close a bank CD account.
The penalties for early withdrawal on a CD account may vary from bank to bank and often the penalty is fairly substantial relative the earnings the CD account generates. To avoid the cost of early withdrawal penalties, account holders should always withdraw their funds or close the bank CD account at or after the maturity date.
The maturity date is the date on which this term ends and you can withdraw the principal amount from your deposit free of penalties. Any withdrawals or closures before the term may carry a fine or penalty. The CD early withdrawal penalty may be measured in months of interest, may be calculated to be equal to the institution’s current cost of replacing the money, or may use another formula.
Banks commonly mail a notice to CD holders shortly before a CD matures requesting directions on what the account holder would like to do with the maturing CD. The notice usually offers the choice of withdrawing the principal and accumulated interest or rolling it over or depositing the funds into a new CD. There is often a grace period given after the maturity date of the CD to change or close the account without penalty. In the absence of any directions to the bank, the bank will most likely roll the existing CD funds over into a new CD automatically with a new term.
When you close a bank CD you will usually have the option of having your funds deposited into an account of your choice. Account closure options often include having the balance mailed to you by check, wired to an account held at another financial institution, or transferred to a different bank account in your name at the same bank.
Most banks offer a number of different methods to close out a CD account. The options generally include a visit to the local bank branch to process a request to have the CD funds released, via fax request with authorization form to close the CD account from the bank and by phone to a bank representative. Some banks exclude phone request often because they are need of an authorized signature to process this type of request. In these cases, if the account holder is unable to visit a local bank branch, they can send the signed request to the branch where the account is held.
Any account CD closure requests should include the bank account number, the request to have the account closed, and instructions on where to send the balance of the CD with accrued interest.
It is essential to keep a tab on the date of maturity and the nature of any CDs held. The documents which were used to open the CD may come in handy when it comes time to close the CD and hence it is important to keep them safe. In addition, in case you would like to withdraw the amount before the maturity date, it is important to know of the withdrawal penalty.
For more information on the best CD rates by term refer to the following pages; 3 month CD rates, 6 month CD rates, 1 year CD rates, 2 year CD rates and 5 year CD rates.
To see a list of the best rates on CDs please refer to Best Rates on CDs.
Additional state specific CD rates can be found at California CD Rates, New York CD rates, Florida CD Rates, Illinois CD Rates, Pennsylvania CD Rates, Ohio CD Rates, Michigan CD Rates, Texas CD Rates.
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