Question

If you take out money from a CD before it reaches maturity you must A) pay the bank a penalty, typically three months' interest. B) forget it. You cannot withdraw yany money until a CD matures. C) pay both the bank and IRS a penalty of three months' interest. D) pay the IRS a penalty, typically 10 percent of the account's value.

Answer 1

Answer:

A) pay the bank a penalty, typically three months' interest.

Explanation:

Most commercial banks and credit unions charge a premature withdrawal fee to individuals that cash out a CD before its maturity date. Generally the withdrawal fee equals 3 months worth of interest, but this is not a fixed rule, some banks may charge a lower fee or others a higher one.

For example, I have a CD in a commercial bank, and if I withdraw the money early (at least after 1 month of making the CD) it will not pay me any interest at all.

Answer 2

Answer:

A

Explanation:

pay the bank a penalty, typically three months' interest.