Penalties for early withdrawal of money from a CD?

Parent Cafe
1

<p>I have recently acquired the job of managing my mother’s finances as I have moved her to be close to me. She was previously living in another state - Florida and handling her own financial affairs. Prior to the move, my mother let a Certificate of Deposit in a bank in Florida roll over to a new CD with a maturity date of 2012. Although she doesn’t need the money right away, she will most likely need it before 2012. Does anyone know if it makes better financial sense in terms of how penalties are assessed to take the money out now, shortly after it rolled over, or whether it is better to just leave it there until she needs it in a couple of years?</p>

<p>I’d also like to know if there are any downsides to having money in an account in another state.</p>

<p>Thanks.</p>

2

<p>I think you’ll have to read the fine print and see what the penalties are.</p>

3

<p>The question is an often asked question. Because everyone is concerned about Interest. The real question as Mathmom as pointed out are the “terms” of the loan your mother made to the bank. Whether to keep the CD longterm to its maturity or to liquidate a recent CD depends on the need, alternative choices, and your ability to forecast the future. </p>

<p>I further add that what are your alternatives if she needs some money now, in 2009, 2010, and 2012. If she left the money in the CD, would some one have to go into debt? Is the interest on the CD enough to cover inflation. Will the interest be heavily taxed? </p>

<p>If the amount is substantial, think about laddering a newer CD but be fully cognizant that there could be future deflation or greater future inflation.</p>

4

<p>Your question is akin to our current debt crisis. Our Government Leader, Bankers, and Homeowners, did not read or understand the terms and they all waited too long to understand the problem.</p>

5

<p>As the CD just recently rolled over, I have to assume a low interest rate. Moving it to a local bank in a new CD or other investment also would result in a low interest rate as well. Knowing when she would need the money is impossible to predict given her advanced age. But I will take the advice to find out the terms of the CD.</p>