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Questionnaire for CD Owner
This form is your fact-finding sheet for CDs. In gathering this factual information, don’t forget to qualify your prospect with some motivating questions.

So that you can calculate the "Substantial Penalty for Early Withdrawal," here is the general equation.

(Principal x Interest Rate)   x   90 days   =   penalty     (1) General Equation
365 days

Example for 1 year CD at 5.50% with $10,000 of principal:

$10,000 x .055 = $550     (2) Annual Interest

$550   =   $1.5068493     (3) Daily Factor
365 days 1 (day)

$1.5068493   x   90 days   =   $135.62     (4) Substantial Penalty
1 (day)

Please note that $135.62 is slightly different than $550 divided by four (a quarter of a year’s interest) which is $137.50. Since the actual “substantial penalty for early withdrawal” is less than the other rough calculation, it is prudent to do the actual calculation of the exact charge.

Note that the 90-day charge is for most 1 year CDs and under. The 180 day charge applies to most longer commitments, although some variations are arising after rates turned upward in late 1993.

Last Updated: 9/23/2012 10:05:00 PM