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Using money that is currently in a CD?
Hi everyone, I'm hoping someone can help me. I'd like to go back to school and the program is starting in July. I have a good amount of money set up in a CD at my credit union. I'd like to use that money to pay for school and medical insurance instead of taking out a loan. The reason I'm going back to school is because I can't find a job and I'm sick of sitting at home. My question is: how does this work? Is there a penalty for using that money or is there a certain time when I can use it?
Thanks for all your answers so far. The CD I have is a 6 month CD and I've had it for a few years now. Every six months I get letters from my credit union that my CD is about to mature, so does that mean I can use the money without penalty since it's been more than 6 months? Or do I have to wait until the next maturation?
4 Answers
- Go with the flowLv 71 decade agoFavorite Answer
There is usually about a 6 month interest penalty on bank cd's.
Different for every bank, and every cd term.
Brokerage cd's are much different.
They are sold at market value.
You call the broker and tell them to get you the best price for this cd.
If it is an older cd- you should make a nice profit - don't be surprised.
If that brokerage cd is paying more than 7% or 8% interest reconsider getting a student loan from your school.
And please take something that is in demand.
Don't take art, music, cooking, graphic design (art), photography, etc.
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You can also make a loan against that cd if it is at a bank...
- mscLv 61 decade ago
A CD has a maturity date, which is the date when you can get the cash out. If you cash it out before that, there will be a penalty. You can ask the credit union when the maturity date is, and what the early withdrawal penalty would be.
The credit union might also be willing to lend you money, using the CD as collateral. Depending on the interest rates involved, that may or may not make sense.
There might be a time window where you can cash out before it starts a new term. Regardless, July is about 5 months away, so without knowing the maturity date, statistically you have a good chance. I'd check with the credit union right away.
- mortgagesaver01Lv 41 decade ago
Yes in most cases there is a small penalty on potently earned interest . I would suggest that depending on the rate You are getting on the CD that you consider taking out a loan against the CD with the credit union they will secure a loan with the CD you still earn interest and basically the charge you a small amount of interest to use your own money
Now keep in mind you need to weight the two cost see exactly what the early withdrawal penalty is and what the rate is that they would charge you to use the money
An alternate is to not cash in the CD use a credit card with a 0.00% interest rate special or a consumer loan with the "NO interest Until " and use the money then pay it back but again you need to weight the interest free period , the interest after and the CD penalty and CD maturity date
This is a mouthful but you have a lot of factors to consider
- KarenLv 51 decade ago
You have to wait until it matures again and tell the bank you don't want another 6 months but the total cash it is now worth.
