Early Withdrawal Penalty

Charge assessed against holders of fixed-term investments, principally Certificates of Deposit (CDS), if they Withdraw their money before Maturity. Such a penalty would be assessed if someone who has a four-year certificate of deposit were to withdraw the money after three years.

Forfeiture of interest or service fee charged depositors for withdrawing money from a savings or time deposit prior to maturity. Banks may require 30 days' notice before withdrawing funds, but penalties for early withdrawals have been sharply reduced from levels prior to interest rate deregulation.