Early withdrawal penalties

Moneywise for Dec. 17, 1980, noted that the penalty for each withdrawal of maturities longer than one year was six months' interest. Since I bought an eight-year CD about two years ago, my savings and loan association told me the penalty would be less. Could you please clarify? --

Penalties for early withdrawal of long-term CDs were initiated on Nov. 1, 1973, and called for a forfeiture of three months' interest plus a drop back to the passbook rate for the remainder of the time on funds withdrawn. Interest accumulations could be withdrawn without penalty. On July 1, 1979, the rules were changed. For CDs issued for one year or less, the penalty amounts to at least 90 days' interest on the amount withdrawn or all interest if the CD was in effect less than 90 days. For certificates issued for longer than one year, the penalty is at least 180 days' interest or all interest if funds withdrawn were on deposit 180 days or less. Under some conditions, a bank or S&L may elect to apply either penalty. Penalties changed again on June 1, 1980, for CDs issued or rolled over after that date. For CDs issued for three months or less the penalty for early withdrawal is all interest that could have been earned on the amount withdrawn if it had been held until maturity. Thus, if the CD was on deposit less than three months, the CD holder could lose part of the principal. If the CD is for more than one year, the penalty is six months' interest whether earned or not on the amount withdrawn and could result in a loss of principal. Two exceptions -- no penalties are assessed if the CD holder dies or is judged incompetent. Also, certificates qualifying for IRA or Keogh funds need not be penalized for early withdrawal if the CD holder is 59 1/2 or older or is disabled. Sorry about the confusion, but the regulations only get more comp licated -- seldom simpler.

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