<P> Withdrawals before maturity are usually subject to a substantial penalty . For a five - year CD, this is often the loss of up to twelve months' interest . These penalties ensure that it is generally not in a holder's best interest to withdraw the money before maturity--unless the holder has another investment with significantly higher return or has a serious need for the money . </P> <P> Commonly, institutions mail a notice to the CD holder shortly before the CD matures requesting directions . The notice usually offers the choice of withdrawing the principal and accumulated interest or "rolling it over" (depositing it into a new CD). Generally, a "window" is allowed after maturity where the CD holder can cash in the CD without penalty . In the absence of such directions, it is common for the institution to roll over the CD automatically, once again tying up the money for a period of time (though the CD holder may be able to specify at the time the CD is opened not to roll over the CD). </P> <P> The Truth in Savings Regulation DD requires that insured CDs state, at time of account opening, the penalty for early withdrawal . It is generally accepted that these penalties cannot be revised by the depository prior to maturity . However, there have been cases in which a credit union modified its early withdrawal penalty and made it retroactive on existing accounts . The second occurrence happened when Main Street Bank of Texas closed a group of CDs early without full payment of interest . The bank claimed the disclosures allowed them to do so . </P> <P> The penalty for early withdrawal deters depositors from taking advantage of subsequent better investment opportunities during the term of the CD . In rising interest rate environments, the penalty may be insufficient to discourage depositors from redeeming their deposit and reinvesting the proceeds after paying the applicable early withdrawal penalty . Added interest from the new higher yielding CD may more than offset the cost of the early withdrawal penalty . </P>

What does a certificate of deposit (cd) usually have