Pls check my math on taking a fine to change CD rate

[Carol1862]

I have a bunch of CD’s and most are in the 3-4% range. I take most out for 12-24 months. These are Traditional IRA’s. I found one that is exceptionally low (what I was thinking back then I’m not sure)! However, it’s only .6%. I want to close it, take the fine, and open a 4% one instead. This is for $80,000 due 4/26/23. It is a 24 month CD

I would lose 180 days of interest which is $239.64
From now till due date I’d make $1027.25
Which would make my gain $787.61

Did I figure this correctly?

Advice?

 

[Car-Guy]

You must have included some compounding of interest since I got lower numbers. Did this CD pay and re-invest interest on a quarterly or semi-annually basis?

 

[Carol1862]

Honestly, I just used a calculator online. That’s why I came here for advice

What numbers did you get?

Is it worth it or should I just wait 4 months?

Is there a calculator I can figure this out on?

 

[Car-Guy]

There are a lot of calculators on-line, but maybe look at it this way... If you pay a 6 mo simple interest penalty on a 80k CD that's paying .6% that would be $240.

A 4% 80k CD will pay you $1600 in 6mos.. I'd switch!

By the way, you can get 2 yr brokered CD's right now that pay 4.5% and 1yr that pay 4.7%.. So that's even more money.

 

[Jerry1]

There are a lot of calculators on-line, but maybe look at it this way... If you pay a 6 mo simple interest penalty on a 80k CD that's paying .6% that would be $240.

A 4% 80k CD will pay you $1600 in 6mos.. I'd switch!

By the way, you can get 2 yr brokered CD's right now that pay 4.5% and 1yr that pay 4.7%.. So that's even more money.

That’s the way to look at it. What am I giving up versus what would I gain. If the number is positive, then go for it.

 

[audreyh1]

I like the depositaccounts.com Should I Break My CD? calculator.
https://www.depositaccounts.com/tools/break-cd-calculator.aspx

It does a very nice job of laying it all out.

Is that what you used?

 

[Carol1862]

Thank you everyone. CarGuy, you were right on the money. It cost me $238. I got 4.3% Audrey, that’s exactly the calculator I was looking for.

I love this site and so happy for all of your help!!