Q: I invested in a CD a few years ago, but I need to withdraw that money immediately because of an emergency. Will I be penalized for doing this?

A: Certificates of deposit, or CDs, are designed to be longer-term investments. Banks give you a higher interest rate in exchange for your promise to let them use your money for a set amount of time — anywhere from a few weeks to several years.

Since banks actually use your money — they loan it out to other customers or invest it — they need to be able to plan on it being around for awhile. To help deter you from pulling the money too soon, they attach a penalty for early withdrawal.

Withdrawal penalties are usually expressed in terms of “days of interest”, that is, if you withdraw your money from a CD before it’s maturity date, you lose the right to a certain amount of interest. For shorter term CDs this may be 30 or 90 days; longer terms may have 90 days or more.

If you have $1,000 in a 1 year CD at 5.00% interest, you’ll earn $51.27 if you hold the CD until it matures. Let’s say this same CD has a 90 day penalty for early withdrawal. If you cash in your CD before the maturity date, you’ll give up $12.58. If you haven’t earned all $12.58 yet, you’ll have the extra taken out of your principal.

All bank CD penalty policies differ. Verify the early withdrawal charge before you sign for the CD and make sure it’s something you can live with.