A CD offers a higher interest rate than the interest rate associated with a personal tiered savings account; however, accessing your funds before the CD's maturity date will result in an early withdrawal penalty. With a savings account, you may access your funds without penalty.
Your account will automatically renew at maturity, but you will have a grace period after the maturity date to withdraw your funds without being charged an early withdrawal penalty. The renewed account will be for the same term as the original term, at the interest rate and APY in effect on your maturity date.
If you withdraw any principal before the maturity date, a penalty may be imposed. The penalty amount, or any portion thereof, will be deducted from the amount withdrawn. Also, the penalty will not be imposed if the withdrawal is due to the death or legal incompetence of any depositor listed in the account name.
Interest that you earn on your CD is usually treated as income and reported as part of your income tax returns. We will provide for you a 1099-INT statement at the beginning of the following year. But everyone's situation could be different, so consult a tax expert.