Question

Caroline is opening a CD to save for college. She is considering a 3-year CD or a 3-year CD since she starts college around that time. She has $19,400 to deposit. Which option should she choose to avoid penalties for early withdrawal?

a. 3-year CD
b. 3-year CD since she starts college
c. Either option
d. None of the above

Answer 1

Caroline should choose the 3-year CD since she starts college around that time to avoid penalties for early withdrawal.

Step-by-step explanation:

If Caroline wants to avoid penalties for early withdrawal, she should choose the 3-year CD since she starts college around that time.

This option will allow her to align her CD maturity date with her college start date, ensuring that she can access the funds without penalties when she needs them. By choosing the 3-year CD, Caroline can plan her savings strategy around her future educational expenses.