A penalty for early withdrawal of funds is most likely charged when funds are withdrawn:

A penalty for early withdrawal of funds is most likely charged when funds are withdrawn before the maturity date for a time deposit, such as a certificate of deposit (CD). Time deposits are financial instruments where money is deposited for a fixed period at a specified interest rate, with the agreement that the funds will remain untouched until the end of that period, or maturity date. If the account holder withdraws the funds before this predetermined date, financial institutions often impose penalties to discourage early access, as they have lost the opportunity to earn anticipated income from the original deposit duration.

In contrast, regular savings accounts typically do not have restrictions on withdrawals, and while some accounts may have specific terms regarding interest accumulation, those are usually related to how interest is credited rather than penalties for early withdrawal. Thus, the structure of time deposits creates a scenario where early withdrawal penalties are particularly relevant.