Banky team Reviewed editorial answerNot necessarily. There is no single rule for the penalty; each bank sets its own in its terms. But commonly the bank recomputes the return for the period already held at a lower rate, and the difference between what was actually paid to you and what you would have received at the lower rate is deducted from the amount returned.
Hypothetical example per 100 pounds in a certificate of 3 years at 20% with monthly payout, broken after one year, where the penalty recomputes that year at 14%: you received 20 pounds during the year, the break rate allows 14, so 6 is deducted and 94 comes back. The principal returned is below 100, even though the total you received over the year (20 + 94) is above 100.
With an upfront return the deduction can be larger, because the whole return was paid at the start. And many certificates cannot be broken at all in the first 6 months.
Before breaking, check the key-facts statement for the break-penalty table by months held, whether partial breaking is allowed, the worked example, and whether a loan against the certificate is offered, and ask the bank for the exact amount you would get back before you sign.