CD Withdrawal Penalty

A customer cashed out a CD after being opened only 7 days. Reg D requires that all time accounts impose an early withdrawal penalty that equals the loss of seven days' interest on funds withdrawn within the first 6 days. We disclosed an early withdrawal penalty of 6 months and charged this penalty amount at time of withdraw. Should we have only charged our customer a seven days interest penalty?

No. Your contract told them the penalty and it exceeded the regulatory minimum requirement.

Reg D establishes a minimum penalty. Your TISA disclosure reflects the penalty you actually impose. It can be more. It just cannot be less.