When Your CD Matures: What to Know

Once a CD matures, you have three options: withdraw your money and put it in another account, withdraw and open a different CD, or let your CD renew.

Spencer TierneyMarch 4, 2020
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Soon you will say farewell to your certificate of deposit. During your time together, the CD had a stable ride, growing your money, but now the time has come and parting may make cents — and hopefully many dollars — for you.

On the day that a CD term ends, or "matures," you typically have less than two weeks to decide what to do next or let your bank decide for you. This is your opportunity to change up your money, either in a new CD or elsewhere. Here’s how it works.

Goodbye CD term, hello grace period

You opened your account at a bank or credit union, held it for the CD’s entire term of months or years, and that final day (the "maturity date") has come. The next day is the start of your CD’s grace period.

A grace period is a short window of time, generally one to two weeks, when you can withdraw the money in your CD without paying an early withdrawal penalty. If you don’t withdraw during this period, a bank will typically renew a CD automatically at the same term it originally had. For example, a five-year CD matures and renews, or rolls over, into a new five-year CD. The new CD’s rate likely won’t be the same as the original.

» Want another CD? Compare the best CD rates this month

Your 3 choices during the grace period

1. Withdraw your CD funds and transfer them into a different account. This gives you the chance to either put that money into a more accessible vehicle, such as a checking or savings account, or invest it. If you used a CD to pursue short-term savings goals, such as buying a home or car, you’ll likely want more access now. If, on the other hand, you want a better return and are willing to accept more risk, then moving money into a brokerage account is a logical move. (See more details about short-term investments.)

2. Withdraw your funds and deposit them into a different CD. You might decide your CD funds don’t need more risk or accessibility. In this case, opening another CD may be the right choice. Compare several rates across banks, especially at online banks. You might also want a different type of CD (see nine CD types). For example, compare these three high-yield CDs:

3. Let your bank renew your CD. This is the most convenient option but not necessarily the best. Letting your bank renew your CD might mean ending up with a lower (or higher) rate because your bank will likely give you the same rate it offers for new CDs with that term. Compare several CD terms and rates at your bank and elsewhere before opting to let your CD roll over into a new one. If you choose to renew, consider taking advantage of the grace period by adding more funds to your CD. This might require calling the bank or visiting a branch, in the case of brick-and-mortar banks.

Remember your CD’s grace period

Unlike other bank accounts, CDs penalize you for withdrawing at any time except during the grace period. The early withdrawal penalty tends to be several months’ worth of interest or even a year’s worth (see a list of a dozen banks’ penalties).

Banks generally send a notification three to four weeks before a CD’s maturity date about an impending renewal, but if you lose or forget about this reminder, you can miss the grace period. If you don’t want to pay a penalty, you’ll have to wait until the new term ends to get your money back.

The one exception is a no-penalty CD. These don’t have the best rates, but they can give you the peace of mind that you can withdraw at any point cost-free after a CD’s first few days. (See our best no-penalty CD rates for more details.)

Grace periods at some banks

A CD’s grace period can vary by bank and credit union; here’s a look at several:

Be prepared for your CD’s end

CDs are the only bank account where knowing one day, the maturity date, is vital for planning the future of your money in that account. Mark the day and the grace period on your calendar and set up a reminder one month before so you’re ready.

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