If your certificate of deposit’s (CD’s) maturity date is coming up, here is what to expect and some actions you can take with your earnings.
What is a CD’s maturity date?
A CD’s maturity date is when your CD’s term is over. Most CD terms are expressed in months, such as 12, 18 or 72 months. When you open your CD, your bank will tell you when your CD matures. After this date, you can withdraw your funds and interest earned without early withdrawal penalties.
About 30 days before your CD matures, your bank will contact you. Then, there’s something called a CD grace period, which is usually 10 to 14 days before the account’s maturity date. Within the grace period, you can make changes or decisions with your CD and inform your bank of your plans with your soon-to-be-matured CD.
What can I do with my CD at maturity?
Within a week or so of your CD’s maturity date, you have two main routes:
Renew the CD for a similar term.
Cash out and close the account. Inform your bank where you want it to send the CD funds, such as to a savings or checking account. Some banks also offer to send a check.
If you do nothing at your CD’s maturity date, your bank typically renews it for the same or a similar term. For example, if Chase Bank doesn’t hear from you by the time your CD hits its maturity date, it automatically renews for the same term with a new maturity date.
3 places to put your CD earnings
Now that your CD term is over, it’s time to decide what you want to do with your funds.
1. Renew for a higher rate
With your old CD closed, you can reinvest your deposit and earned interest into another CD. The great thing about fixed-rate CDs is that the rate won’t change during the term.
2. Put earnings in a high-yield savings account
CDs are great for guaranteed interest earnings, but you don’t exactly have “free” access to the funds until the maturity date. If you want your savings to continue to grow while having a little more access to those funds, consider a high-yield savings account. High-yield savings accounts are simply regular savings accounts, but they have very high APYs.
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3. Invest your earnings
With a matured CD and fresh earnings, you can consider investing those funds. There are alternative investments, retirement accounts, exchange-traded funds (ETFs), stock trading and so much more. There are also brokerage and trading apps that guide you through investing.
Can I withdraw CD funds before maturity?
You can, but it will likely mean losing some earned interest.
Banks and credit unions may allow full or partial CD withdrawals before your maturity date, but typically, some penalties come along with that: early withdrawal penalties.
These penalties aren’t normally paid out of pocket, though. Most of the time, the bank deducts some earned interest, such as 90 days to a full year of earned interest. If you didn’t earn enough interest to cover the penalty, the bank may take the difference out of your deposit.
There are no-penalty CDs if you’d like the ability to withdraw funds before a maturity date. However, once you withdraw your funds from a no-penalty CD, you typically get only one full withdrawal, and this action closes the account.
If I renew my CD, will the rate be the same?
It’s possible to renew a CD at the exact same rate, but it’s not very likely. CD offerings change all the time. This month, you may see a CD with a 6-month term at a 5% APY, and the next month, that same bank may lower that offer to 4%. When you renew a CD, your rate may be lower, higher or the same. Most of the time, the bank doesn’t promise any specific renewal rates.
Banks and credit unions can change their CD rate offerings as often as they wish. But they can’t adjust your fixed-rate CD’s current rate. If you have a fixed-rate CD open right now, the rate will not change.
CDs are considered a safe and effective way to grow your savings. With a fixed-rate CD, the interest rate doesn’t change for the entire term, and since CDs are deposit accounts, they’re protected under FDIC or NCUA insurance.
What is the biggest negative of putting your money in a CD?
The biggest downside with CDs is that you don’t have easy access to your funds. Your cash is locked in the deposit account until the CD matures. While you can withdraw the funds before the maturity date, you’ll likely incur early withdrawal penalties.
Another downside is also a CD’s upside: Fixed-rate CDs have non-adjustable rates. This feature is good when rates are dropping but bad when rates are rising. If interest rates increase, your CD’s rate won’t rise with the market.
Can you ever lose money on a CD?
Probably not. When you open a CD, your interest earnings are guaranteed as long as you leave the funds in the account and don’t withdraw early. Aside from early withdrawal penalties, the only other real “loss” is potential opportunity cost, such as choosing to invest your money in a 2% APY CD when your savings account has a 5% APY right now.
Bethany Hickey is the banking editor and personal finance expert at Finder, specializing in banking, lending, insurance, and crypto.
Bethany’s expertise in personal finance has garnered recognition from esteemed media outlets, such as Nasdaq, MSN, Yahoo Finance, GOBankingRates, SuperMoney, AOL and Newsweek. Her articles offer practical financial strategies to Americans, empowering them to make decisions that meet their financial goals. Her past work includes articles on generational spending and saving habits, lending, budgeting and managing debt.
Before joining Finder, she was a content manager where she wrote hundreds of articles and news pieces on auto financing and credit repair for CarsDirect, Auto Credit Express and The Car Connection, among others.
Bethany holds a BA in English from the University of Michigan-Flint, and was poetry editor for the university’s Qua Literary and Fine Arts Magazine. See full bio
Bethany's expertise
Bethany has written 435 Finder guides across topics including:
See what the average interest rate was in the US for 3-month, 60-month, 1-year, 3-year and 5-year CDs since 2009 and learn how the economy affects rates.
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