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.
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.
Within a week or so of your CD’s maturity date, you have two main routes:
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.
Now that your CD term is over, it’s time to decide what you want to do with your funds.
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.
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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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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.
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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.
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.
But if you’d rather have unfettered access to your cash, consider savings accounts or other investment options.
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.
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.
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The highest CD rates in Texas are from Ciera Bank, Quontic Bank, Susser Bank, Ally Bank and more. See the full list here.
Some of the highest CD rates in Florida are from Quontic Bank, Bethpage Federal Credit Union, First Internet Bank and more. See the full list here.
Some of the highest CD rates in Michigan are from Flagstar Bank, Quontic Bank, First Internet Bank, Ally Bank and more. See our full list here.
Savings rates are dropping, but you can lock in a high-APY CD without penalties for early withdrawal. Sallie Mae and Marcus CDs top our list.
Finding the best CD rate is vital to ensuring that your savings balance grows to the maximum amount possible in the shortest time.
EverBank’s CD variety offers something for everyone at high rates.
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.
If you need a high-yield place to tuck your savings away, a $100,000 jumbo CD could be a solid option.
