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- When your CD term is about to end, you'll receive a notice from your bank.
- Banks offer a grace period once a CD term ends, when you can decide to renew the term or withdraw money.
- Before automatically renewing a CD, always review the current CD rates available at your bank.
If you've received a notice from your bank that your CD term is about to end, you now have to make the decision on what to do with your account. Should you renew it for another term or transfer your money to another type of savings account?
We'll explain what to do when a CD matures so you know your options.
What happens when your CD reaches maturity
Once your CD has reached maturity, you'll have the flexibility to make changes to your account.
You can choose to renew your CD for another term or move all your money to another account at the same bank or a different bank. You could also withdraw it from your bank if you need your money immediately.
What the CD grace period means
Financial institutions will specify in the bank account agreement a grace period to make changes to your account. The grace period is a short time frame, usually around 10 days, when you can withdraw your money and transfer it to another bank account.
During the grace period, you won't have to worry about penalties or fees. An early withdrawal penalty only occurs when you take out money from a CD before the term ends.
If you do not notify your bank to make changes, the bank will usually automatically renew your CD for another term. However, be aware the CD rate for your renewed account may not necessarily be the same as when you first opened it.
CD grace period of 20 of the biggest financial institutions
| Account | Grace period for CD |
10 days | |
10 days | |
1 day for terms 27 days and under; 7 days for terms 28 days or longer | |
7 days | |
10 days | |
10 days for terms 14 days or longer | |
7 days | |
10 days | |
10 days | |
9 days | |
1 day for terms 31 and under; 10 days for terms 32 days or longer | |
10 days | |
10 days | |
21 days | |
1 day for terms 31 days and under; 10 days for terms 31 days or longer | |
7 days | |
10 days | |
10 days | |
1 day for terms 31 days and under; 10 days for terms 32 days or longer | |
| 7 days |
How to decide whether to renew a CD or close it
Alvin Carlos, CFA, CFP, financial planner and managing director of District Capital Management, says in most cases, he recommends that people shouldn't automatically renew a CD. Instead, Carlos suggests that people consider whether they'll need the money for a particular reason relatively soon.
Carlos also recommends comparing the current interest rates for CD terms before making your decision. You can check to see if the rate at your bank has changed since you last opened your account. You may also stack up your bank's CD rates to the rates of other banks to see which financial institution is more competitive.
Maggie Gomez, CFP professional and owner of Money with Maggie, also points out that you may be able to request a rate increase from a bank if you notice rates are going up at other banks.
Alternatives to CDs
If you've decided you'll need access to your money relatively soon, a high-yield savings account or money market account are alternative savings account options.
These bank accounts allow you to earn interest on your money, but they have more flexibility than a CD. You'll be able to make additional deposits or make withdrawals each month. However, there could be excess withdrawal fees depending on where you bank.
An excessive withdrawal fee occurs when you make more than six transactions per month from a savings account. The Board of Governors of the Federal Reserve has amended Regulation D — a federal rule that specifies transfer limits for savings accounts — so financial institutions may choose to suspend the monthly transfer limit so customers can make unlimited monthly transactions, or they could enforce it.
How to close a CD
The process for closing a CD varies across financial institutions. Some banks, like Ally, let you close a CD through online banking. Other financial institutions, such as Synchrony, may require you to call customer support or go to a local branch to fill out some paperwork to initiate the withdrawal.
If you are transferring money to another bank account, it should be moved into your account within the same day. If you are moving money to a bank account from another financial institution, it may take a few days to process.
Frequently asked questions about CD maturity
Can you keep money in your CD once it matures?
Yes, you may renew your CD and keep the money in your account. Unless you opened a promotional CD, the term length will not change.
What happens if you don't renew your CD?
If you receive a CD maturity notice and decide not to act, usually your CD will automatically renew for another term. You won't lose any interest you've earned on the account. However, you also won't be able to access your money until the new term ends, unless you're willing to pay an early withdrawal penalty. Bear in mind that the CD rate may not be the same as when you first opened the account.