Maturity Overview
When you buy a CD, the bank promises to pay you a fixed rate of interest for a given term. In other words, they promise to pay you 5% for one year. After the year is over (at maturity), you decide what to do with your cash.
Renewals at Maturity
Most banks will continually renew CDs for you after maturity. They offer to “renew” and put your money into a new CD with the same term as the previous one. However, the rate may be different if CD interest rates have changed since you bought the first CD.
If you want to take a more active role in growing your cash, it may pay to shop around. Take some steps to get better CD rates and move your money to another institution if necessary. While it’s convenient for the bank to renew your CDs at maturity, it also keeps your money with them.
How to Monitor Maturity
Keeping track of a CDs maturity is simple: read your mail. The bank will send you notice of a maturing CD and information on any renewals. This is required under Regulation DD, so any reputable bank will comply.
You can also check your records and view your accounts online. If all else fails, call the bank and ask. You should be able to determine when a CD will mature somehow.
Be Proactive
I recommend taking a proactive approach to CD maturity. You’ll want to know ahead of time so that you can research other opportunities for your money. If you wait until your bank sends a letter, you may be rushed and unable to take the best steps for your money.
If You Just Can’t Wait Until Maturity
If something comes up and you need access to your cash, it is possible that you can get money out of a CD before maturity. However, there’s probably a cost involved. You may have to pay early withdrawal penalties.
Depending on your desired use of the funds, the amount involved, and the penalty, you should consider every option available. You may be better off borrowing (against a credit card, for example) for a short time and paying off the debt once the CD matures. Do the math and see what’s best.
