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How CD Maturities Work

Manage Your CD Maturity

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Maturity is simply the date when your CD term ends. At that time, your agreement with the bank comes to an end: the bank can stop paying you the interest they promised, and you can take your cash and walk with it.

Maturity Overview

When you buy a CD, the bank promises to pay you a fixed rate of interest for a given term. The interest rate is generally higher than the rate paid on savings accounts because you've promised to keep your money locked up for a certain amount of time. For example, the bank might offer to pay you 3% for a one year CD. 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. In other words, they'll put your money into a new CD with the same term as the previous one. However, the rate may be different (higher or lower) if CD interest rates in general have changed since you bought the first CD.

If you want to take a more active role in growing your cash, it pays to take an active role when CDs mature -- don't just let them renew, even if you don't need the cash right away. Shop around and compare rates at credit unions and competing banks. Take some steps to get better CD rates and move your money to another institution if necessary. It’s convenient to leave money with the same bank, but you might pay for that convenience with lower earnings (not that it's worth calculating how much more you'll really earn by switching banks -- only do it if there's a meaningful difference and you've got the time to spare).

How to Monitor Maturity

Keeping track of a CD's 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.

Be Proactive

It's best to take a proactive approach to CD maturity. You’ll want to figure things out ahead of time so that you can gather all of the information you need and avoid missing any deadlines. If you wait until your bank sends a letter, you may be rushed and unable to take advantage of better offers.

If You Just Can’t Wait Until Maturity

If something comes up and you need access to your cash, it is possible to get money out of a CD before maturity. However, there’s usually some 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 might even be better off borrowing for a short time and paying off the debt once the CD matures. Do the math and see what’s best.

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