What to Do When Your CD Matures, Rung by Rung

What to Do When a CD Matures: The Short Answer

When a CD matures, its term ends. The money plus its interest is yours to use again. A CD, or certificate of deposit, is a bank account that pays a set rate if you leave the money alone for a set time.

What are your options when a CD matures? There are four main choices:

• Renew it for the same term.
• Pick a new term, at the same bank or a different one.
• Move the money to another kind of account.
• Take the cash out and use it.

Before you choose, look at the rate the bank offers now. Then think about when you'll need the cash. Those two facts point to where the money should go.

Decide soon. The window to choose without a fee is short, and it starts on the maturity date.

What Happens If I Do Nothing When My CD Matures?

Many CDs renew on their own if you do nothing. Others pay out or move the money, as your account agreement says. A CD that renews on its own usually rolls into a new CD with the same term. The new CD pays whatever rate the bank offers that day.

So does a CD renew automatically? Often, but not always. Some CDs pay out to your savings account. Others mail you a check. Your account terms say which kind you have.

The hidden cost is the rate. Suppose your old CD paid an assumed 4% on $10,000. That is about $400 a year. If it renews at an assumed 2%, you earn about $200. Your money is also locked up again for a full new term.

Find your renewal setting now, before the maturity date arrives. Then compare what each rate would earn with our CD ladder calculator. It works from the rates, amounts and terms you enter. Use the figures from your own notice so the result matches your account.

A quick note on terms. A CD ladder means several CDs that end at different times. Each CD is one rung, so some cash comes free on a regular schedule. We explain ladders in more detail further down.

How Long Is the Grace Period After a CD Matures?

Your bank decides how long the grace period lasts. A grace period is a short window after maturity when you can change your plans with no fee. The number of days varies from bank to bank. Check your maturity notice or account agreement for the exact days.

During that window, you can usually withdraw or move your money with no penalty. A penalty is a fee for taking money out early. It is often a set amount of interest. Once the window closes, the renewed CD's penalty applies. Your account terms show how that penalty is worked out.

Count from the maturity date, not the day you read the notice. Suppose your CD matures June 1 with an assumed 10-day window. If you open the notice June 8, only a few days remain. Your notice or agreement gives the real number of days. Use it in place of the assumed 10.

Also ask how the bank counts days. Some count calendar days. Others count business days, which skip weekends and holidays. That small detail can move your deadline.

The grace period keeps shrinking before the notice is opened.

Will My Bank Notify Me Before My CD Matures?

Often, yes. But don't count on that notice alone. Your account terms say whether and how your bank will warn you. Many banks send a maturity notice by mail, email or in their app before the CD comes due. The notice usually explains what happens if you take no action.

Look for three things on the notice:

• The maturity date.
• The renewal rate and term.
• The grace period end date. That is your last day to act without a penalty.

If you hold a CD ladder, each rung has its own dates. Write down both dates for every rung yourself. Then set a reminder about two weeks before each maturity.

Also check that your bank has your current address and email. A notice sent to an old address helps no one. If you haven't seen a notice and maturity is close, log in or call the bank and ask for it.

Step One: Compare the Renewal Rate With Your Other Choices

APY means annual percentage yield. It is the yearly return, counting interest earned on earlier interest. Use APY for every comparison so the numbers line up.

The rate is only one part of the choice. Renewing makes sense when three things are true. The renewal APY is close to your other choices. The cash can stay locked up. Moving would take more effort than it earns.

Start by writing three numbers side by side:

1. The renewal APY from your notice.
2. The best CD APY at another bank, for the term you want.
3. The APY on a savings account you could use.

Here is a made-up example. Say $10,000 renews at an assumed 3.00% APY for one year. That earns about $300. Another account at an assumed 4.00% APY earns about $400. The gap is about $100. These are teaching numbers, not real offers.

Now turn any gap into dollars. Multiply the APY gap by your balance. For instance, an assumed gap of a quarter point on $10,000 is only about $25 a year.

Here is our own rule of thumb, not a tested result. If the yearly gain is less than an hour of your time is worth to you, renewing is fine. If it is more, the move is worth the paperwork.

One more check. A savings rate can change anytime. A CD rate stays fixed for the term. So a savings account that pays a bit more today may not pay more all year.

Step Two: Match Each Rung to Your Cash Needs

Before each rung matures, ask one question. Will you need this cash before a new term ends? If yes, put it where you can reach it. If no, a new CD can hold it.

Say your car needs a new transmission next month. That money should not roll into a one-year CD.

An emergency fund is cash set aside for surprises like a job loss or a repair. If yours is thin, a maturing CD can fill it. A savings account is a common home for that money.

Also think about dates you already know. A tuition bill, a move or a tax payment each has a date. Pick a CD term that ends before that date, or keep the cash liquid. Liquid means you can get to it fast without losing value.

Can I Withdraw My CD Money Without a Penalty After Maturity?

Usually yes, during the grace period. That is the main point of the window. You can take some or all of the money with no early withdrawal fee.

If you miss the window, the CD may renew. A new term then starts, and so does a new penalty rule. A high rate won't help if you then pay to break it.

To withdraw, follow the steps on your notice. Many banks let you do it online or by phone. Some need a signed form. Give yourself a few days of slack in case the bank needs time to process it.

Where Can I Put My Money After a CD Matures?

Once the term ends, the money has a few main places to go:

• Renew the CD, or open one with a new term or at a new bank.
• Move it to a high-yield savings or money market account.
• Spend it on a planned cost.
• Pay down debt.

Here is how the main choices compare:

Paying debt deserves a closer look. Say a card charges an assumed 20% and a CD pays an assumed 4%. Paying the card saves far more than the CD earns. Keep enough cash for emergencies first.

Our opinion: a maturing CD deserves a real decision, not a default. Renewing is easy and often fine. For most standard CDs, maturity and the grace period are the usual chance to change terms without a penalty.

Some products differ. One is a no-penalty CD. That is a CD that lets you take money out before the term ends without a fee. That kind, or one that allows partial withdrawals, may give you other chances. Check your account terms. A small rate gain isn't worth locking up cash you may need.

What Is a CD Ladder, and What Changes When a Rung Matures?

A CD ladder is several CDs that end at different times. Say you split $12,000 into four $3,000 CDs that end three months apart. Each CD is one rung. In this example, one $3,000 rung comes due every quarter.

When a rung matures, its cash comes free. That means you rarely need to break a CD early. Each maturing rung is also a fresh chance to check rates and your cash needs.

Staggered maturities release one portion of the ladder at a time.

Then you choose one of three paths:

• Keep it. Roll the money into the longest term.
• Shrink it. Take the cash out.
• Reshape it. Pick a new term that fits a new plan.

To keep the ladder, put the rung into a new CD that ends after your last rung. In the $12,000 example, a one-year CD keeps a rung coming due every quarter. Maturity is also the easy time to add new savings to that rung. Many CDs don't take new deposits mid-term.

Shrink the ladder when you need the cash. It also makes sense when savings pays about the same rate. Reshape it when your plans change. For example, a shorter term fits money you need next year.

If a higher rate shows up, compare two amounts before you break a rung early. The first is the extra interest the new rate would earn before that rung would mature anyway. The second is the early withdrawal penalty from your account terms. Break the CD only if the extra interest is larger.

Here is a made-up example. Say a $3,000 rung at an assumed 4% has three months left. An assumed rate one point higher would add about $7.50 over those three months. An assumed penalty of three months of interest would cost about $30. Here, waiting is the better move.

For steady payouts, see how to build a CD ladder for monthly income.

An Illustrative Scenario: Three Rungs, Three Decisions

Each rung that comes due gets its own decision. Imagine a made-up saver named Dana with three rungs ending over the next year. All rates and amounts are assumed.

First rung. The renewal rate dropped, and Dana's roof needs repairs soon. Dana moves that money to savings during the grace period. Dana pays the bill with no penalty.

Second rung. Suppose the banker says, "We'll renew you at our standard rate." Dana asks, "What does that earn on $5,000 for a year?" At an assumed 3%, it's $150. An assumed 4% elsewhere pays $200.

That $50 gap is the real question. Moving takes Dana about an hour of forms. Dana decides $50 is worth an hour and moves the rung. If the gap were only a few dollars a year, Dana would just renew. The hour of forms would cost more than the move earned.

Third rung. Dana doesn't need the cash, so it goes back in at the longest term. A simple test guided this choice. Shrinking the ladder made sense only if Dana had a bill to pay or savings paid about the same. Reshaping made sense only if Dana knew a date the cash was needed. Neither applied, so Dana kept the ladder as it was.

Notice that the same saver made three different moves. The rate, the cash need and the effort each pointed a different way. Before your next rung matures, decide which path fits it.

A Quick Checklist for Each Maturing Rung

Use this list each time a CD comes due:

1. Find the maturity date and the grace period end date.
2. Read the renewal rate and term on your notice.
3. Compare it with one other CD and one savings account.
4. Turn the rate gap into dollars on your balance.
5. Ask whether you'll need the cash before a new term ends.
6. Choose: renew, change the term, move it, spend it or pay debt.
7. Act before the grace period ends, and save the confirmation.
8. Set a reminder for the next rung.

Missed the Grace Period? What You Can Still Do

First, confirm what happened to your money. Your CD may have renewed for another term. It may also have paid out or moved to another account, as your account agreement says. Your latest statement shows which.

If it renewed, taking money out now usually costs an early withdrawal penalty. Find the new maturity date on that statement.

Call your bank next. Ask whether it ever waives the penalty, which means it lets you skip the fee. Ask about a request made soon after the window closes. Your account terms decide this. It is not a right, so ask before you fill in any withdrawal form.

Next, estimate what breaking the renewed CD would cost. Your account terms show the penalty rule. Use that rule with your own balance and rate. For example, say the penalty is an assumed three months of interest on $10,000 at an assumed 4%. That costs about $100.

Then check when breaking a CD early for a higher rate is worth it. Often the better move is to wait for the next maturity. This time, set a reminder a week before it.

Conclusion: Make Every Maturity Date a Decision

A maturing CD hands you a fresh choice. The default is rarely the only good one. Dana's second rung shows why. The $50 gap only mattered because Dana checked before the grace period ended. If you do nothing, many CDs renew on their own at whatever rate the bank offers then.

Each time a rung comes due, ask three questions. Is the new rate worth locking in? Will you need this cash before the next term ends? Would the money do more in another CD, a savings account or a debt payment?

Today, put every rung's maturity date and grace period end date on your calendar.