As your certificate of deposit (CD) nears its maturity date, you may have the option to automatically roll it over into a new CD. However, this may not always be the most advantageous choice.
When your CD is about to mature, your CD provider will reach out to you with several options. You might have the opportunity for your funds to automatically roll over into a new CD, or you could choose to withdraw the money, including the accrued interest.
Before your CD matures, it’s essential to understand the applicable regulations and review the interest rate on the new CD. The interest rate on the new CD could be lower than your current rate. It’s advisable to explore different CD rates as your CD matures instead of opting for automatic rollovers.
How to Roll Over a CD
For most CDs, there’s typically no action required on your part for the funds to roll over into a new CD with a similar term. The majority of banks and building societies will facilitate an automatic rollover if you do not intervene.
When your CD is approaching maturity, each financial institution has its own set of rules. Your provider should inform you of the impending maturity and present you with three options: rolling over into a new CD at the same bank, withdrawing the funds, or transferring them to another account within the same bank.
- Rolling over into a new CD at the same bank, typically with a term similar to the maturing CD.
- Withdrawing the proceeds, which can be transferred to an external account or sent to you via check.
- Transferring the funds to another account within the same bank, such as a savings or money market account.
By default, most CDs will automatically roll over if no action is taken, matching the existing term. However, it’s crucial to understand your provider’s specific policies since they can vary.
Finding the Best CD Rates
In many cases, CDs will roll over automatically upon expiration unless instructed otherwise. However, the new CD’s interest rate may differ from the current rate. While the term remains consistent, fluctuations in interest rates may impact the APY.
To maximize your CD returns, keep track of maturity dates and seek out the most competitive rates for new CDs. Explore the top CD rates available to secure the best placement for your funds.
CD interest rates are influenced by various factors, typically following the prime rate, affected by the fed funds rate. Economic conditions can impact interest rates, affecting the attractiveness of CDs.
Purchasing a CD in a high-rate environment, only to face a lower-rate scenario upon maturity, can lead to diminished returns on a rollover.
Before your CD matures, consider evaluating rates from multiple providers to optimize your investment. If unsatisfied with available options, consider moving funds to a high-yield savings account post-maturity for greater flexibility in securing a suitable CD.
Explore different CD types and term lengths to find the best fit for your financial goals. Our rankings feature the top 15 APYs across various CD terms and categories to aid in your decision-making.
Frequently Asked Questions (FAQs)
What Happens When a CD Matures?
Upon reaching maturity, your financial institution will outline your choices—typically allowing for funds withdrawal, transfer to another account, or automatic rollover into a new CD.
Will My CD Interest Rate Change If I Roll Over?
Rolling over your CD may result in a rate change, as it will be aligned with the current rate for new CDs. This could be higher or lower than your original rate.
What Happens If I Do Nothing When a CD Matures?
Many financial institutions will automatically roll over your CD into a new one with a similar term if no action is taken. It’s advisable to clarify the specific rules governing your accounts with your provider.
The Bottom Line
When your CD matures, your financial institution should detail your choices, giving you a brief window for fund withdrawal. Failure to act typically results in an automatic rollover into a new CD.
While the term of the new CD likely mirrors the previous one, the interest rate may vary. Your institution will offer the prevailing rate for new CD customers, potentially impacting your returns. Seeking the best CD rates upon maturation is essential for maximizing your investment gains.