CD Maturing? Don’t Make This Costly Mistake — 4 Smarter Moves to Boost Your Cash Now

Your certificate of deposit is maturing—and banks are salivating. They’re counting on you to auto-renew into another dismal yield. Don’t fall for it.

Step 1: Ditch the loyalty tax

That ‘special’ renewal rate? Probably half what you’d get shopping around. Online banks and credit unions are offering 4-5% while megabanks dangle 1.5% like it’s 2009.

Step 2: Play the yield curve

Short-term CDs now pay more than 5-year terms—a rare inversion. Lock in 6 months at 5.2% instead of languishing in a 3% ‘long-term’ trap.

Step 3: Go rogue with Treasuries

6-month T-bills yield 5.4% with zero state taxes. Your bank won’t mention this—they can’t charge ‘management fees’ on free TreasuryDirect purchases.

Step 4: Bet on yourself

That $25k CD could be a crypto staking starter kit. ETH yields 4%—with upside potential. (Or stick with banks and enjoy their 0.01% ‘high yield’ savings accounts.)

The system’s rigged to keep your money lazy. Time to wake it up.

Key Takeaways

• Before a CD matures, you have a window of time to decide what to do with your funds before your bank automatically rolls them over.
• Missing the deadline could result in your money being locked into an undesirable CD with a low rate and new term you may not want.
• Instead, it's worth doing a little research before the deadline (we make it easy) so you can make a proactive decision that works for you.
• Even if you want another new CD, you can almost always earn a much better return by choosing one of today's best CD rates instead of accepting the bank's rollover offer.
• Need more flexibility? Consider moving some or all of your CD balance into a top high-yield savings account for easy access and a solid return.
  

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The Costly Mistake Many People Make With CDs

Anytime you have a certificate of deposit (CD) nearing its maturity date, you face a deadline to decide what to do with the resulting funds. If you take no action, this could be a big mistake—as your money will most likely be rolled into a new CD at the same institution.

While automatic rollovers seem convenient, they limit your choices and often cost you. First, they typically prevent you from earning a competitive interest rate, as the bank or credit union will only offer one rollover CD, which is likely to pay a subpar return. To earn a higher rate, you’ll need to take action.

Second, a rollover CD essentially doubles the length of time your money is locked up. A 1-year CD turns into a 2-year commitment, a 2-year CD becomes 4 years, and so on. Getting locked into a term that doesn’t match your financial goals is problematic—especially since you’ll face an early withdrawal penalty if you need to cash out before the term ends. By avoiding the rollover, you can take control of your money and make choices that better align with your needs.

To avoid this common mistake, it’s essential to take a proactive approach before your CD matures. By understanding your options and making an informed decision, you can avoid locking yourself into a subpar rate and an unwanted term. In the next section, we’ll explore four smarter steps you can take with your maturing funds.

4 Smart Steps To Take Before Your CD Matures

Step 1. Should You Open a New CD or Keep Your Money Flexible?

If you're unsure about locking into another CD because you might need access to the funds soon, a high-yield savings account could be a better alternative. The best of these currently offer up to 5.00% APY, providing a solid return while keeping your funds fully accessible when you need them.

However, with the Federal Reserve expected to cut interest rates in the coming months, savings account rates are likely to start dropping. That means the 5% APY available today will probably fade away soon, with even lower top returns expected next year.

That's why a new CD guaranteeing one of today's top rates could be a better option, if you don't need your funds for a bit. Since CDs offer a locked-in rate promise, it won't matter how often the Fed cuts interest rates. Your CD will keep paying its advertised annual percentage yield (APY) until it matures.

Fed Rate Cuts Are on the Near Horizon

According to the CME Group’s FedWatch Tool, there’s currently a 94% probability of a 0.25% rate cut at the Sept. 16–17 meeting, with a 91% chance of another cut by December.

Step 2. Compare Your Bank's Rollover Rate vs. Today's Best CD Deals

When you're notified by your bank or credit union about a maturing CD, you'll see the rollover CD they're offering, including its term and rate. If you want to reinvest in a new CD, now’s the time to shop around for the best options.

Fortunately, we make that easy with our daily ranking of the best nationwide CDs. It not only guides you to top APYs but also helps you determine your ideal CD term, based on how much today’s best offers pay across different durations.

Warning

If your CD isn't maturing for another month, be aware that the rates advertised on your bank's website today may not be the same when your CD matures. With rates likely to decline soon, the APY you'll receive upon maturity could be much lower. This underscores the importance of taking control of your funds, rather than letting them automatically roll over.

Step 3. Don't Miss the Deadline: How To Give Instructions Before Auto-Renewal

Several weeks before your CD matures, your bank or credit union will contact you with instructions on how to specify what you want done with your funds. They may provide a reply form, envelope, or instructions for using online banking or telephone services.

If you’re unsure about what to do with your CD funds, it’s smart to instruct the bank—by their deadline—to simply transfer your balance into a savings account at that institution or another one you have linked. This ensures flexibility, as it will be easy to MOVE the money later, no matter what you ultimately decide. Even if you choose to open a new CD at the same bank, for example, you can do so easily with funds that were temporarily moved to savings.

Missed the deadline? Get in touch as fast as you can

Most institutions offer a grace period for new CDs. So, if you've missed the deadline and your funds have been moved to a new certificate, you may be able to undo the rollover if you act fast. Grace periods typically range from 5 to 10 days, but this can vary by institution.

Step 4. Plan Ahead on Your Next CD To Maximize Returns

If you’ve decided to open a new CD, it’s wise to act quickly and lock in the best rate you can find for a term that aligns with your financial goals. With rate declines already affecting the CD market and more reductions expected, the sooner you lock in, the higher the APY you’re likely to secure.

In fact, if your current CD isn't maturing for another month or two, and have additional funds that you can afford to commit for a short period, opening a new CD now could be beneficial. By doing so, you could lock in a better rate than what might be available when your current CD expires.

Pro tip from savvy CD savers

Whenever you open a new CD, set a reminder a month or two before its maturity date. This gives you ample time to make an informed decision about what to do with your resulting funds. It also helps ensure the bank has sent you timely instructions for submitting your request.

Daily Rankings of the Best CDs and Savings Accounts

We update these rankings every business day to give you the best deposit rates available:

• Best High-Yield Savings Accounts - Up to 5.00%
• Best Money Market Accounts - Up to 5.00%
• Best 3-Month CD Rates - Up to 4.41%
• Best 6-Month CD Rates - Up to 4.60%
• Best 1-Year CD Rates - Up to 4.50%
• Best 18-Month CD Rates - Up to 4.40%
• Best 2-Year CD Rates - Up to 4.50%
• Best 3-Year CD Rates - Up to 4.28%
• Best 4-year CD Rates - Up to 4.28%
• Best 5-Year CD Rates - Up to 4.28%

Important

Note that the "top rates" quoted here are the highest nationally available rates Investopedia has identified in its daily rate research on hundreds of banks and credit unions. This is much different than the national average, which includes all banks offering a CD with that term, including many large banks that pay a pittance in interest. Thus, the national averages are always quite low, while the top rates you can unearth by shopping around are often 5, 10, or even 15 times higher.

How We Find the Best Savings and CD Rates

Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs and savings accounts to customers nationwide and determines daily rankings of the top-paying accounts. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account's minimum initial deposit must not exceed $25,000. It also cannot specify a maximum deposit amount that's below $5,000.

Banks must be available in at least 40 states to qualify as nationally available. And while some credit unions require you to donate to a specific charity or association to become a member if you don't meet other eligibility criteria (e.g., you don't live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.