Key Takeaways
- If you don’t act before your CD’s maturity date, your money may get locked into a lousy rate and a new term you don’t want.
- With a Fed rate cut expected, it’s worth researching your options early so you can make a proactive decision that protects your earnings.
- Even if you want a new CD, you can almost always earn much more with one of today’s best CDs instead of the bank’s rollover CD.
- Need flexibility instead? Moving your CD balance into a top high-yield savings account offers easy access and a solid return.
The Costly CD Mistake That Can Lock You In to a Lousy Rate
Whenever a certificate of deposit (CD) nears its maturity date, you face a deadline to decide what happens with your funds. Take no action, and your bank will likely roll them into a new CD—a move that can hurt you in two ways.
First, rollover CDs rarely offer competitive rates. Banks typically default you into a single option, which often pays far less than the best CD yields available elsewhere.
Second, an automatic rollover may double your commitment. A 1-year CD could become two years, a 2-year CD an become four—locking up your money in a term that may not fit your goals. And if you need access before the CD ends, an early withdrawal penalty will apply.
The good news: You can sidestep this costly trap by planning ahead. Taking control before maturity lets you avoid being locked into a lousy CD rate and an unwanted term, and instead choose the option that best fits your needs.
Why This Matters
When your CD approaches maturity, the decisions you make in that window can meaningfully shape your return. Understanding your choices now helps you avoid a low-rate rollover and keep your earnings strong.
4 Smart Steps To Take Before Your CD Renews
Step 1. Decide: A New CD or More Flexibility?
If you’re hesitant to lock into another CD because you might need access to your money soon, a high-yield savings account could be a better alternative. The best accounts right now pay 4%–5%, offering a strong return with full access to your funds when you need them.
But with the Federal Reserve expected to cut interest rates again next week, savings account yields are set to drop. That means today’s returns aren’t likely to last, with all of the top accounts paying less in the coming weeks and months.
That’s where a new CD comes in. If you don’t need immediate access to your funds, opening one of today’s top CDs guarantees the advertised annual percentage yield (APY) until maturity. No matter how many times the Fed lowers rates, your CD rate will be locked in.
Step 2. Compare Your Bank’s Renewal Rate With Today’s Best CDs
When your bank or credit union notifies you about a maturing CD, they’ll show you the renewal option they’re offering—with its set term and rate. But before you simply accept it, it pays to compare what’s available elsewhere.
See our list of the best nationwide CDs and compare the top rates. You’ll see the top APYs available right now and how rates stack up across different terms, so you can choose the CD that best fits your goals.
Step 3. Beat the Deadline Before Automatic Renewal Kicks In
Several weeks before your CD matures, your bank or credit union will send instructions on how to direct your funds. You may get a reply form, an envelope, or directions for using online or phone banking.
If you’re undecided, the safest move is to tell the bank—before their deadline—to transfer your balance into a savings account, either at the same institution or one you’ve linked. That way, your money stays flexible and easy to move later, no matter what you decide.
Even if you know you want another CD—either at that same bank or another one—you’ll be able to open it easily with funds that were first parked in savings.
Missed the Deadline? Act Quickly
Most banks and credit unions give you a short grace period after a CD renews. Even if your funds have already rolled into a new certificate, you may be able to reverse it—if you move fast. Grace periods usually last 5 to 10 days, though the exact window varies by institution.
Step 4. Plan Your Next CD Strategy To Maximize Earnings
If you’ve decided to open a new CD, act quickly to lock in the best rate for a term that fits your financial goals. With CD yields already slipping and another Fed cut likely, moving sooner increases your odds of securing a higher APY.
Also, if your current CD won’t mature for another month or two, but you have extra funds allowing you to double-commit for a short time, consider opening a new CD now instead of waiting. That way, you may be able to lock in a stronger rate than what will likely to be available after your existing CD matures.
Pro Tip From Savvy CD Savers
Whenever you open a new CD, set a calendar reminder one to two months before maturity—helping you avoid auto-renewal and keeping your options open.
