When you take out a certificate of deposit (CD), you agree to leave your money in a particular account for a given length of time. This could be a few months or a few years. When this length of time is up, your CD will mature and your money will be released back to you along with the interest it has accrued. At this point, your CD provider will write to you to outline your options.
In general, at this point, you can either withdraw the funds or let them roll over into a new CD. Each bank and credit union has different rules, but in most cases, you don’t need to do anything to roll over your CD. Just make sure you know the rules that apply to your CDs and make sure you check the rate that you will be paid for the new CD because it could be lower than the previous one.
- When your CD term comes to an end, your money will be released back to you along with the interest it has accrued.
- As the end of the CD term approaches, your CD provider will inform you of your options.
- Your choices are generally to withdraw the funds or roll them over into a new CD.
- Be sure to check the rate for the new CD if you choose a rollover because it might be lower than the previous rate.
How To Roll Over a CD
For most CDs, you don’t need to do anything to have them roll over into a new CD of a similar length—most CDs held with most banks and building societies will automatically roll over if you do nothing.
Each bank, credit union, and other CD provider has its own rules when it comes to CD maturities. When your CD is close to maturing, your provider should write to you and explain your options. Typically, they will offer you three options:
- Transfer the funds into another account at that bank. Options include a savings, checking, or money market account.
- Withdraw the proceeds. They can be transferred to an external bank account or mailed to you in a paper check.
- Roll over the CD into a new CD at that bank. Generally, this would be into a CD that most closely matches the term of your maturing CD. For example, if you have a one-year certificate concluding, they would likely roll your balance into a new one-year CD.
For most CDs, the third option is the default one: If you do nothing, your CD will roll over into a new one that matches the term of the old one. You should check with your provider as to what their rules are, however, because each provider sets their own.
Though most CDs will automatically roll over into a new CD if you don’t withdraw the funds at maturity, you might not receive the same interest rate as you did with the previous CD. You should check with your CD provider as to the interest rates they will pay on new CDs to avoid a nasty surprise.
Finding the Best CD Rates
Though most CDs will roll over if you do nothing when they reach maturity, that doesn’t necessarily mean that the terms of the CD will be the same. Your bank will usually put your money into another CD of the same length as the CD that just matured. For example, if your six-month CD is maturing, you may have a 10-day window of time after maturity to provide instructions to your bank. If you don't provide new instructions, your bank may put the money into another six-month CD.
That doesn’t necessarily mean you’ll earn the same rate as before, though. When a CD rolls over, this is equivalent to the previous CD ending and a new one beginning. The interest rate your provider pays on new CDs might have changed since you took yours out and if it rolls over, you will be paid the new rate. This might be more or less than you earned on the previous CD.
If you want to maximize the return on your CDs, pay attention when your CDs reach maturity and try to find the best possible rate. The interest rates on CDs depend on a variety of factors, some of which are beyond the control of individual institutions (such as the prime rate and the Federal Reserve rate). There is a wide variation in the amount that each provider will pay, however, so shopping around for the best deal is as important when you roll over your CD as it is when you first take it out.
What Happens When a CD Matures?
When a CD reaches maturity, your bank or credit union will write to you to explain your options. You can normally withdraw your funds from the CD or allow it to roll over into a new CD. If you do nothing, most providers will automatically roll over your CD into a new one.
Will My CD Interest Rate Change if I Roll Over?
It might. Your bank will likely roll over your CD into one with a similar term, but they will pay the interest rate available to new CD customers. This might be higher or lower than your previous rate.
What Happens if I Do Nothing When a CD Matures?
It depends on who you hold the CD with. Most financial institutions will roll over your CD into a new CD with a similar term. Others may withdraw your funds to another type of account. You should check with your provider in order to be certain about the rules that apply to your accounts.
The Bottom Line
When a CD reaches maturity, your bank or credit union should write to you to outline your options. Typically, you will be given a short window in which to withdraw your funds. If you do nothing, your CD will likely roll over into a new CD.
The term length of your new CD will normally be similar to your previous one, but the interest rate may be different. Your bank or credit union will pay you the same interest rate as new CD customers and this rate might be lower or higher than your previous rate. If you want to make sure that your CD is paying the highest possible rates, you should shop around each time your CD matures.