How CD Maturities Work

When a CD reaches maturity, you have a few options

When you take out a certificate of deposit (CD), you agree to leave your money in one place for a set amount of time. This is known as the term of a CD. When the term is over, the bank will release the money in your CD back to you, along with the interest it’s earned. This is known as the CD maturing.

When your CD matures, you have several options available to you. You can take the money and interest out of the CD or allow it to roll over into a new CD.  The bank or credit union that holds your CD will write to you shortly before it matures, and they will give you instructions on your options.

In this article, we’ll take you through these options and a few issues that can crop up as your CD matures.

  • When you take out a CD, you agree to leave your money in the account for a set amount of time, known as the term length of the CD. 
  • At the end of this period, the CD will mature and your bank or credit union will release your money, along with the interest you’ve earned. 
  • At this point, you have several options: Take the money out of the CD or roll it over into another CD.
  • Your CD provider should write to you in the weeks before your CD matures. This message will outline your options and how you can tell the bank your decision.

Understanding CD Maturities

A certificate of deposit (CD) is a product offered by banks and credit unions that provides an interest rate premium in exchange for the customer agreeing to leave a lump-sum deposit untouched for a predetermined period of time. Leaving your money in one place is good for the bank because they know they can use your money for a set period. They reward you for this by offering a better interest rate than a standard savings account.

You can take out CDs that run for a few months or many years. In the month or two leading up to your CD’s maturity date, the bank or credit union will notify you that the end of your CD term is coming up. This message should also include instructions on how to tell them what to do with the maturing funds. Typically, they will offer you three options:

  • 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 1-year certificate concluding, they would likely roll your balance into a new 1-year CD.
  • 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 as a paper check. 

In any case, the communication to you will stipulate a deadline for you to provide instructions, with an indication of what the institution will do in lieu of receiving your guidance. In many cases, its default move will be to roll your proceeds into a new certificate.

Make sure you move quickly when your CD comes to maturity. The grace period to withdraw CD funds may only last days and if you don’t withdraw your funds and close the account, they may be automatically rolled over into a new CD.

Issues and Problems

There are a couple of potential problems to be aware of when it comes to CD maturities.

The first is that you need to act quickly once you receive notice that your CD is about to mature. After the CD reaches maturity, the account enters a grace period that may last for up to 10 days. If you do not close the CD within the grace period, then your bank may automatically roll over your CD into a new one and you may have to pay a penalty to access the funds before the next maturity date.

This can give rise to a second issue–what happens if you try and access your money before your CD reaches maturity. In this case, you will likely have to pay early withdrawal penalties. The exact amount you will pay depends on your bank or building society. Federal law specifies a minimum level of penalty, but there is no maximum, and these penalties vary widely between banks and types of CD. You should check these fees before you withdraw money from your CD because they could mean you get back less than you originally put in.

Can You Close a CD Before Maturity?

Yes, you can. After all, the money in the CD is yours. However, you will most likely be charged a penalty for this. Federal law sets a minimum penalty on early withdrawals from CDs, but there is no maximum penalty. If you withdraw money within the first six days after deposit, the penalty is at least seven days' simple interest. Review your account agreement for policies specific to your bank and your account.

How Long Is a CD Grace Period?

It depends on your bank or credit union. Typically, though, it ranges from seven to 14 days. For example, Bank of America and Wells Fargo have seven-day grace periods while Chase gives 10 days. Online banks Ally Bank and Capital One give 10 days.Barclays has a 14-day grace period for online CDs.

Can I Avoid CD Early Withdrawal Penalties?

In some cases, your bank may waive early withdrawal penalties for CDs. However, they are not required to by law and this remains at their discretion.

The Bottom Line

When you take out a CD, you agree to leave your money in the account for a set amount of time, known as the term length of the CD. At the end of this period, the CD will mature and your bank or credit union will release your money, along with the interest you’ve earned. At this point, you have several options–take the money out of the CD or roll it over into another CD.

Your CD provider should write to you in the weeks before your CD matures. This message will outline your options and how you can tell the bank your decision.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. U.S. Securities and Exchange Commission. “Certificates of Deposit.”

  2. Consumer Financial Protection Bureau. “What Is a Certificate of Deposit (CD) Rollover or Renewal?

  3. U.S. Securities and Exchange Commission. “High-Yield CDs: Protect Your Money by Checking the Fine Print.”

  4. Office of the Comptroller of the Currency. "What Are the Penalties for Withdrawing Money Early From a CD?

  5. Office of the Comptroller of the Currency. "What Are the Penalties for Withdrawing Money Early From a CD?

  6. Bank of America. “Deposit Interest Rates & Annual Percentage Yields (APYs),” Page 3.

  7. Wells Fargo. "Wells Fargo CDs (Certificates of Deposit)."

  8. Chase. “The Benefits of a Chase CD: Chase Certificates of Deposit Interest Rates.”

  9. Capital One. “Certificate of Deposit Agreement and Electronic Funds Transfer Agreement

  10. Ally Bank. “Get Rewarded When Your CD Renews.

  11. Barclays. “Terms and Conditions.”