You may be able to roll over a certificate of deposit (CD) automatically when the term expires. But it might not always be the best choice. As your CD term nears its end, your provider will contact you with options. The money in your CD could roll over into a new CD automatically, or you might need to select this option before the end of the term. You can also withdraw the money and the interest earned when your CD matures.
Before your CD matures, learn the applicable rules and check the interest rate on the new CD as it could be lower than the previous rate. It’s often better to shop around for the best CD rates as your CD matures rather than allowing automatic rollovers.
Key Takeaways: When your CD term ends, your money may be rolled over automatically or released back to you along with the accrued interest. As the CD term approaches its end, your provider will inform you of your options (usually to roll over or release the funds). Check the rate for the new CD before choosing a rollover as it might be lower than the previous rate. Shopping around for the best available rate, which could be a new promotional offer, is often preferable to taking an automatic rollover.
How to Roll Over a CD: For most CDs, you don’t need to do anything for the money to roll over into a new CD of similar length. Most CDs held with banks and building societies will roll over automatically if you do nothing. Each bank, credit union, and other CD provider has its own rules regarding CD maturities. When your CD is close to maturing, your provider should contact you and explain your options. Typically, they will offer three options: Open a New Bank Account. Advertiser Disclosure×. The offers in this table are from partnerships from which apexfinancialpath receives compensation. This compensation may impact how and where listings appear. apexfinancialpath does not include all offers available in the marketplace. 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 CD concluding, the provider would likely roll your balance into a new one-year CD. Withdraw the proceeds. They can be transferred to an external bank account or mailed to you via paper check. Transfer the funds into another account at that bank. Options include savings, checking, and money market accounts. For most CDs, the first option is the default. If you do nothing, your CD will roll over into a new one that matches the existing term. You should check with your provider to learn its rules as each provider sets its own.
Finding the Best CD Rates: Generally, when a CD expires, it will roll over automatically unless you take prior action. When a CD rolls over, the new interest rate might be different from the rate you were receiving. The new CD will have the same or a similar term. For example, a 12-month CD will be rolled over into a new 12-month CD.
The interest rate on a CD can be different when it rolls over depending on the current interest rate environment or promotional offers. To maximize returns, pay attention to CD maturity and find the best rate for a new one. See the best CD rates available to find a good home for your money.
CD interest rates depend on various factors and generally follow the prime rate influenced by the fed funds rate. A nation’s central bank actions can make CDs more or less attractive by changing interest rates.
You may purchase a CD in a high interest rate environment but end up in a low interest rate environment when it matures. Rolling over the money could result in less earnings on the new CD.
If you want to continue investing in CDs, evaluate rates from different providers before maturity. If you haven’t found a provider you like, instruct your bank to move CD funds to a high-yield savings account upon maturity to have time to find the right CD.
Consider different CDs and term lengths. We rank the top 15 APYs in every major CD term and category, including best 3-month, 6-month, 1-year, and jumbo CD rates.
Frequently Asked Questions (FAQs):
What Happens When a CD Matures? When a CD reaches maturity, your bank or credit union will inform you of your options. You can withdraw funds, transfer money to another account, or allow it to roll over into a new CD. If you do nothing, most providers will automatically roll over your CD.
Will My CD Interest Rate Change If I Roll Over? The interest rate on your CD may change if you roll over. Your bank will likely roll it over into a similar-term CD with the same APY as new customers, which could be higher or lower than your previous rate.
What Happens If I Do Nothing When a CD Matures? The result depends on where you hold the CD. Most financial institutions will roll over your CD into a new one with a similar term. Others may transfer your funds. Check with your provider for the rules that apply to your accounts.
The Bottom Line: When a CD reaches maturity, your bank or credit union should outline your options. You’ll usually have a short window to withdraw funds. If you do nothing, your CD will likely roll over into a new one with a similar term length but possibly a different interest rate. Your bank or credit union will pay the same rate as new CD customers, which might be lower or higher than your previous rate.
When it comes to Certificates of Deposit (CDs), maximizing your investment returns is crucial. To achieve this, it’s important to be aware of the option to automatically roll over a CD when the term expires.
Shopping around for the best CD rates each time your CDs mature is a smart strategy. By doing so, you can ensure that you are earning as much as possible on your CD investments. This proactive approach can help you secure higher interest rates and potentially increase your overall returns.