Search

What Happens When a CD Matures

A grace period is a headstart that is given to the CD owner when it matures. This period usually lasts for about 2 weeks. Make sure you capitalize this window to avoid paying a penalty.
What Happens When a CD Matures
Once your CD matures, you have the option to reinvest in a new CD or invest the money somewhere else or can use it as you desire. But if you fail to withdraw money within 2 weeks from the day of maturity, the bank will reinvest the amount in a new CD of the same term.
In this article

A Certificate of Deposit or CD matures when its term ends. For instance, if you open a CD for three months, then at the end of the third month, it will mature. After maturing you have to ponder about what action you will take with regard to your CD funds. If you don’t do it within 2 weeks, the bank will do that on your behalf. As the owner, you can decide to reinvest that money in another financial instrument or use it as you please. Either way, make sure you manage your money well.

Grace period for a matured CD

A grace period is a headstart that is given to the CD owner when it matures. This period usually lasts for about 2 weeks. During this period, you can take out your funds from the CD anytime without having to pay a withdrawal penalty. The grace period commences on the last day of a CD. 

If you fail to take any action for the CD as it matures then the bank will renew your CD for the term that it was previously opened. For instance, a three-year CD matures and is converted to a new three-year CD. The interest rates for this new CD will always vary from the previous one.

See also about:CD vs. High Yield Savings

3 things you can do during a grace period

Withdraw and transfer into another account

If your transfer funds into another account, you will have more accessibility to your money. You can do so by depositing the CD funds into an account (savings or checking) or investing in another money-growing instrument. If you opened a CD to fulfill certain goals like buying a vehicle or house, you can use that money for that. If you want more returns, you can also open a brokerage account. However, certain risks are entailed with it.

Invest in a new CD

You can open a new CD if you feel that you don’t want your money to be subjected to risk. Hence to choose a suitable CD you will need to check rates across different CDs in online banks or credit unions. 

Let the bank handle the next step

When you are having problems making any decision, the bank will do it for you. However, this is not very beneficial and is usually not recommended too. Your bank tends to provide your CD with the rates at the current time of maturity. These rates are uncertain and can be higher or lower. If you still decide to renew the same CD, make sure you assess the rates for other CDs in banks. You can also amplify your return by increasing the amount of your CD in the grace period.

Don’t forget the maturity date

If you withdraw from your Certificate of Deposit before maturity, you will be penalized in worths of interest for a certain period. Your bank will remind you about the maturity of your CD through a notification 3 to 4 weeks before the actual date. Some CDs don’t impose any penalty on withdrawals before maturity, but they also do not have great rates in the market.

Grace periods at some banks

Here is a list of grace periods at various banks:

Name of institutionGrace Period
Chase10 days
Marcus By Goldman Sachs10 days
Discover Bank9 days
Ally Bank9 days
Wells Fargo 9 days
Capital One10 days
Bank Of America7 days

FAQs

What if I Forget to Respond to a CD Closing Notification From the Bank?

The bank will take action by renewing your CD for the term that it was opened. However, the rates will change according to the current rate in the market.

Should I Let the Bank Know About Not Renewing the CD Before the Maturity Date?

This varies from bank to bank. To find this out, you can visit the website of your bank and confirm your intentions of renewing.

What if I Don’t Remember Anything About the CD?

The bank will renew it for the same term if you don’t do anything else. However, if this repeats for a long period, the Certificate of Deposit will go under the state government agency as unclaimed property.

Was this helpful?

Did you like the post or would you like to give some feedback? Let us know your opinion by clicking one of the buttons below!

👍👎

Author

Picture of Devanshee Dave

Devanshee Dave

With over 4 years of experience in financial writing and a master’s degree in mass communication & journalism, Devanshee is currently preparing for her CFA (Chartered Financial Analyst) exams. In her spare time, she likes to dance and learn about cosmology, astronomy and anything that can expand her knowledge from the big bang to the big crunch.

Editor

This page is purely informational. Beem does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

Related Posts

Apps Like Vola Finance: Exploring Alternative Financial Solutions
Apps like Vola Finance – Top 10 Vola Finance alternatives
Discover alternative financial solutions that extend beyond Vola Finance. Let's learn more about Vola Finance, which provides various features, advantages, and innovative methods.
Profit and Loss Statement
Profit and Loss Statement
Examine the Profit and Loss (P&L) statement, a financial compass that navigates through sales, costs, and net profit or loss to decode a company's fiscal health.
Six Tips to Set Financial Goals in 2024
Every year, we all make a slew of resolutions that we follow for a few days before abandoning them. This time, let's set more practical financial goals to build confidence.
Tips to Improve Your Financial Health and Well-Being
The old year is fading away and the new year is set to begin. Have you set your financial goals? If you haven’t, let's do it together.
4 Money Moves to Make Before the Year Ends
And it’s a wrap! 2022 is almost done and we are stepping into a New Year. Are you financially ready for 2023? If you aren’t, then read to know how you can succeed financially in the New Year.
Financial Goals: Your Roadmap to a Brighter Future
In five, ten, twenty, or thirty, where will you be? You can use retirement calculators to determine how much money you'll need for the lifestyle you plan to lead after retirement. Investing your money is an important part of building wealth.
Features
Essentials

Get up to $1,000 for emergencies

Send money to anyone in the US

Ger personalized financial insights

Monitor and grow credit score

Save up to 40% on car insurance

Get up to $1,000 for loss of income

Insure up to $1 Million

Coming Soon

File federal and state taxes at low cost

Quick estimate of your tax returns

Get up to $1,000 for emergencies

Send money to anyone in the US

Save big on auto insurance - compare quotes now!

Zip Code:
Zip Code: