When your certificate of deposit (CD) reaches its maturity date, it’s decision time. This is when your CD term ends, and your bank releases your money along with the interest you’ve earned. What you do next can affect your savings, flexibility, and long-term financial progress.
Many banks give you a short grace period usually around 7 to 10 days to choose your next step. If you don’t take action, your bank will typically renew your CD automatically for the same term at the current interest rate. That might sound convenient, but it’s not always the smartest move.
Let’s walk through your options so you can make a confident decision.
Step 1: Review Your Financial Situation First
Before doing anything, pause and ask yourself: Do I still need this money locked away?
Your goals may have changed since you first opened the CD. For example:
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Maybe you originally saved for a car down payment but you’ve already bought the car.
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Or perhaps you wanted a financial safety net, but now you have stable savings elsewhere.
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You might even need the money now for something more important, like paying off debt.
A maturing CD gives you a chance to realign your money with your current priorities.
Tip: If you’re unsure, move the funds into a savings account temporarily. This keeps your money safe and accessible while you decide.
Option 1: Renew Your CD (But Compare Rates First)
Renewing your CD is the simplest option. Your money stays invested, and you continue earning interest.
However, don’t assume your current bank offers the best deal. Interest rates change constantly, and another bank or especially an online bank or credit union might offer a better return.
Example:
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Your bank offers 3.50% APY on a new CD.
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Another bank offers 4.25% APY.
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On $10,000, that difference could mean an extra $75 per year.
It may seem small, but over time, those gains add up.
Option 2: Move Your Money to a More Flexible Account
One downside of CDs is that your money is locked away. If flexibility matters more to you now, consider these alternatives.
Liquid CDs: Access Your Money Anytime
A liquid CD lets you withdraw money without paying an early withdrawal penalty. The interest rate may be slightly lower, but you gain freedom.
This is useful if you want better returns than a savings account without losing access completely.
Money Market Accounts: Earn Interest With Easy Access
Money market accounts are another strong option. They usually offer competitive interest rates and allow limited withdrawals.
Some accounts even include:
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Debit cards
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Check-writing privileges
This makes them ideal if you want your money to grow while staying accessible.
Option 3: Build a CD Ladder for More Flexibility
A CD ladder spreads your money across multiple CDs with different maturity dates.
For example:
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$2,000 in a 6-month CD
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$2,000 in a 12-month CD
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$2,000 in an 18-month CD
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$2,000 in a 24-month CD
This strategy gives you regular access to portions of your money while still earning solid interest rates.
CD ladders work especially well when interest rates are rising because you can reinvest at higher rates over time.
Option 4: Use the Money to Pay Off High-Interest Debt
Sometimes, the best return isn’t from saving it’s from eliminating debt.
If your CD earns 4% interest but your credit card charges 18%, paying off that credit card gives you a much bigger financial benefit.
Example:
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CD earnings: 4% per year
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Credit card interest: 18% per year
Paying off the credit card saves you far more money.
Just make sure you keep some cash in savings for emergencies.
Option 5: Invest for Long-Term Growth
If you already have emergency savings and no high-interest debt, investing may be worth considering.
Unlike CDs, investments such as stocks and bonds offer higher growth potential but they also involve risk.
This option makes sense if:
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You don’t need the money soon
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You’re saving for retirement or long-term goals
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You’re comfortable with some ups and downs
Over long periods, investments often outperform CDs.
Option 6: Transfer the Money to a High-Yield Savings Account
If you want safety and flexibility, a high-yield savings account is a strong middle ground.
You’ll get:
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Easy access to your money
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Competitive interest rates
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No lock-up period
This is ideal if you’re building or maintaining an emergency fund.
What Happens If You Do Nothing?
If you ignore your CD after maturity, your bank will most likely renew it automatically for the same term.
This can be risky because:
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The new interest rate may be lower
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Your money will be locked again
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You’ll lose flexibility
Always review your options before the grace period ends.
How to Choose the Best Option for You
Here’s a simple guide:
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Renew your CD: Best if you want safe, predictable returns
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Switch banks: Best if you find significantly higher rates
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Use a money market or savings account: Best for flexibility
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Create a CD ladder: Best for balance between access and returns
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Pay off debt: Best if you have high interest loans
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Invest: Best for long-term growth
