:max_bytes(150000):strip_icc():format(jpeg)/mature-Westend61-5fa42284eaca45e6b4590999be6ff3a2.jpg)
Key Takeaways
- When your CD matures, letting it auto-renew can trap you in a lousy rate and a new term you didn’t plan for.
- Find a better return by researching today’s best CD rates. With Fed rate cuts on the horizon, acting soon can help you lock in a stronger yield.
- Need more flexibility? Move some or all of your balance into a top high-yield savings account for steady growth and quick access.
The full article continues below these offers from our partners.
The Costly CD Oversight That Can Hurt You Twice
When your certificate of deposit (CD) nears maturity, you face a deadline: give instructions or your bank will do it for you—usually by rolling your balance into a new CD that can hurt you twice.
First, the renewal rate is often far below today’s best CD yields. Banks typically default to a single, uncompetitive option—sometimes so low it borders on abysmal compared with what you could earn elsewhere.
Second, the rollover can lock up your money for longer than you planned. A 1-year CD turns into committing for two, a 2-year CD doubles to four years, and so on. And if you need the cash before that second maturity date arrives, you’ll face an early withdrawal penalty.
But there’s good news. By planning ahead, you can avoid both pitfalls—and choose the option that works best for your savings goals.
Why This Matters for You
If your CD is about to mature, a little planning can help you avoid an automatic renewal that costs you twice—first with a weak rate, then with less flexibility for your cash.
4 Steps To Take Before Your CD Renews
Avoiding a bad rollover isn’t complicated—but you do need to act before maturity.
Step 1. Decide Whether To Lock In Again or Keep Your Money Flexible
If you may need access to your money soon, a top high-yield savings account could be the smarter choice, with the best accounts right now paying 4%–5%. Still, those yields won’t stay this high for long. The Federal Reserve is widely expected to cut rates next week and possibly again in December, so today’s top rates are likely to start sliding soon.
But when rates are declining, a CD can really shine. For money you won’t need right away, locking in one of today’s best CD rates guarantees your yield until maturity—no matter how many more cuts the Fed makes.
More Fed Cuts Set To Push Rates Lower
Markets now see about a 99% chance the Fed will cut rates by at least half a point by December. While nothing’s official until it happens, that kind of move would likely pull CD and savings rates lower by a similar amount.
Step 2. Compare Your Renewal Offer With Today’s Best Rates
When your CD is about to mature, your bank will usually offer a single renewal deal—but those rates are almost always lousy compared with the top options elsewhere. To see how your offer stacks up, check our ranking of the best nationwide CDs.
Step 3. Give Instructions Before You’re Renewed With a Bad Rate
A few weeks before maturity, your bank or credit union will send instructions on how to direct your CD funds. Ignore the deadline, and your balance will roll into a new certificate you probably don’t want.
If you feel uncertain, you can always instruct the bank to simply move your CD balance into a savings account—either at that institution or one you’ve linked. This keeps your money flexible and ready to redeploy, even if you choose later to put it in another CD.
Missed the Deadline? Act Fast
After renewal, most banks and credit unions provide a brief grace period—typically 5 to 10 days. If your CD has already rolled over, you may still be able to cancel it by contacting the bank quickly.
Step 4. Plan Your Next Move To Keep Your Savings Growing
If you’ve decided on another CD, act quickly—yields are already slipping, and more Fed cuts could lower rates further.
One savvy move is opening a new CD before your current one matures, if you’re able to double-up your commitment for a short time. That could allow you to capture a better rate than may be available after your original CD matures.
Or split your balance: keep some in a top high-yield savings account for easy access and the rest in a CD for higher guaranteed returns. You’ll stay flexible without risking an early withdrawal penalty.
Smart Tip from Seasoned CD Savers
Anytime you open a new CD, set a calendar reminder six to eight weeks before maturity. That gives you time to shop rates, compare options, and avoid an unwanted auto-renewal.
Daily Rankings of the Best CDs and Savings Accounts
We update these rankings every business day to give you the best deposit rates available:
Important
Note that the “top rates” quoted here are the highest nationally available rates Investopedia has identified in its daily rate research on hundreds of banks and credit unions. This is much different than the national average, which includes all banks offering a CD with that term, including many large banks that pay a pittance in interest. Thus, the national averages are always quite low, while the top rates you can unearth by shopping around are often 5, 10, or even 15 times higher.
How We Find the Best Savings and CD Rates
Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs and savings accounts to customers nationwide and determines daily rankings of the top-paying accounts. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account’s minimum initial deposit must not exceed $25,000. It also cannot specify a maximum deposit amount that’s below $5,000.
Banks must be available in at least 40 states to qualify as nationally available. And while some credit unions require you to donate to a specific charity or association to become a member if you don’t meet other eligibility criteria (e.g., you don’t live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.
Source link
