Have a CD Maturing Soon? Move the Funds to a New One—Quick!

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Two Reasons Time Is of the Essence Right Now for CDs

Anytime you have a certificate of deposit (CD) approaching its maturity date, it's important to give it some time-sensitive attention. But right now, there's added reason to get ahead of the game—rather than play catch-up later and likely lose money in the process.

That's because most maturing CDs are automatically rolled into a new CD at the same institution—unless you give other instructions by the bank's deadline. Unfortunately, default CDs for roll-overs tend to pay sub-par rates, which means your inaction could result in being locked into a new CD term you may not want and at a rate that's much lower than you could have guaranteed elsewhere.

Add to this today's interest rate environment, in which the Federal Reserve is expected to start cutting interest rates next month—and possibly two more times this year. Since at least one 2024 rate cut is almost certain, many banks and credit unions aren't waiting for an official Fed announcement to start reducing rates. In fact, the best CD returns have been sliding for months—and are probably only going to accelerate when the Fed makes a move.

What to Expect When Your CD Matures

Every certificate of deposit has its own maturity date based on the term you chose and the date it was established. The maturity date is when you can freely withdraw your money—including all the interest you've earned—without incurring an early withdrawal penalty.

Several weeks before that date rolls around, the bank or credit union where you hold the CD will contact you, often by letter but perhaps by email or secure message. With a reminder of the date your term ends, they'll provide instructions on how to tell them what you want done with your funds. They may provide a reply form and envelope and/or instructions for making your wishes known through online banking or a telephone call.

With most institutions, there are usually four options:

1. Transfer the CD funds into another account at that institution
2. Transfer the funds to an account at another bank
3. Receive the funds by paper check in the mail
4. Let the CD roll into a new default CD at that institution

To accomplish any of the first three, you must submit your instructions to the institution by the deadline they stipulate. But if you do nothing or fail to act in time, you'll get Door No. 4. And you may not like the result.

Smart Moves to Make With a Maturing CD

Whether or not you opt to move your money into a new certificate, here are four tips for making the best moves with your existing CD.

Step 1. Decide If You Want Another CD

Perhaps you're unsure about committing your maturing funds to another CD—if you need or want to keep the money accessible for something else. A smart alternative, in this case, is socking it away in a high-yield savings account. The best of these currently pays up to 5.50% APY, giving you an excellent return while leaving the funds completely available for when you need them.

But with multiple Fed rate cuts likely this year—and possibly in 2025 and maybe 2026 as well—rates on savings accounts will be declining. That means returns above 5% may fade away in the coming months and could fall much lower than that next year.

That makes a new CD at one of today's top rates a great option if you don't need the funds from your maturing certificate. Since CDs offer you a locked-in rate guarantee, it won't matter how often the Fed cuts interest rates. Your CD will keep paying its advertised annual percentage yield (APY) until it matures.

Step 2. Start Shopping Today's Best CD Rates

If you decide you do want another guaranteed rate from a CD, start shopping around as soon as you get that tickler notice about your expiring CD. First, look up what rate your existing institution is paying on the CD they've indicated your funds would be rolled into. Then, look at our rankings of today's best CD rates to see how the returns compare. This can also help you decide how long a CD term you prefer, given today's best offers.

Step 3. Communicate Instructions for Your Current CD

Even if you can't decide what to do with your CD funds before maturity, instruct the bank to transfer the CD balance into a savings account at that institution or another one where you have an account. This is smart no matter what you plan to do next, because it will be easy to transfer the money from savings to any other bank. Even if you ultimately decide to open a new certificate at your existing bank, you can easily do this with money moved into savings.

Step 4. Set Yourself Up for Future CD Success

If you've decided to take the plunge with a new CD, it's smart to lock in quickly on the best rate you can find for a term that suits your financial timeline. With rate declines already hitting the CD market and further reductions looming, the sooner you can lock in a new CD, the higher the APY you're likely to get.

In fact, if your existing CD isn't maturing for another month or two and you can afford to be double committed for a short time, you'd likely benefit from opening a new CD now—even if your current CD hasn't yet matured. This could let you lock in a better rate now than you can secure several weeks down the road.

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.