What to do when a CD matures….

A Certificate of Deposit also known as a CD usually has a better interest rate than a regular savings account, or a checking account.  That said, unlike a regular savings or a checking account, it does have other stipulations.

They have ‘Maturity Dates’, meaning they have to stay put for the length of time of the chosen CD.  Usually they run 6 months or more, but if the bank is running a ‘special’, sometimes they have a 1 – 3 month one.  How you decide is knowing when you might need your money.  If it’s a savings that you’re leaving for a while, you may choose a 12 month one.

You may not want to choose one more than 2 years, because interest rates change often and you may lose out on a better rate during that time frame that yours is locked in. So think first, then choose one that fits for you.

You can close it out earlier, but with penalties…..usually about 3 months of interest.  Some banks allow it and some don’t ….so check first.

Maturity…. About a month before the CD matures, you should get notification of the upcoming date.  Start checking on the rates at other banks and comparison shop so you’ll get the best  rate for the length of time you want.  If you let the maturity date slide by, the bank automatically rolls it over into a new CD at the current rate for the same length of time.

You can also add to it at the time it matures, then roll it over in the same bank, or a different one choosing a new maturity date and interest rate.

If you’re not sure what you want to do, you can notify the bank that you want to close the CD when it matures, and they can ‘hold’ it as a regular savings (at the rate of a regular savings), giving you time to decide.

CD’s are good because your money is FDIC insured at the bank, and you’re getting a better rate than a regular account.  It’s up to you to choose a length of time.