Cashing Out a CD at Maturity? Don't Make These 4 Common Mistakes
KEY POINTS
- Being aware of your grace period is the most important thing when it comes to cashing out your CD.
- Prioritize paying down debt.
- Try to lock in a high-interest savings account.
When your certificate of deposit (CD) reaches maturity, what you choose to do next will seriously affect your finances. CDs are low-risk, interest-earning accounts that come with set terms, but your CD maturing isn't the end of the line -- it's an opportunity. Continue to earn a return on your investment by avoiding these four common mistakes.
1. Ignoring the grace period
Your CD almost certainly comes with a grace period of seven to 10 days after it matures. This grace period gives you a chance to decide what to do with your money. This can be easy to miss or forget.
Before doing anything else, review the terms of your CD and take note of exactly how long your grace period is. Missing this window could lock your cash into a new CD that might have an interest rate well below competitors.
2. Rolling over without reviewing your options
If you don't otherwise specify, many banks automatically roll your funds from the expired CD into a new CD once your grace period ends.
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| Product | APY | Min. to Earn | |
American Express® High Yield Savings
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APY
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3.70% annual percentage yield as of April 14, 2025. Terms apply.
Min. to earn
$0
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3.70%
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3.70% annual percentage yield as of April 14, 2025. Terms apply.
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$0
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CIT Platinum Savings
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4.10% APY for balances of $5,000 or more
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Min. to earn
$100 to open account, $5,000+ for max APY
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4.10% APY for balances of $5,000 or more
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|
$100 to open account, $5,000+ for max APY
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Barclays Tiered Savings
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APY
4.15%
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Balances less than $250,000 earn 4.15%, and balances greater than $250,000 earn 4.40% APY.
Min. to earn
$0
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4.15%
Rate info
Balances less than $250,000 earn 4.15%, and balances greater than $250,000 earn 4.40% APY.
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$0
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While this may seem convenient, especially if you want to keep your cash in a CD, when you do an automatic rollover, your bank doesn't give you any choice of which CD your money will be put into. That means the interest rate you get can be well below today's best CD annual percentage yields (APYs) of 4.00% and higher.
Looking for a new CD to roll your cash into? Check out our list of the best CD rates to continue earning a top APY on your money.
3. Letting your money sit in a low-interest savings account
One of the benefits of a CD is earning a high interest rate on your money, while preventing you from spending that cash before reaching your savings goal. Transferring your funds to a standard savings account after your CD matures might seem easy, but it can be a big mistake.
The average 6-month CD interest rate is 1.64%, according to the FDIC. But the average savings account interest rate is only 0.41%. That makes the average CD rate three times higher than the average savings account. Instead, check out the best CD interest rates or the best high-yield savings accounts, which currently include accounts earning APYs of 4.00% or higher.
4. Not using funds to pay down debt
While earning a return of 4% or more on your cash in a CD is a sweet deal, consistently paying credit card debt with a 25% annual percentage rate (APR) more than wipes out anything you earn. Having a savings goal is important, but it becomes a moot point when you're dealing with high-interest, revolving debt. Paying down credit card debt will increase your credit score, give you more financial freedom, and give you the best chance to land the top credit cards.
Once your CD matures, it's not just time to collect your earnings, but it's an opportunity to reassess your financial priorities. Make sure you're reviewing your savings goals, paying down as much high-interest debt as you can, and exploring the best high-yield savings accounts.
Our Research Expert
Jake is a full-time Editorial Strategist for Motley Fool Money. He specializes in product ratings and all things credit cards, and wants to make sure each person has the best card for them.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. Motley Fool Money does not cover all offers on the market. Motley Fool Money is 100% owned and operated by The Motley Fool. Our knowledgeable team of personal finance editors and analysts are employed by The Motley Fool and held to the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands. Terms may apply to offers listed on this page. APYs are subject to change at any time without notice.