perspectives

What happens when a CD matures? Your options explained.

When a certificate of deposit (CD) reaches the end of its term, you'll typically have a short grace period to decide what to do next. Your main options are generally to renew the CD, change to a different CD term, or close the CD and withdraw your funds. Depending on the option you choose, you may also be able to add or withdraw funds. If you don't take action before the grace period ends, many banks automatically renew the CD for the same (or similar) term at the rate available at that time.

Overview

  • A CD's maturity date marks the end of its fixed term, when the funds become accessible without an early withdrawal penalty.
  • Banks typically offer a grace period, often seven to ten days, to decide what to do next.
  • Options at maturity generally include renewing the CD, changing to a different CD term, or closing the CD and withdrawing your funds.
  • Doing nothing during the grace period usually results in automatic renewal at the bank's current rate.
  • The right choice depends on whether the funds are needed soon, whether current CD rates are still competitive, and how your broader savings goals have changed since the CD was opened.

Understanding the CD maturity date

The CD maturity date is the specific day a CD's fixed term ends. Until that date, funds are generally subject to an early withdrawal penalty if withdrawn before the term ends. Once the maturity date arrives, the funds, principal plus any interest earned, become available without penalty.

Most banks, including EverBank, provide a grace period immediately following the maturity date. During this window, often seven to ten days, the account holder can let the CD renew for the same term, renew to a different CD term, or close the CD, all without triggering an early withdrawal penalty. The exact length of the grace period varies by institution and should be confirmed in the account's original disclosure or maturity notice.

Your options when a CD matures

When a CD reaches its maturity date, there are generally three paths forward. Each fits a different financial situation, and none is inherently better than the others.

Renewing the CD

If the funds are not needed in the short term and current rates remain competitive, renewing into the same term may make sense. A renewal resets the clock on a new fixed term, at the bank's current rate for that term length, which may be higher or lower than the original rate depending on market conditions. Reviewing rates before a CD matures helps confirm whether renewing for the same term aligns with current goals.

Renewing into a different CD term

At maturity, you may have the option to renew your CD into a different term rather than keeping the same term. Choosing a shorter or longer term can help you align the CD with your current savings goals and when you expect to need access to the money. Available terms and rates may differ from those on your maturing CD, so it can be helpful to review your options during the grace period.x

Closing a CD at maturity

Another option is to close the CD during the grace period. At this point, you will have full access to your total balance, including principal and earned interest, and can request disbursement via the available options. Closing the CD may make sense if you need the money for an upcoming expense or simply don't want to commit the funds to another CD term.

If you want to continue earning interest while maintaining easier access to your money, you may choose to transfer the funds to a more liquid account. An account like the EverBank Performance® Savings account offers competitive yields with no minimum balance and no monthly maintenance fee, making it one option for clients who want to keep their savings accessible.

What happens if you take no action

If no instructions are given by the end of the grace period, most banks automatically renew the CD. The new term is generally the same (or similar) in length to the original, and the rate applied is the bank's current rate for that term at the time of renewal, not necessarily the original rate.x Automatic renewal keeps your money earning interest, but it also means the money remains locked in for another fixed term unless the account holder takes other action during the next grace period.

If flexibility is important to you, consider noting your CD's maturity date on your calendar. EverBank sends a maturity notice before your EverBank Performance® CD matures, and the grace period is generally the window to make changes without an early withdrawal penalty.

How to decide which option fits

A few questions can help clarify the right choice at CD maturity:

  • Do you need the funds soon? If yes, cashing out and moving the money into a liquid account like a savings account makes the funds accessible.
  • Would a shorter term give you more flexibility? If rates are uncertain or your timeline has shifted, renewing into a shorter CD lets you reassess sooner without locking funds away for longer than needed.
  • Are current CD rates still attractive relative to other options? Comparing the renewal rate to rates on a high-yield savings account or money market account can reveal which vehicle currently offers the better return for the client’s timeline.
  • Has your savings goal changed? A CD that was opened for a specific short-term goal may no longer suit a longer-term or more flexible objective, and vice versa.

The best option depends on your liquidity needs, today's rates, and how your savings goals may have changed since you opened the CD.

In conclusion

When your CD matures, it's a good opportunity to review your options before making a decision. Reviewing the grace period timeline, comparing current rates, and deciding between cashing out, transferring, or renewing can help you choose the option that best supports your current savings goals. Clients weighing their next step can review the EverBank Performance CD alongside EverBank's other Performance products to find the option that best matches their current goals.

Frequently asked questions

What happens when a CD matures?

When a CD matures, the fixed term ends and the funds, principal plus any interest earned, become accessible without an early withdrawal penalty. Most banks provide a grace period afterward, typically seven to ten days, during which the account holder can withdraw the funds, transfer them elsewhere, or let the CD renew into a new term.

How long is the grace period after a CD's maturity date?

Grace periods commonly last seven to ten days, though the exact length varies by bank and should be confirmed in the CD's original account disclosure or maturity notice. Any changes made during this window, including full withdrawal, typically avoid an early withdrawal penalty.

What happens if I do nothing when my CD matures?

If no instructions are given by the end of the grace period, most banks automatically renew the CD into a new term that is the same or similar in length to the original one.x The renewal rate reflects the bank's current rate for that term at the time of renewal, which may differ from the original rate.

Can I withdraw money from a CD without penalty at maturity?

Yes. Cashing out a CD at maturity or during the grace period does not trigger an early withdrawal penalty, since the funds are no longer restricted once the term has ended. However, withdrawing funds after the grace period closes and a new term has begun would be subject to an early withdrawal penalty.

Should I renew my CD or move the funds elsewhere?

The answer depends on your liquidity needs and how current CD rates compare to other options, such as a high-yield savings account. Comparing the renewal rate against current rates on other Performance products can help clarify which account currently offers the better fit for your timeline and goals.

Related terms

  • CD maturity date: The specific date on which a certificate of deposit's fixed term ends and funds become accessible without an early withdrawal penalty.
  • Grace period: A short window immediately following a CD's maturity date, commonly seven to ten days, during which funds can be withdrawn, transferred, or the CD renewed.
  • Early withdrawal penalty: A fee charged when funds are removed from a CD before its maturity date.
  • Annual percentage yield (APY): The total rate earned on a deposit account in one year, expressed as a percentage and accounting for compound interest.
  • Renewal: The process of continuing funds from a matured CD into a new CD term. Renewal may occur when you choose to renew the CD or automatically if the CD is set to renew and you don't provide other instructions during the grace period.
  • FDIC insurance: Protection provided by the Federal Deposit Insurance Corporation covering deposits up to $250,000 per depositor, per insured bank, per ownership category.x
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