Is your CD account maturing this August? Here’s what experts say to do now

Rates on certificates of deposit (CDs) were high at this point last year, and many consumers opened new accounts to take advantage of them. Now, though, some of those CDs are starting to mature. “A record number of CDs are set to expire this year,” says Mary Grace Roske, senior vice president of communications at CDValet.com. “It’s a notable opportunity for savers.”

Those maturing CD accounts leave savers with a big decision to make: Should they put those funds into new CD accounts, considering that rates have fallen and may fall more later this year? Or should they look to alternative options for their money, like a high-yield savings account or other interest-bearing products?

The answer to that question isn’t always cut-and-dry. Here’s what experts say you should think about when deciding what to do when your CD matures this year.

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What experts say to do if your CD account matures this August

When your CD account hits maturity, you have a short period in which you can take action. Otherwise, the bank will auto-renew your account, rolling it into a new CD with the same account term, only it will have the rate that the bank currently offers. 

“The bank tends to notify you that the CD term is ending and inform you of your seven- to 10-day grace period before they auto-renew your CD,” says D’Andre Clayton, co-founder of Clayton Financial Solutions. “Probably, the No. 1 mistake is not responding to the message or not opening the mail in the first place, which leads to inaction. This would usually result in you not being familiar with the new terms.”

There could also be some tax surprises because the interest earned on your CD accounts is taxable, even if you don’t withdraw it. Plus, rolling over your CD will result in your money being locked up again, which may or may not work for your budget, Clayton says.

So, instead of letting that grace period pass by, you’ll want to weigh your options. Look up the rate you would get if you were to renew the CD with your current bank, and then consider the possible alternatives, including:

• A new CD account with a different term or amount at your current bank
• A new CD account at a different bank or credit union
• Withdrawing the CD funds to use toward an expense or project
• Putting the money into a high-yield savings account or other bank account
• Investing the money in a brokerage account or other asset
• Buying a life insurance policy or annuity 

“While there’s nothing wrong with auto-renewal, there are millions of ‘sleepy savers’ who passively allow their maturing CDs to rollover — without paying attention to the new rate and term,” Roske says. “To make the most of your investment, it’s wise to mark the maturity date on your calendar and review your options before the grace period ends. Proactively comparing rates and terms empowers you to make the most of your savings.”

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How to determine if a new CD account is the right option

Another CD account could be a good option for your money once your current CD account matures. To determine whether that’s the case, though, you’ll need to consider a few factors.

First, ask yourself if you will need the money anytime soon. If not, and if you have a good emergency fund on hand, then a CD might be the right fit. If you think there’s a chance you’ll need access to the money, however, you might want to opt for something more liquid, like a high-yield savings account. 

“You could withdraw the funds and place them in a high-yield savings account or money market account, if you’d like liquidity,” Clayton says. “You could also try investing it somewhere else, such as in short-term treasuries, annuities, or a brokerage account.”

You should also look at the CD rates that are available to you and consider where rates are headed. While rates on CDs have dropped a bit since last year, they’re still relatively high, at least for now.

“CD rates last year were slightly higher than they are now, with rates in July 2024 averaging between 5-5.5%. Currently, rates are hovering around the mid-4s,” says Shana Hennigan, chief business officer at savings marketplace Raisin. “Rates are still at high levels, historically speaking, but the market’s expectation is that the Fed will likely cut rates some time before year-end.”

That means if you can find a good CD rate now, it might be best to act fast. (Remember: Rates on savings accounts will fall as the Federal Reserve reduces rates. A CD guarantees your rate for the entire term.)

“Locking in a guaranteed return now is a smart move,” Roske says. “A 12- to 18-month CD is a savvy choice for savers, especially with potential Fed rate cuts on the horizon. Such terms allow savers to benefit from today’s attractive yields while maintaining flexibility to adjust their strategy as longer-term impacts of recent economic policies become more defined.”

The bottom line

Whatever you do, don’t sit idly by if your CD is nearing maturity. “Letting your money languish in a zero or low-fee account after your CD hits maturity is a wasted opportunity,” Hennigan says. “If you know you have a CD maturity on the horizon, now is a good time to do some research and make a plan for your funds, so when they become available, you can put them to work immediately.”

And if you do opt to continue with a CD once your current one reaches maturity, make sure to shop around.”Compare current interest rates across financial institutions — not just the big players,” Roske says. “Even a small rate difference can significantly impact your returns over time.”

Make sure to look beyond the rate, too. Not only should the CD’s term length align with your financial needs and goals, but you will also want to understand the fine print.

“Look at the rates, penalties, and other features/benefits of the CD,” says Sarah Wicker, consumer market loan and deposit account manager at Georgia’s Own Credit Union.. “Consumers can be quick to jump to the highest rate, but it’s important to consider the other factors, like the term and what early withdrawal penalties would be charged, if any, in the event they had to access the funds prior to maturity.”