Your CD stops earning interest on its maturity date, and you have a window to decide what to do with the money

When a certificate of deposit (CD) matures, the bank stops paying you the interest rate you locked in. On that date, your account holds the original amount you deposited plus all the interest earned. You then have a set number of days — usually 7 to 10 calendar days, though this varies by bank — to tell the bank what you want to do with the money. If you do nothing by the end of that window, most banks automatically roll the money into a new CD at whatever rate they are currently offering, which may be higher or lower than your original rate.

The maturity date is printed on your CD agreement when you open the account. You can also find it in your online banking portal or by calling your bank. Knowing this date matters because it gives you time to shop around for better rates at other banks, decide whether you want to keep money in a CD at all, or straightforward move the funds to a savings account.

Key Takeaways

  • On your CD's maturity date, interest stops accruing and you enter a grace period — usually 7 to 10 days — to decide what happens next.
  • If you do nothing during the grace period, your bank will automatically roll the money into a new CD, often at a different interest rate.
  • You can withdraw the full amount without penalty once the CD matures, even if you originally agreed to a longer term.
  • Shopping for rates at other banks before maturity gives you the chance to move your money to a higher-paying CD or a different account type.
  • If you miss the grace period window, you are still not locked in — you can contact your bank to reverse an unwanted automatic renewal.

The grace period: your window to make a choice

The grace period is the number of days your bank gives you after maturity to decide whether to renew, withdraw, or move your money. This period typically runs 7 to 10 calendar days from the maturity date, though some banks offer longer windows. During this time, the money sits in your account earning no interest — it is no longer in the CD, but it has not been moved anywhere else.

You have three main options during the grace period. You can withdraw the full amount and deposit it elsewhere, you can ask the bank to roll it into a new CD (which you can do yourself or let happen automatically), or you can move it to a regular savings account or money market account at the same bank. The bank will not charge you a penalty for any of these choices once the CD has matured.

The exact length of the grace period depends on your bank's policy. Check your CD agreement or call your bank's customer service line to confirm how many days you have. If you are unsure of your maturity date, do not wait until the last moment — contact the bank now so you can plan ahead.

What automatic renewal means and why it happens

If you do not take action during the grace period, your bank will automatically roll your money into a new CD with the same term length as your original CD. For example, if you had a 1-year CD, the new CD will also be 1 year. The interest rate on the new CD will be whatever your bank is currently offering for that term, not the rate you had before.

Banks do this because it keeps money in their system and reduces the number of customers who forget about their CDs and leave money sitting idle. Automatic renewal is a convenience for some people but a trap for others — especially when interest rates have fallen since your original CD opened. If rates have dropped, you may end up locked into a lower rate than you had before.

You can always reverse an automatic renewal. If you realize the bank has renewed your CD and you do not want it, contact the bank within a reasonable time frame — usually within 30 days, though policies vary — and ask them to undo the renewal. The bank will return your money to your account without penalty. After that, you can move it wherever you want.

Withdrawing your money without penalty at maturity

One of the key features of a CD is that you agree to leave your money untouched for a set period in exchange for a higher interest rate. If you withdraw early, the bank charges you an early withdrawal penalty, which is a fee that reduces your earnings. However, once your CD reaches its maturity date, this penalty no longer applies — you can withdraw every dollar without any cost.

The amount you withdraw includes your original deposit plus all interest earned. For example, if you deposited $5,000 in a 1-year CD earning 4.5% annual interest, at maturity you would have $5,225 available to withdraw. The bank will report the interest portion ($225) to the IRS on a Form 1099-INT, and you will owe income tax on that interest in the year the CD matures.

You can withdraw the money in several ways: transfer it to another bank account, have the bank mail you a check, or move it to a savings account at the same bank. There is no penalty regardless of which method you choose, as long as you act during the grace period or contact the bank shortly after if you missed the window.

Shopping for better rates before your CD matures

CD interest rates change constantly based on what the Federal Reserve does with its benchmark rate. The rate you locked in six months or a year ago may be much lower than what banks are offering today — or much higher. Before your CD matures, spend a few minutes checking what other banks are currently paying for the same term length.

You can compare rates across banks using financial websites that track CD rates, or by visiting bank websites directly. Look for rates on the same term you had (if you want another CD) or on savings accounts and money market accounts (if you want more flexibility). Once you know what is available, you can decide whether to renew with your current bank, move to a different bank, or switch to a different account type altogether.

The best time to shop is one to two weeks before your maturity date, while you still have time to open a new account and transfer funds if you find a better rate. Some banks offer a "CD ladder" strategy, where you open multiple CDs with different maturity dates so that money becomes available at regular intervals — this lets you take advantage of rate changes without having all your money locked up at once.

What to do if you miss the grace period

If your grace period ends and you did not take action, your bank has already rolled your money into a new CD. This is not permanent. You can still contact the bank and ask them to reverse the renewal, usually within 30 days of the maturity date, though some banks allow longer. The bank will move the money back to a regular account without charging you a penalty.

Once the money is out of the CD, you can move it to another bank, deposit it in a savings account, or do whatever else you want with it. The key is to act as soon as you realize what happened — do not wait weeks or months. The longer you wait, the more interest the new CD will earn, and some banks may be less willing to reverse a renewal if too much time has passed.

To avoid this situation in the first place, set a calendar reminder for one week before your maturity date. This gives you time to make a decision and take action without rushing. You can also ask your bank if they offer email or text alerts when a CD is about to mature — many do, and it is a free service.

Tax implications when your CD matures

The interest your CD earned is taxable income in the year the CD matures, regardless of whether you withdraw the money or roll it into a new CD. Your bank will send you a Form 1099-INT by January 31 of the following year, showing how much interest you earned. You must report this amount on your tax return.

If you roll the money into a new CD, you still owe tax on the interest from the old CD — the fact that you did not withdraw it does not change that. This is why it matters to know your maturity date and plan ahead. If you are in a high tax bracket or have other income, the tax bill on CD interest might be larger than you expect.

Some people use CDs as part of a tax strategy by keeping them in tax-advantaged accounts like IRAs or 401(k)s, where the interest is not taxed until you withdraw money in retirement. If your CD is in a regular taxable account, you will owe federal income tax on the interest, and possibly state income tax as well, depending on where you live.

Frequently Asked Questions

Can I withdraw my money before the maturity date without a penalty?

No. If you withdraw before maturity, your bank will charge you an early withdrawal penalty, which reduces your earnings. The penalty amount varies by bank and CD term — it might be a flat fee or a certain number of months of interest. Once the CD matures, you can withdraw without any penalty.

What if I want to keep my money in a CD but at a different bank?

During your grace period, you can withdraw the full amount and deposit it at another bank into a new CD. There is no penalty for withdrawing at maturity. Shop for rates before your maturity date so you know where you want to move the money, then complete the transfer during the grace period.

Does my bank have to tell me when my CD is about to mature?

Banks are not required to send a notice, though many do as a courtesy. It is your responsibility to track your maturity date. Check your original CD agreement or log into your online banking account to find the date. You can also call your bank and ask them to confirm it.

If my bank renews my CD automatically, can I get the old interest rate back?

No. The new CD uses whatever rate your bank is currently offering for that term. If rates have fallen, your new rate will be lower. If rates have risen, your new rate will be higher. You can reverse the renewal and move your money to a bank with better rates if you are unhappy with the new rate.

What happens to my CD if the bank fails?

Your CD is protected by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depositor, per bank. If the bank fails, the FDIC will return your money, including accrued interest up to the maturity date. This protection applies whether your CD has matured or not.