A CD maturity notice is the letter or email your bank sends before your certificate of deposit’s term ends, telling you the maturity date, your renewal rate if the bank has set one, and how long you have to decide what to do with the money. Read it when it arrives. If you do nothing, the bank will roll your principal and interest into a new CD at whatever rate it’s currently offering, and once that happens your money is locked up again until the new term ends.
What the Notice Must Tell You
Federal regulations set the timing. For CDs with terms longer than one month that renew automatically, the notice must arrive at least 30 calendar days before maturity. A bank can instead send it at least 20 days before the end of the grace period, as long as the grace period runs at least five days.1eCFR. 12 CFR 1030.5 – Subsequent Disclosures
For CDs with original terms longer than one year, the notice includes full account disclosures for the renewal term, including the new interest rate and APY. For CDs with terms of one year or less, the bank can send a shorter disclosure covering the current maturity date, the new maturity date if the CD rolls over, the new interest rate and APY, and any changes in terms compared with your original CD.1eCFR. 12 CFR 1030.5 – Subsequent Disclosures
Sometimes the renewal rate hasn’t been set when the notice goes out. In that case, the bank has to tell you the date the rate will be determined and give you a phone number to call for it. Don’t skip this step. Banks aren’t required to match the rate you had, and the renewal rate can be noticeably lower than what you were earning, especially if market conditions have moved.
The Grace Period Is Your Only Free Window
After the CD matures, you get a short penalty-free window to withdraw or give new instructions. The regulation requires at least five calendar days, and most banks offer somewhere between seven and ten.1eCFR. 12 CFR 1030.5 – Subsequent Disclosures The notice should state the exact length of your grace period. That number matters more than any other on the page.
If you do nothing during the grace period, the bank rolls your principal and accrued interest into a new CD, typically for the same term as the original, at the current rate. Once the window closes, pulling money out of the new CD means an early withdrawal penalty, often several months of interest. For longer-term CDs, the penalty can cut into principal. The grace period is the only moment where you have full flexibility at no cost.
Your Options Before the Deadline
You have three practical choices, and the right one depends on whether you need the cash, how the renewal rate compares with other options, and what else is going on with your savings.
Withdraw Everything
Taking all the money out gives you full liquidity. The bank transfers principal and earned interest to a checking or savings account, mails a check, or wires the funds. This makes sense when you need the cash for a planned expense, when current CD rates are unattractive, or when you’ve found a better place for the money. The tradeoff: the funds stop earning CD-level interest the moment they leave.
Reinvest Everything
Rolling the full balance into a new CD keeps your savings earning a guaranteed rate. You don’t have to accept the same term or stay at the same bank. If the renewal rate on your notice looks low, shop around during the grace period — you can move funds to a different institution without penalty. Reinvestment works best when CD rates are competitive against other safe options and you won’t need the money before the new term ends.
Take Some, Reinvest the Rest
Many people pull out the interest and roll the principal into a new CD, keeping their savings base intact while pocketing the earnings. Others reduce the principal if they want more liquidity. Not every bank handles partial withdrawals at renewal the same way, so confirm the mechanics with yours before the window closes.
Start or Continue a CD Ladder
A maturing CD is a natural moment to split the proceeds across several CDs with staggered terms, so that one matures regularly going forward. That gives you periodic penalty-free access while keeping most of your money in longer-term rates.
How to Submit Your Instructions
Communicate your decision before the grace period ends. Most banks accept instructions online, by phone, in person, or by mail. Online banking is the fastest route and creates an automatic record, but for a large transfer, calling or visiting a branch lets you confirm the details live.
For withdrawals, specify where the money goes: a linked checking account, an external bank transfer, or a physical check. Electronic transfers between institutions can take a few business days, so start them early in the grace period rather than on the last day. For reinvestment, confirm the new term, the rate, and whether the bank will let you change the term from the original. Keep written or electronic confirmation of whatever you choose. A receipt or new CD agreement showing the term, APY, and maturity date is your proof that the bank followed instructions.
Check Your FDIC or NCUA Coverage Before Rolling Over
If you reinvest at the same bank, your total deposits there may have grown past the insurance limit. FDIC insurance covers up to $250,000 per depositor, per insured bank, for each account ownership category.2FDIC. Understanding Deposit Insurance A CD opened at $240,000 that earned $15,000 in interest and rolls over in full would push $5,000 past the limit, uninsured if the bank failed. At a credit union, the National Credit Union Administration’s Share Insurance Fund provides the same $250,000 coverage per depositor.3NCUA. Share Insurance Coverage Joint, retirement, and trust accounts each carry separate coverage. For balances near the limit, splitting across institutions is the simplest fix.
If It’s an IRA CD
The maturity process itself works the same way: notice, grace period, same renewal and withdrawal options. What’s different is what happens if you move money out of the IRA wrapper rather than just reinvesting inside it.
If you’re under 59½ and take a distribution from a traditional IRA CD, the amount is taxable income, and you’ll owe an additional 10% tax on the portion included in gross income.4Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts That’s separate from any bank early withdrawal penalty. A narrow set of exceptions exists, including permanent disability, certain medical expenses, and first-time home purchases up to $10,000. For Roth IRAs, contributions come out tax-free, but earnings withdrawn before 59½ face the same 10% penalty unless an exception applies.
If you’re 73 or older, you must take required minimum distributions from traditional IRAs each year.5Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs) A maturing IRA CD is a natural moment to pull the year’s RMD. If you lock the full balance into a new multi-year CD without accounting for the RMD, you’ll have to break that new CD early to meet the requirement, triggering the bank’s penalty. Roth IRA owners don’t face RMDs during their lifetime.
If you take a distribution and want to move the money to another IRA instead of spending it, you have 60 days to complete the rollover. Miss that deadline and the entire amount becomes a taxable distribution, potentially with the 10% additional tax on top.6Internal Revenue Service. Topic No. 413, Rollovers From Retirement Plans You’re also limited to one such rollover per 12-month period across all your IRAs. A direct trustee-to-trustee transfer, where the money never passes through your hands, avoids both the deadline risk and the one-per-year limit.7Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions
If Your CD Came Through a Brokerage
Brokered CDs work differently and typically don’t generate the same kind of maturity notice. They don’t auto-renew. When the term ends, principal and the final interest payment land in your brokerage cash account, with no grace period decision to make because there’s no rollover to prevent.
The flip side: have a plan ready, or the money will sit in a low-interest cash sweep. If you want another CD, you’ll buy one on the secondary market or at new issue through your broker. Brokered CDs also lack traditional early withdrawal penalties — exiting before maturity means selling on the secondary market, where the price depends on current interest rates. If rates have risen since you bought in, you’ll likely sell at a discount. Some brokered CDs are also callable, meaning the issuing bank can buy them back before maturity, usually when rates have dropped.
Taxes on the Interest
Interest earned on a CD is taxable income in the year it’s credited or made available to you, whether you withdraw it or let it roll into a new CD.8Internal Revenue Service. Topic No. 403, Interest Received An automatic rollover doesn’t change that. The IRS treats the interest as available to you at maturity, so it’s taxable that year, as ordinary income at your regular federal rate.
Your bank will send Form 1099-INT by January 31 of the following year if the interest was $10 or more.9Internal Revenue Service. General Instructions for Certain Information Returns10Internal Revenue Service. About Form 1099-INT, Interest Income Even if you don’t receive one, you still have to report the interest on your federal return.8Internal Revenue Service. Topic No. 403, Interest Received If you paid an early withdrawal penalty on a previous CD, that penalty appears on your 1099-INT and can be deducted as an adjustment to gross income — an above-the-line deduction you can claim without itemizing.11Internal Revenue Service. Adjustments to Income Workout
What Happens If You Ignore the Notice
Short term, the bank auto-renews. You get a new term at whatever the current rate is, and the money is locked up again. That might be fine if the rate is competitive, but it’s a decision made by default.
Longer term, truly forgotten CDs become a bigger problem. If you never contact the bank and the CD keeps renewing without any activity on your part, the account eventually becomes classified as abandoned property. Every state has unclaimed property laws that require banks to turn dormant accounts over to the state after a set period of inactivity, typically three to five years in most states. Recovering the money then means filing a claim with your state’s unclaimed property office. You’ll get the principal back eventually, but the process is slow and the funds stop earning interest once they’re escheated. If you’ve moved and the bank can’t reach you with maturity notices, this is more common than people expect.