What Happens When a Certificate of Deposit Matures?

When a certificate of deposit matures, the bank releases your original deposit plus all the interest it earned, and you get a short grace period to decide whether to withdraw the money, move it, or roll it into a new CD. Miss that window and the bank will almost always renew the CD automatically at whatever rate it is currently offering, which may be well below what you were earning.

What the Bank Does on the Maturity Date

The maturity date is the day your CD’s fixed term ends. At that point the bank owes you the full principal plus every dollar of interest the account earned. The locked rate disappears, and for the first time since you opened the CD you have full access to the money.

Most banks either compound your final interest into the balance or pay it as a lump sum on the maturity date. Your account agreement spells out the method. Federal rules under Regulation DD require banks to disclose upfront how interest is compounded and credited, including whether closing the account early would forfeit any accrued interest.¹

The Maturity Notice

You should receive written notice before your CD matures. For CDs longer than one month that automatically renew, banks must deliver a maturity notice at least 30 calendar days before the CD expires. There is an alternative timing: the bank can send the notice at least 20 calendar days before the end of the grace period, as long as the grace period is at least five days.²

For CDs longer than one year that do not automatically renew, the bank must send notice at least 10 calendar days before maturity, stating the maturity date and whether interest continues after the term ends.³ If your CD has a term over one year and renews automatically, the notice must include full disclosures for the new CD. The bank can leave out the new rate if it has not been set yet, but it has to tell you when the rate will be determined and give you a phone number to call.

Open the notice as soon as it arrives. Confirm the account number, the projected final balance, the maturity date, and the renewal terms. That is the starting point for every decision that follows.

The Grace Period

The grace period is a short window after maturity when you can withdraw or redirect your money without paying an early withdrawal penalty. Something that surprises many depositors: Regulation DD does not actually require banks to offer a grace period. It only requires them to disclose whether one exists and how long it lasts.⁴ Most banks do offer one, and seven to ten calendar days is common, but the only regulatory floor is five days, and that applies only when the bank uses the alternative maturity-notice timing above.

Whether your money earns anything during the grace period depends on the bank. The Office of the Comptroller of the Currency notes that banks pay interest during the grace period only “in accordance with your account agreement and bank policy.”⁵ Some pay a nominal rate, some pay nothing. Check your agreement rather than assume.

Your Options Once the CD Matures

You have three basic paths, and which one fits depends on current rates and whether you need the cash.

Take the Full Balance

You can withdraw everything and move it wherever you want. Banks typically offer transfer to a linked account, a wire, or a check. If you are sending the money to a different institution, allow one to three business days for the transfer to settle.

Renew the Full Balance

Rolling the entire balance into a new CD keeps your money earning a fixed rate. Before renewing with the same bank, compare what competitors are offering. The renewal rate your bank quotes may be lower than what is available elsewhere, especially if your original CD was opened at a promotional rate.⁶

You are not stuck with the posted rate either. Banks have retention desks whose job is to keep large deposits from leaving. Call, mention the rates you have found elsewhere, and ask whether they can match. It works best with larger balances, but costs nothing to try.

Withdraw Some, Renew the Rest

Some banks let you pull out a portion and roll the remainder into a new CD. Useful if you need cash now but want to keep a fixed return on the rest. Not every bank offers this, so confirm before the grace period closes.

Brokered CDs Work Differently

If you bought your CD through a brokerage rather than directly from a bank, the maturity process is not the same. Brokered CDs do not automatically renew. When the CD matures, the principal and final interest payment land in your brokerage cash account.⁷ From there you decide whether to buy another CD, invest elsewhere, or withdraw. Some brokerages offer auto-roll programs, but you have to opt in.

What Happens If You Do Nothing

If the grace period passes without instructions, your bank will almost certainly trigger an automatic renewal. Your principal and earned interest roll into a new CD.⁶ The new rate is whatever the bank is offering on the renewal date, which may be well below your original rate.⁸

The new term is not guaranteed to match the old one. Banks can set whatever length they choose for the renewal as long as the maturity notice disclosed it. A three-year CD can renew into a five-year term at a lower rate, and now you are locked in with a penalty if you want out early.

Promotional-rate CDs are where this hurts most. A bank might have offered 5% to attract new deposits while the standard renewal rate sits a full percentage point or more lower. The CFPB specifically warns depositors to compare rates before allowing a rollover because the renewal rate is not guaranteed to match the original.⁶

How to Submit Your Instructions

Once you have decided, tell the bank before the grace period closes. Most accept instructions through an online portal, over the phone, at a branch, or by a signed mailed form. Online and phone are fastest. If you mail a form, send it early enough to arrive well before the deadline.

Double-check the account number against your maturity notice and specify your disbursement method clearly. For an external transfer, have the receiving account’s routing and account numbers ready. The bank should send a confirmation. If nothing arrives within a business day or two, follow up rather than assume it went through.

If the CD Is Inside an IRA

A CD held inside an Individual Retirement Account adds a layer at maturity. The CD itself behaves the same way: it matures, you get a grace period, you can renew or move the funds. But pulling the money out of the IRA wrapper triggers retirement account rules that have nothing to do with the CD.

If you are under 59½ and take a distribution from a matured IRA CD, the money is taxable income and you will likely owe a 10% additional tax on top.⁹ For SIMPLE IRAs, the penalty jumps to 25% if you have been participating for less than two years. These apply even though the CD has matured and the bank charges no penalty.

To avoid tax entirely, move the money into another IRA CD or a different IRA investment using a trustee-to-trustee transfer, where the funds go directly from one institution to another without ever landing in your hands. If the funds are distributed to you first, you have 60 days to deposit them into another IRA or retirement plan. Miss that window and the full amount becomes taxable, with the early withdrawal penalty on top if you are under 59½.¹⁰ You also get only one indirect rollover per year across all your IRAs.

Check Your Deposit Insurance Coverage

Federal deposit insurance covers your CD balance dollar-for-dollar, including principal and accrued interest through the date of any bank failure. The limit is $250,000 per depositor, per insured bank, per ownership category.¹¹ Credit unions carry the same $250,000 limit through the National Credit Union Administration.¹²

Maturity is when this matters most. A $240,000 deposit that earned $15,000 in interest now totals $255,000, which is $5,000 over the limit. That uninsured portion is at risk if the bank fails. When renewing a large CD or letting interest roll into a new term, check whether your combined balances at that institution push you past the threshold. Splitting funds across multiple banks or ownership categories is the standard way to stay fully covered.

Forgotten CDs and State Escheatment

If you forget about a matured CD entirely and the bank cannot reach you, the money does not sit there forever. Every state has unclaimed property laws that force banks to turn dormant accounts over to the state after a set period of inactivity. For CDs, the dormancy clock typically starts on the maturity date, and the waiting period runs from three to seven years depending on the state, with three years the most common.

Once the state takes custody, the money is not lost. You can still claim it through your state’s unclaimed property office with proof of identity and ownership. But the process takes time, and whatever interest the CD was earning stops. A calendar reminder for every maturity date is the simplest way to avoid the whole problem.

1
eCFR. 12 CFR Part 1030 – Truth in Savings (Regulation DD)
2
eCFR. 12 CFR Part 1030 – Truth in Savings (Regulation DD) – Section 1030.5(b)
3
eCFR. 12 CFR 1030.5 – Section (c)
4
eCFR. 12 CFR Part 1030 – Truth in Savings (Regulation DD) – Section 1030.4(b)(6)(iv)
5
HelpWithMyBank.gov. Does the Bank Have to Continue to Pay Interest on My CD After It Matures
6
Consumer Financial Protection Bureau. What Is a Certificate of Deposit (CD) Rollover or Renewal
7
Fidelity. Certificates of Deposit (CDs)
8
HelpWithMyBank.gov. My Certificate of Deposit (CD) Matured, but I Did Not Redeem It
9
Internal Revenue Service. Retirement Plans FAQs Regarding IRAs Distributions (Withdrawals)
10
Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions
11
Federal Deposit Insurance Corporation. Deposit Insurance FAQs
12
National Credit Union Administration. Share Insurance Coverage