Your CD Is Maturing. Here Are Your 5 Options.

By Greg Stevens · 4 min read

When a CD matures, most banks give you a short grace period, often 7 to 10 days. If you do nothing, they roll it into a new CD at whatever rate they're offering that day, which may not be their best rate.

So before the maturity date, it's worth taking ten minutes to look at your options. Here are the five I walk people through.

1. Renew it with the same bank

The easiest option, and sometimes the right one. Ask the bank for its best rate, not just the automatic renewal rate. Banks often have promotional terms that don't apply to automatic rollovers.

2. Move it to a bank or credit union paying more

Online banks and credit unions frequently pay more than big branch banks for the same term. Your money stays FDIC- or NCUA-insured within the limits.

3. Move it to a MYGA

A multi-year guaranteed annuity (MYGA) works a lot like a CD: a fixed rate for a set number of years, usually three to ten. The differences:

• Rates are often higher than bank CDs for the same term. Not always, so compare.
• Taxes: CD interest is taxed every year, even if you don't touch it. MYGA interest grows tax-deferred until you take it out.
• Backing: a CD is FDIC-insured. A MYGA is backed by the insurance company that issues it, so its financial strength matters.
• Access: most MYGAs let you take out about 10% a year with no charge. Taking out more before the term ends means a surrender charge.

A MYGA fits money you won't need during the term. I put the two side by side, with a calculator, on my CD vs. MYGA page.

4. Use it for income

If you're retired or close to it, a maturing CD can be the start of steady monthly income instead of another lump sum to manage. My retirement income page covers the common ways to do that.

5. Keep it in cash

If you'll need the money within a year or two, a high-yield savings or money market account keeps it available. Locking it up for five years makes little sense if you'll need it next spring.

The bottom line

There's no single right answer. The right move depends on when you'll need the money, your tax bracket, and what else you have set aside. Just don't let the bank make the decision for you by default.