4 questions to ask before your CD matures
Certificate of deposit (CD) accounts have historically been smart and effective ways to protect and grow your money. And, in recent years, the benefits of these accounts have surged due to a combination of elevated inflation and interest rates that have grown exponentially. Thanks to the locked nature of these accounts, these elevated rates have remained the same throughout the CD term in the face of wider volatility.
And while that locked nature has been advantageous for many (and early withdrawal penalties discourage savers from accessing their funds for non-emergencies), CDs inevitably mature, leaving savers with a variety of options to choose from. To make the best decision for their money, savers would be best served by having the answers to a series of questions prepared in advance. Below, we'll break down four of these questions (and answers) now, so savers are better informed about their next steps.
Start by exploring today's top CD rates now to learn more.
4 questions to ask before your CD matures
Do you have a CD maturing this June or later in the summer? Here are four questions you should start thinking about before your account matures:
Has the rate changed?
Look at the fine print of your current CD account. If you don't do anything to the account when it matures it may automatically rollover into a new account after a transitionary period. While this could be advantageous if the going rate has since risen it could be an issue if the new rate is lower than what you previously earned. So ask your lender if the rate has since changed and, if so, find out what they're offering now. If it's not as high as desired, it may be time to withdraw your funds and start shopping for a CD with a better rate and terms.
Start shopping for CDs online today.
Has your financial situation changed?
Do you need the money you've had locked away in your CD? Or are you comfortable leaving it untouched in the bank? Maybe you're in a better financial position than you were when you first opened the account and you can open a new one with additional funds. Only you will know the answer to these questions but they're important ones to ask now, in advance of your CD maturing. With today's CD rates high but unlikely to stay quite this high for much longer, it's important to establish clear next steps now.
Can you get a better rate with an online bank?
If you opened an account at the branch of your local bank, you may not have secured the highest rate possible. That's because online banks tend to (but not always) offer higher rates to savers than their counterparts with in-person locations. So be sure to shop around for CDs with online banks to store your soon-to-be-maturing funds. You may be surprised by how much higher a rate you can lock in simply by using one of these banks.
Are the alternatives better?
CDs aren't for everyone and the lack of access you had to your money during the CD term may not have been beneficial for your financial situation and goals. So it behooves you to start exploring alternatives now so you're ready to move your funds when the CD ultimately matures. While traditional savings accounts come with an average rate many times lower than the top CDs right now, high-yield savings accounts come with similar returns to CDs and you'll still be able to withdraw and deposit as you would with most regular savings accounts. But the rates on high-yield savings accounts are variable while CDs are not, which will need to be considered in advance.
Explore the top high-yield savings accounts available here today.
The bottom line
If your CD maturity date is soon, it's important to start thinking about your options now. This involves preparing the answers to a variety of questions. So be sure to ask about the changing rate climate, understand if your financial situation has evolved, research your online bank options and look into alternatives like high-yield savings accounts, too. By doing this work preemptively you'll position yourself for additional financial success once your current CD term has matured.
