3 things to do before your CD matures
While inflation and elevated interest rates have hurt borrowers recently, they've boosted savers with interest-earning accounts. For example, high-yield savings and certificates of deposit (CD) account holders have earned exponentially more on their money than they could have just a few years ago. With CD interest rates hovering close to 6% for select terms right now, there's significant money to be made simply by transferring funds from one account to another. That said, the rate climate could change as the year evolves, particularly if the Federal Reserve sees continued success with reducing inflation.
Against this backdrop, current CD account holders should be preparing their next move now, before their CD matures. With the volatility of the market top of mind, it's smart to be proactive. Below, we'll break down three things savers should consider doing before their CD matures.
Start by exploring your current CD options here to see how much more you could be earning.
3 things to do before your CD matures
Here are three things savers should consider doing before their CD term concludes.
Review your existing CD terms
Many CD accounts will automatically renew, potentially at a less advantageous interest rate than initially obtained. So, before your CD matures, carefully review your existing CD terms to determine if this will happen to your CD.
You may have a short window to remove the funds or transfer them to a different account before they roll over to a new account. Or you may be able to put them into a CD with a different term or different rate (or both). But you won't be able to make any of these changes without first reviewing and understanding your existing CD terms and limitations.
See how high of a rate you could get with a new CD here.
Compare your options
Sure, CD rates today are high, but that high rate comes with a cost, namely the inability to withdraw those funds. If you withdraw your money early, you'll generally get stuck paying a penalty. But there are other options available now with competitive rates that don't come with these same restrictions.
High-yield savings accounts, for instance, come with rates almost as high as the best CDs but without the limitations CDs do. On the other hand, high-yield savings account rates are variable and subject to change based on market conditions. But that may be worth it for you in exchange for greater access to your money. So compare your options now, before your CD matures, so you'll be prepared to make the right move at the right time.
Learn more about your high-yield savings account options today.
Explore CD laddering
CD laddering involves opening multiple CDs with different terms, allowing you more freedom to move your money around more freely than you would have with one account and one term. In today's market, with rate cuts predicted but no concrete timeline for when they will come, it can be beneficial to take this approach.
So, if you have $10,000 in a CD now, you may want to take half of that amount and put it into a long-term CD when it matures and the other half in a short-term one, giving you an edge for when the rate climate does change. This strategy may not be beneficial for everyone, but it could be valuable for select savers.
The bottom line
In today's rate climate CD account holders — and those savers considering CDs — need to be thoughtful in their approach. If you have a CD approaching its maturity date, this thoughtfulness extends to reviewing your current terms, exploring alternatives and looking into the benefits of CD laddering. By making these moves now savers will be prepared to act when their CD does mature, regardless of what's going on in the larger rate environment.
