Missed your CD account's maturity date? Do this now.
A certificate of deposit (CD) account has many timely advantages. Right now, many come with interest rates over 4%, beating both inflation and the minimal sub-1% earnings traditional savings accounts come with. CDs have fixed interest rates, meaning that savers will earn the same rate they opened the account with, even in the face of changes to the broader rate climate during that CD term. To get the most from a CD, however, savers will need to be strategic in their choice of terms to ensure they don't have to pay an early withdrawal penalty to regain access to their money.
They will also need to be well-prepared for the next steps, before their CD account's maturity date, especially if they opened an account in a different rate climate than what's readily available now. But what happens if you miss your CD's account maturity date? Below, we'll explain what to do next.
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What to do if you missed your CD account's maturity date
While missing your CD account's maturity date isn't ideal, there are some steps to take immediately once it's passed. Here are three:
Utilize the grace period
Your CD account won't automatically roll over into a new account. There's typically a grace period of a few weeks (the exact length varies from lender to lender) in which you can work with the money. Even if you technically missed the maturity date, your funds may still be available to withdraw or deposit into a different account. So check the grace period to determine if you're still in that window of opportunity. If you are, you can feel free to take any number of steps, including moving the money into a long-term CD to ensure protection and growth against future interest rate volatility.
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Contact the lender
If you missed the maturity date and the grace period, your options will become more limited. But that doesn't mean you should keep your funds frozen in a new account, either. Instead, contact the lender to discuss your next steps. They may be willing to help reduce any fees or waive them entirely, particularly if you want to reinvest the funds in another account with them. But you won't know what your options truly are until you speak to the lender. So don't hesitate to do so, particularly if your CD rolled over into a long-term one.
Crunch the numbers
The chances of you regaining access to your funds in a CD rollover – without penalty – are small. But leaving the money in a low-interest earning account may not be beneficial either. Crunch the numbers, then, to determine exactly how much an early withdrawal penalty would be if you withdrew your funds now. The penalty may be minimal if you acted early in the new CD's term. And it could be a small price to pay if you have better, higher-interest-earning opportunities for that money. The only way to determine the value of paying the penalty, however, will be by comparing your returns by taking action (and by letting it stay in the rollover).
The bottom line
A missed CD maturity date doesn't necessarily mean financial trouble. But it will require strategic and quick thinking on behalf of the saver. This means reading the fine print (and dates) in your grace period (and utilizing the limited window of opportunity), speaking to your lender about potential solutions, and, finally, comparing the costs of withdrawing your funds prematurely from a new account versus the potential to earn more money with a different one. Just don't sit idle. In today's rate climate, you'll want to take advantage of all high interest-earning opportunities while still available, and a CD that rolled over into an account you didn't personally choose may not be the best way to do so.
