A CD maturity date is the day your certificate of deposit’s term ends and the bank releases your money along with the interest it promised. On that day, and for a short window afterward, you can take the funds out penalty-free, move them, or change the terms. If you do nothing, the bank almost always opens a new CD for you at whatever rate is current, and the lock-up starts over.
What a CD Maturity Date Is
When you open a certificate of deposit, you agree to leave your money with the bank for a fixed period in exchange for a guaranteed interest rate. Terms can run from about three months to ten years, though one- to five-year CDs are the most common. The last day of that period is the maturity date. On that day the bank owes you your original deposit plus all the interest it agreed to pay.
Until maturity, the money is locked. Pulling it out early triggers a penalty, usually measured in months of interest rather than a flat fee. The maturity date is the point where that trade-off ends and your money is yours again without cost.
What Happens When Your CD Matures
Maturity itself is not a one-day event in practice. Most banks give you a short window called the grace period, typically 7 to 10 days, during which you can act on the CD without paying a penalty.1Bankrate. What To Do When A CD Matures The bank will pay interest during the grace period according to your account agreement.2HelpWithMyBank.gov. Does the Bank Have to Pay Interest on My CD After It Matures?
During that window you have three practical choices:
- Withdraw everything and move the principal and interest to a checking account, savings account, or another investment.
- Take a partial withdrawal, if your bank allows it during the grace period, and leave the rest in a new CD.
- Roll the balance into a CD with a different term, either at your current bank or somewhere else.
The grace period is your only chance to make any of these moves without a penalty. Miss it and the bank makes the decision for you.
What Happens If You Do Nothing
If you take no action during the grace period, the bank rolls the entire balance into a new CD with the same term length. The new CD locks in whatever rate the bank is offering that day, which can be noticeably lower than what you originally earned.1Bankrate. What To Do When A CD Matures Once the rollover happens, you are locked in for the full new term, and early withdrawal penalties apply all over again.
This is where forgotten CDs quietly lose money. A five-year CD that earned an attractive rate can renew into a five-year CD at a much lower one, and you will not know until you check the paperwork.
The Notice Your Bank Must Send
Federal rules require banks to warn you before an auto-renewing CD matures. For CDs with terms longer than one month, the bank has to mail or deliver the notice at least 30 calendar days before the maturity date. If the bank offers a grace period of at least five days, it can instead send the notice at least 20 calendar days before the grace period ends.3Consumer Financial Protection Bureau. 12 CFR 1030.5 – Subsequent Disclosures
The notice will show the maturity date, the term of the CD that will replace it, and either the new interest rate or a phone number you can call to get it. Do not rely on the mail alone. Set a calendar reminder a few weeks before the maturity date so the decision is on your radar in time to act.
Taking Money Out Before Maturity
Withdrawing from a CD before its maturity date almost always costs you. The penalty is expressed as a forfeiture of a set number of days or months of interest, not a flat dollar amount, and the amount varies more than most people expect.
Federal law sets a small floor: if you withdraw within the first six days after depositing, the bank must charge at least seven days’ worth of interest.4eCFR. 12 CFR Part 1030 – Truth in Savings (Regulation DD) Beyond that, banks set their own penalties. For a one-year CD, penalties at major banks run from about 60 to 180 days of interest. For a five-year CD, you might lose 150 to 365 days of interest.5Bankrate. Here’s When an Early Withdrawal From a CD Is Worth It Longer terms tend to carry steeper penalties, but the specifics come from your account agreement.
The penalty comes out of your earned interest first. If you have not earned enough interest yet, the bank can and will deduct the rest from your original principal. That means an early withdrawal on a new CD can leave you with less than you deposited.
When a Bank May Waive the Penalty
Federal regulations allow banks to waive the early withdrawal penalty when the account owner dies, and some banks also waive it when a court declares the owner legally incompetent. These waivers are permitted, not required, so the answer depends on bank policy. Hardship waivers outside those circumstances are uncommon and entirely at the bank’s discretion.
The Tax Deduction for Early Withdrawal Penalties
If you do pay a penalty, you can deduct it from your federal income. The deduction goes on Schedule 1 of Form 1040, Line 18, and reduces your adjusted gross income directly, so you get the benefit whether or not you itemize.6Internal Revenue Service. 2025 Schedule 1 (Form 1040) Your bank reports the penalty amount on your 1099-INT, so keep that form for tax season.
Planning Around Maturity Dates With a Ladder
CD laddering is a way to use maturity dates to your advantage rather than being surprised by them. Instead of putting a lump sum into one CD, you split it into equal pieces and buy CDs with staggered maturity dates.
With $25,000, for example, you could open five CDs of $5,000 each, maturing in one, two, three, four, and five years. Every year, one CD matures. You then choose whether to spend the proceeds, park them in a liquid account, or reinvest them in a new five-year CD at the far end of the ladder. After the first five years, a five-year CD matures every twelve months, so you capture the higher rates that longer terms usually pay while keeping something coming due on a regular schedule.
A ladder works best in stable or rising rate environments. If rates are falling, each maturing CD gets reinvested at a lower rate, and some investors prefer to break the ladder and lock in a longer term while rates are still favorable. Either way, the maturity notice you receive before each CD renews is the prompt to think it through instead of letting the rollover happen by default.