A CD maturity notice is the letter or email your bank sends before your certificate of deposit’s term ends, telling you the maturity date, the grace period you have to act, and the rate and term that will apply if you let the money roll into a new CD. Read it promptly. If you do nothing, the bank renews the CD automatically at whatever rate it happens to be offering, which is often lower than what you locked in originally, and your money is tied up again the moment the grace period closes.
What the Notice Tells You
Federal rules require the notice to arrive well before the deadline. For CDs longer than one month that renew automatically, banks must send it at least 30 calendar days before the maturity date.1eCFR. 12 CFR 1030.5 – Subsequent Disclosures
Inside, look for four things: the current maturity date, the new maturity date if you let it renew, the new interest rate and APY, and any changes from your original terms.1eCFR. 12 CFR 1030.5 – Subsequent Disclosures
Sometimes the renewal rate hasn’t been set yet when the notice goes out. In that case the bank must tell you the date the rate will be determined and give you a phone number to call for it. Do call. Banks aren’t required to offer the same rate you had, and the new one can be noticeably lower if market conditions have shifted.
The Grace Period Is Your Decision Window
Once the CD matures, you get a short penalty-free window to withdraw funds or give new instructions. The regulation requires at least five calendar days, and most banks give seven to ten.1eCFR. 12 CFR 1030.5 – Subsequent Disclosures The notice will state the exact length. Read that number carefully.
If you do nothing, the bank rolls your principal and accrued interest into a new CD, typically at the same term but at whatever rate the bank is currently paying. Once the grace period closes, the money is locked. Pulling it out early triggers an early withdrawal penalty, often several months of interest, and on longer CDs it can eat into principal. The grace period is the one moment where you have full flexibility at no cost.
Your Options at Maturity
You have three basic choices. The right one depends on whether you need the cash, how current CD rates compare with what you were earning, and what the rest of your finances look like.
Withdraw Everything
Full withdrawal gives you complete liquidity. The bank sends the principal and earned interest to a checking or savings account, mails a check, or wires it out. This makes sense when you need the cash, when current rates are unattractive, or when you’ve found a better home for the money. The tradeoff: the funds stop earning CD-level interest the moment they leave.
Reinvest Everything
Rolling the full balance into a new CD keeps it earning at a guaranteed rate. You aren’t stuck with the same term or the same bank. If the renewal rate on the notice looks weak, shop around and move the funds to another institution during the grace period without penalty. Reinvestment fits when CD rates are competitive against other safe options and you won’t need the money before the new term ends.
Take Some, Reinvest the Rest
A partial withdrawal splits the difference. Many people take the interest and roll over the principal, pocketing the earnings while keeping their savings base intact. Others reduce the principal for liquidity. Not every bank supports partial withdrawals at renewal, so confirm with yours during the grace period.
Build or Extend a CD Ladder
A maturing CD is a natural point to start or continue a ladder. Instead of one new CD, split the proceeds across staggered terms. For example, $10,000 divided into one-, two-, and three-year CDs. As each matures, you reinvest it at the longest term. After the initial cycle, you have a CD maturing regularly, giving you periodic access without penalties while most of the money earns longer-term rates. If rates rise, your shorter CDs catch the increase; if rates fall, the longer ones stay locked in.
How to Submit Your Instructions
Whatever you decide, tell the bank before the grace period ends. Most institutions accept instructions online, by phone, in person, or by mail. Online portals are fastest and create an automatic record. For a large transfer, calling or visiting a branch lets you confirm details in real time.
For a withdrawal, specify where the money goes: a linked checking account, an external transfer, or a physical check. Electronic transfers between institutions can take a few business days, so start them early in the grace period rather than on the last day. For a reinvestment, confirm the new term, the rate, and whether the bank lets you change the term from the original. Get written or electronic confirmation. A receipt or new CD agreement showing the term, APY, and maturity date is your proof the bank followed your instructions.
Check Your FDIC or NCUA Coverage Before Reinvesting
When you’re deciding where to put the money next, pay attention to your total deposits at each institution. FDIC insurance covers up to $250,000 per depositor, per insured bank, for each account ownership category.2FDIC. Understanding Deposit Insurance If a CD opened at $240,000 and earned $15,000 in interest, rolling the full amount into a new CD at the same bank pushes you past the limit, and the excess $5,000 would be uninsured if the bank failed.
At a credit union, the NCUA Share Insurance Fund provides the same $250,000 coverage per depositor.3NCUA. Share Insurance Coverage Joint, retirement, and trust accounts each carry separate coverage, so structuring across ownership categories can raise total protection. For balances near the limit, splitting across institutions is the simplest fix.
If Your CD Is Inside an IRA
An IRA CD matures the same way, with a notice, a grace period, and the same withdrawal or reinvestment choices. But pulling money out of the IRA wrapper, rather than moving it to another investment inside the IRA, brings tax consequences that vary by age.
Under Age 59½
A distribution from a traditional IRA CD is taxable income, and you’ll owe an additional 10% tax on the portion included in your gross income.4Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts That’s separate from any early withdrawal penalty the bank charges on the CD itself. For Roth IRAs, contributions come out tax-free, but earnings withdrawn before 59½ face the same 10% penalty unless an exception applies.
Age 73 and Older
Traditional IRA owners must take required minimum distributions each year starting at 73.5Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs) A maturing IRA CD is a good moment to satisfy that obligation. Before rolling the full balance into a new multi-year CD, calculate the RMD for the year and withdraw at least that much. Locking the whole balance into a new term without accounting for the RMD would force you to break the new CD early and pay the bank’s penalty. Roth IRAs have no lifetime RMDs, so this doesn’t apply.
The 60-Day Rollover Rule
If you take the funds and want to move them to another IRA rather than spend them, you have 60 days to complete the rollover. Miss the deadline and the whole amount becomes a taxable distribution, potentially with the 10% additional tax on top.6Internal Revenue Service. Topic No. 413, Rollovers From Retirement Plans You’re also limited to one such rollover per 12-month period across all your IRAs. A direct trustee-to-trustee transfer, where the money moves between institutions without passing through your hands, doesn’t count against that limit and eliminates the risk of missing the deadline.7Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions
The Interest Is Taxable Whether You Take It Out or Not
Interest earned on a CD is taxable income in the year it’s credited or made available to you, whether you withdraw it or let it roll into a new CD.8Internal Revenue Service. Topic No. 403, Interest Received An automatic rollover can feel like you didn’t receive anything, but the IRS treats the interest as available to you at maturity, so it’s taxable that year at your regular federal rate.
Your bank sends Form 1099-INT by January 31 of the following year if the interest was $10 or more.9Internal Revenue Service. About Form 1099-INT, Interest Income Even without a 1099-INT, you’re required to report the interest.8Internal Revenue Service. Topic No. 403, Interest Received If you paid an early withdrawal penalty on a previous CD, the penalty amount appears on your 1099-INT and can be deducted as an adjustment to gross income without itemizing.10Internal Revenue Service. Adjustments to Income Workout
Brokered CDs Don’t Work This Way
If you bought the CD through a brokerage rather than directly from a bank, there is no maturity notice with a grace period and no automatic rollover. When the term ends, the principal and final interest payment land in your brokerage cash account. If you want another CD, you’ll need to buy one on the secondary market or as a new issue through your broker. Otherwise the money sits in a cash sweep until you act.
What Happens If You Ignore the Notice
In the short term, the bank auto-renews the CD. You get a new term at the current rate, and the money is locked again. That may work out if the rate is competitive and you didn’t need the cash, but it’s a decision made by default rather than by you.
Longer term, a forgotten CD becomes a bigger problem. If you never contact the bank and the CD keeps renewing without any activity on your part, the account is eventually classified as abandoned property. State unclaimed property laws require banks to turn dormant accounts over to the state after a set period of inactivity, typically three to five years in most states. At that point, recovering the money means filing a claim with your state’s unclaimed property office. You’ll get the principal back, but the process is slow and the funds stop earning interest once they’re escheated. If you’ve moved and the bank can’t reach you with maturity notices, this happens more often than people expect.