Account maturity is the date when a time-bound account or security — most often a certificate of deposit (CD) or a bond — reaches the end of its fixed term, and the institution has to return your principal along with any interest still owed. That date is set when you open the account or buy the security, and it controls when your money becomes fully accessible, what interest rate applies until then, and what decision you need to make to avoid penalties or lost earnings.
What Account Maturity Is
When you open a CD or buy a bond, you agree to leave your money with the institution for a specific period. The maturity date is the last day of that period. It’s the moment the institution’s obligation to hold your funds under the original terms ends and your right to collect the full balance kicks in. A six-month CD opened on January 1 matures on July 1. A 10-year Treasury note purchased in 2026 matures in 2036.
The institution cannot move this date on its own. Because it’s locked into the contract at the outset, changing it would require your agreement. Until it arrives, the bank or issuer has the contractual right to keep your funds deposited, and you receive the agreed-upon interest rate in exchange for leaving the money alone.
Products That Have Maturity Dates
Several common financial products are built around a maturity date:
- Certificates of deposit, where you deposit a lump sum for a set number of months or years — commonly three months to five years — at a fixed interest rate.
- Treasury bills, short-term federal securities that mature in 4, 8, 13, 17, 26, or 52 weeks. You buy them at a discount and receive the full face value at maturity.1TreasuryDirect. Treasury Bills
- Series I savings bonds, which earn interest for up to 30 years and pay out automatically at maturity if you haven’t cashed them in.2TreasuryDirect. I Bonds
- Municipal and corporate bonds, which pay periodic interest and return the face value on a maturity date that can run anywhere from a few years to 30 years or more.
Each of these spells out the exact maturity date in the purchase agreement or prospectus, so you know from day one when your funds are scheduled to come back.
What Happens on the Maturity Date
Once maturity arrives, the original agreement expires. The interest rate you locked in no longer applies, and in most cases interest stops accruing at the original rate immediately. Whether any interest continues during a grace period depends on your account agreement and the bank’s policy.3HelpWithMyBank.gov. Does the Bank Have to Pay Interest on My CD After It Matures
Federal regulations require your bank to notify you before the maturity date so you can decide what to do. For CDs longer than one month that renew automatically, the bank must mail or deliver a disclosure at least 30 calendar days before the account matures. Alternatively, it can send the notice at least 20 calendar days before the end of the grace period, as long as the grace period is at least five calendar days.4eCFR. 12 CFR 1030.5 – Subsequent Disclosures
For CDs longer than one year that do not renew automatically, the bank must notify you at least 10 calendar days before maturity and tell you whether interest will be paid after that date.4eCFR. 12 CFR 1030.5 – Subsequent Disclosures The disclosure has to include the new interest rate and annual percentage yield if they’re known, or a phone number you can call to find out.
Your Choices During the Grace Period
Most CDs that renew automatically come with a grace period, a short window after maturity when you can withdraw or change plans without paying a penalty. Federal law requires this to be at least five calendar days, though many banks offer seven to ten.4eCFR. 12 CFR 1030.5 – Subsequent Disclosures
You generally have three options during that window:
- Withdraw the full principal plus any accrued interest, which closes the account.
- Let it renew into the same product. Many accounts automatically roll into a new CD at the current interest rate if you do nothing, and the new term usually matches the original — a 12-month CD renews for another 12 months.
- Move the money into a different product, such as a savings account, a CD with a different term, or another investment. You need to tell the bank before the grace period ends.
Miss the grace period on an auto-renewing account and you’re locked into the new term. Pulling the money out after that triggers an early withdrawal penalty on the new CD, not the old one.
Pulling Money Out Before Maturity
Taking money out of a CD before the maturity date almost always triggers a penalty. Federal regulations define a time account as one where withdrawals within the first six days carry a penalty of at least seven days’ simple interest.5eCFR. 12 CFR Part 1030 – Truth in Savings, Regulation DD That’s a federal floor. Banks are free to impose much steeper penalties, and most do.
In practice, penalties commonly range from several months of interest on shorter-term CDs to a year or more of interest on longer terms. The exact formula varies by institution and has to be disclosed when you open the account.6HelpWithMyBank.gov. What Are the Penalties for Withdrawing Money Early From a CD
If you do pay an early withdrawal penalty, you can deduct it on your federal tax return. The IRS treats it as an adjustment to income, which means you subtract it even if you don’t itemize.7Internal Revenue Service. Publication 550 – Investment Income and Expenses
Callable CDs and Bonds
Some bonds and CDs include a call feature that lets the issuer end the investment before the stated maturity date. A callable CD might have a five-year term but allow the bank to call it after one year. If interest rates drop, the bank can end the CD early, return your principal, and stop paying the higher rate you locked in.
The risk for you is reinvestment risk: your money comes back sooner than expected and the best available rates are lower than what you were earning. If you were earning 5 percent on a called bond and the best rate you can now find is 3.5 percent, that gap directly reduces your income going forward.8FINRA. Callable Bonds: Be Aware That Your Issuer May Come Calling
Before purchasing a bond or brokered CD, check the prospectus for call provisions. The call date, call price, and conditions under which the issuer can exercise the call should all be spelled out.8FINRA. Callable Bonds: Be Aware That Your Issuer May Come Calling A non-callable product eliminates this risk, though it may pay a slightly lower rate.
Taxes on the Interest
Interest earned on CDs, Treasury securities, and most bonds is taxable as ordinary income in the year you receive it or become entitled to it. You don’t have to withdraw the money for it to be taxable. Under the constructive receipt rule, interest that’s been credited to your account and is available for withdrawal counts as income for that year, even if you leave it in the account.9eCFR. 26 CFR 1.451-2 – Constructive Receipt of Income
For CDs that mature in one year or less and pay all interest in a single lump sum at maturity, you report the interest in the year the CD matures.7Internal Revenue Service. Publication 550 – Investment Income and Expenses For longer-term CDs that pay interest annually, you report each year’s interest in the year it’s credited. Your bank or brokerage sends a Form 1099-INT for any account that paid at least $10 in interest during the year.10Internal Revenue Service. Instructions for Forms 1099-INT and 1099-OID Treasury interest is exempt from state and local taxes but still subject to federal tax. Municipal bond interest is generally exempt from federal tax.
If You Do Nothing After Maturity
If a CD or bond matures and you take no action — no withdrawal, no response to notices, no renewal choice — the bank will eventually have to turn the money over to your state government as unclaimed property. Every state has abandoned-property laws that set a dormancy period, typically three to five years of inactivity, after which the institution must report and remit the funds to the state treasurer or comptroller.
You can still claim the money once it’s been turned over, but the process involves filing paperwork with the state’s unclaimed property office and providing proof of ownership. Any interest that would have accrued during the dormancy period is usually lost. Responding promptly to maturity notices and keeping your contact information current with every institution that holds your money is the simplest way to avoid landing there.