How To Renew a CD: Your Grace Period Guide

To renew a CD, you can either do nothing and let it auto-renew during the grace period, or contact your bank during that same window to change the term, add funds or move your money elsewhere.

That grace period, typically 7 to 10 days after your CD matures, is your only chance to act without triggering an early withdrawal penalty.

Key Takeaways

• Doing nothing usually renews your CD automatically into the same term at whatever rate the bank is currently offering, which could be higher or lower than what you were earning.

• The grace period is your only penalty-free window, and it typically runs 7 to 10 days after your maturity date, depending on the bank.

• You have three real choices at maturity: renew for a new term, withdraw the funds, or transfer the money to another account or bank.

• Comparing rates during the grace period costs nothing and could mean a meaningfully better return if your bank's renewal rate has slipped.

• Missing the grace period locks your money back up, and any changes after that point may trigger an early withdrawal penalty.

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How Do You Renew a CD?

You can renew a certificate of deposit in one of two ways: automatically, by taking no action, or manually, by contacting your bank during the grace period.

Automatic renewal: If you do nothing during the grace period, your CD rolls into a new term of the same length at whatever rate the bank is currently paying. That rate could be higher or lower than your original one, since it reflects current market conditions rather than the rate you locked in before.

Manual renewal: You can also contact your bank by phone, online, through its app or in person to adjust the term, add funds or move the money to a different account or bank entirely, all without penalty as long as you act within the grace period.

What Is a CD Grace Period?

A CD grace period is the short window after your CD matures, typically 7 to 10 days, during which you can withdraw funds, add money, change the term or transfer to another account without paying an early withdrawal penalty.

Grace periods vary by bank and sometimes by CD term length. Here's how several major banks currently handle it:

Grace period lengths and policies are subject to change, so confirm the current terms directly with your bank before your CD matures.

What Are Your Options When a CD Matures?

Once your CD hits maturity and enters the grace period, you generally have three choices:

• Renew. Let the CD automatically or manually renew for a new term at the bank's current rate.

• Withdraw. Take out your principal plus interest without an early withdrawal penalty.

• Transfer. Move the funds to another account, whether that's a high-yield savings account, a money market account or a CD at a different bank offering better CD rates.

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How Does Automatic CD Renewal Work?

Automatic CD renewal means your bank rolls your CD into a new term of the same length if you take no action during the grace period, and the new rate reflects current market conditions rather than your original rate.

The main risk is that you could end up locked into a lower rate if market rates have fallen since you opened the CD. The reverse can also happen: if rates have risen, your renewed CD may earn more than before. Either way, once the grace period ends, the early withdrawal penalty clock resets, meaning you're committed to the new term unless you're willing to pay a penalty to get your money out early.

How To Renew a CD Step by Step

If you'd like to manually renew a CD, follow these steps:

1. Determine when your CD matures. Check your account online, wait for the bank's maturity notice, or ask directly. Banks typically send written notice at least 20 days before maturity.

2. Understand your options. Decide whether renewing, adding funds, transferring the money or withdrawing makes the most sense for your goals.

3. Shop around for rates. Compare your bank's renewal rate against current CD rates elsewhere, including money market accounts if you want more flexibility.

4. Know your grace period dates. Confirm exactly how many days you have, since it varies by bank and sometimes by term length.

5. Take action during the grace period. Contact the bank via phone, online, app or in person if you want anything other than a straightforward auto-renewal.

6. Confirm your new terms. Review the new rate, term length and maturity date, then set a reminder for the next time your CD comes due.

How To Stop a CD From Automatically Renewing

If you don't want your CD to automatically renew, here's what to do:

1. Know your grace period. Confirm how many days you have to act, usually 7 to 10 days after maturity.

2. Contact your bank before or during the grace period. Reach out by phone, online, in the app or in person.

3. Tell the bank you don't want to auto-renew. Be specific about what you'd like to happen to the funds instead.

4. Decide where the money should go. Options include a checking or savings account, or a new CD at a different bank with a better rate.

5. Request written confirmation. Get it in writing that auto-renewal has been disabled and the funds moved before the grace period ends.

Should You Renew Your CD or Move Your Money?

Whether you should renew or move your money depends on your rate, your timeline and how much access to cash you need.

During your grace period, take a few minutes to shop around and compare rates before deciding. Even if your current bank's rate looks fine, a quick comparison could reveal a better option elsewhere.

The Bottom Line

Renewing a CD doesn't have to be complicated, but it does require paying attention to one short window.

If you're happy with your bank's current rate and don't need the cash, letting your CD auto-renew during the grace period is the simplest path. If rates have moved, or your goals have changed, that same 7-to-10-day window is your chance to renew into a different term, shop a better rate elsewhere or move the money into something more flexible, all without a penalty.

Mark your maturity date now, watch for your bank's notice, and take a few minutes during the grace period to confirm you're getting the best deal for where your money sits next.

Key Terms

• CD maturity date: The last day of a CD's term, when the original deposit and any earned interest become available without penalty.

• Grace period: The short window, typically 7 to 10 days after maturity, during which you can renew, withdraw or transfer CD funds without a penalty.

• Automatic renewal: A default policy where a bank rolls a matured CD into a new term of the same length if the account holder takes no action.

• Early withdrawal penalty: A fee, often calculated as a set number of days of interest, charged when funds are withdrawn from a CD before its term ends.

• APY (annual percentage yield): The total interest rate earned on a deposit account over a year, including the effect of compounding.

• CD rollover: Another term for automatic renewal, where matured CD funds move directly into a new CD term without the funds leaving the account.

• CD ladder: A savings strategy that involves opening multiple CDs with staggered maturity dates to balance access to funds with earning higher rates.

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Sources

• Consumer Financial Protection Bureau: What Is a Certificate of Deposit (CD) Rollover or Renewal?

• Chase: CD Maturity

• Ally Bank: CDs Help Center

• Citi: When Should You Renew Your Certificate of Deposit (CD)?

Summary generated by AI, verified by GoBankingRates editors

FAQ

Here are quick answers to common questions about renewing a CD:

Do CDs automatically renew? Most CDs are set to automatically renew if you take no action during the grace period. If you don't want your CD to renew, you'll need to tell the bank during that window.

How many days do I have to renew a CD? Grace periods typically run 7 to 10 days after maturity, though the exact number depends on the bank and sometimes the CD's term length. During that window, you can renew, withdraw, add funds or transfer the money elsewhere.

Does renewing a CD start a new term? Yes. Renewing a CD starts a new term of the same or a similar length, with a new maturity date based on when the renewal takes effect.

Will my renewal rate be the same as my original CD? Not necessarily. Your renewal rate reflects whatever the bank is currently offering for that term on your renewal date, which could be higher or lower than your original rate.

What happens if I do nothing when my CD matures? If you take no action during the grace period, your CD will typically renew automatically for the same or a similar term at the bank's current rate.

Can I add money to my CD when I renew it? In many cases, yes. Most banks allow you to add funds during the grace period when you manually renew, though policies vary, so confirm with your bank directly.