Your CD stops earning interest and your money becomes available to withdraw or reinvest

When a certificate of deposit matures, the bank stops paying you the interest rate you locked in. Your original deposit plus all the interest you've earned sits in your account, usually accessible without penalty. What happens next is your choice: you can withdraw the money, let it roll into a new CD at the bank's current rates, or move it elsewhere. The bank will notify you before maturity, typically 10 to 30 days in advance, giving you time to decide.

The maturity date is set when you open the CD. A six-month CD matures six months from the day you fund it; a five-year CD matures five years later. On that exact date, the interest stops accruing. If you do nothing, many banks automatically roll your balance into a new CD with the same term and their current rate — but you have a window (usually 7 to 10 days after maturity) to change your mind and withdraw instead.

Key Takeaways

  • Your CD stops earning interest on the maturity date, and you can withdraw your full balance without penalty after that date.
  • Banks typically send a maturity notice 10 to 30 days before the date, telling you what will happen if you take no action.
  • If you do nothing, most banks automatically roll your money into a new CD at their current rate and term, but you can cancel this within a grace period.
  • Withdrawing after maturity carries no early-withdrawal penalty, but withdrawing before maturity usually does.
  • Interest earned on a CD is reported to the IRS on a 1099-INT form, and you owe taxes on it in the year it was earned, not when you withdraw.

How the maturity notice works and what it tells you

The bank is required by federal regulation to notify you before your CD matures. This notice arrives by mail or email (depending on how you set up your account) and includes the maturity date, your current balance with interest, and the bank's automatic renewal terms — usually the same CD length at whatever rate they're offering that day.

Read this notice carefully. It will tell you the exact date you have until to take action, the new rate you'll receive if you do nothing, and how to contact the bank if you want to withdraw or choose a different product. Some banks give you seven days after maturity; others give ten. If you miss that window and the CD has already rolled over, you can still withdraw without penalty, but you'll be starting a new CD term.

What happens if you do nothing

If you don't contact your bank by the deadline in the maturity notice, your money automatically rolls into a new CD. The term is usually the same as your original CD — if you had a two-year CD, the new one is typically two years. The interest rate is whatever the bank is offering on that term on the day of maturity, not the rate you had before.

This automatic renewal can work in your favor if rates have risen, but it locks you in again if rates have fallen. That's why reading the maturity notice and knowing the new rate matters. If the new rate is lower than you'd get elsewhere, you can withdraw during the grace period and move your money to a different bank or product.

Withdrawing your money after maturity

Once your CD has matured, you can withdraw your full balance — principal plus interest — without any early-withdrawal penalty. This is the key difference between withdrawing before and after maturity. Withdraw one day before maturity and you'll typically lose three to six months of interest. Withdraw one day after and you pay nothing.

You can withdraw by visiting your bank branch, calling customer service, or using online banking, depending on the bank's options. The money usually appears in your linked checking account within one to three business days. If you're moving the money to a different bank, ask whether they offer a CD with a rate that beats what your current bank is offering.

Tax implications when your CD matures

The interest your CD earned is taxable income in the year it was earned, not in the year you withdraw it. If your CD matured on December 15, 2024, you owe taxes on that interest in 2024, even if you don't touch the money until 2025. The bank will send you a 1099-INT form by January 31 showing the interest paid during the year.

If your CD earned $500 in interest and you're in the 24% tax bracket, you'll owe roughly $120 in federal taxes on that interest alone. This is one reason some people choose to reinvest rather than withdraw — the money stays working for you instead of going to taxes. However, reinvesting doesn't change the tax you owe; it just delays when you'll need the cash to pay it.

Comparing your options at maturity

When your CD matures, you have three main paths. The first is to let it roll over into a new CD at your current bank — simple, but only worthwhile if the new rate is competitive. The second is to withdraw and move the money to a higher-yielding CD at another bank. The third is to withdraw and put the money into a different product entirely, like a high-yield savings account or money market account, which offer more flexibility.

Before maturity, check what other banks are offering. CD rates change constantly, and a bank offering 5.0% today might offer 4.5% at your next maturity. Shopping around takes 15 minutes and can mean hundreds of dollars in extra interest over the CD's term. Online banks and credit unions often have higher rates than large national banks.

What to do if you miss the grace period

If your CD has already rolled over and you didn't act during the grace period, you're not stuck. You can still withdraw your money without penalty — you're simply starting a new CD term. However, if you withdraw now, you'll be breaking that new CD early and will face an early-withdrawal penalty.

Call your bank and ask what the penalty is. It's usually three to six months of interest. If the new rate is significantly lower than what you could get elsewhere, paying the penalty to move your money might still make financial sense. Do the math: compare the penalty cost against how much extra interest you'd earn at a better rate over the remaining CD term.

Frequently Asked Questions

Can I withdraw my money on the maturity date without penalty?

Yes. Once your CD reaches maturity, you can withdraw your full balance without any early-withdrawal penalty. The penalty only applies if you withdraw before the maturity date. You typically have a grace period of 7 to 10 days after maturity to withdraw before the bank rolls the money into a new CD.

What if I don't want the bank's automatic renewal rate?

Contact your bank during the grace period (usually within 7 to 10 days after maturity) and request a withdrawal instead. You can then move the money to a different bank, a different CD product, or a savings account. There's no penalty for declining the automatic renewal during this window.

Do I owe taxes on my CD interest when it matures?

Yes. You owe taxes on the interest in the year it was earned, regardless of when you withdraw the money. The bank reports this on a 1099-INT form by January 31. If your CD earned $300 in interest in 2024, you owe taxes on that $300 in 2024, even if you leave the money in the CD.

What if rates have dropped by the time my CD matures?

If your bank's new rate is lower than what you had, you can withdraw and shop for a better rate elsewhere. Many online banks and credit unions offer higher rates than large national banks. Compare rates before deciding whether to accept the automatic renewal or move your money.

Can I reinvest my CD into a longer term at maturity?

Yes. When your CD matures, you can choose a different term than your original CD. You could roll a one-year CD into a five-year CD, or vice versa. Rates vary by term, so a longer CD might offer a higher rate, or a shorter one might be better if you think rates will rise soon.