What happens when a CD matures?

If you’ve been saving money in a certificate of deposit (CD), great job! CDs can be a safe and smart way to see your money grow, especially when interest rates are high. But CDs don’t lock your money away forever—and that’s a good thing. When your CD reaches its maturity date, you’ll need to decide what to do next with the money you’ve invested.

Do CDs automatically renew? In many cases, yes. However, you generally have to choose one of three options when CDs mature. You can:

1. Renew the full amount of the CD for the same term.
2. Renew the CD but change the amount of money invested and/or its term length.
3. Close the CD and withdraw the money.

Considerations before and at CD maturity

Your money goals

What are you saving for? Is it a short-term goal, like a vacation or a down payment on a car? Or a longer-term goal, like retirement or your child’s college fund? If you need the money sooner rather than later, you might want to renew the CD for a shorter term or close it. If your goal is further in the future, renewing for a longer term could help you earn more interest.

Your timeline for needing access to the funds

CDs are best for money you know you won’t need immediately, since most have early withdrawal penalties. If there’s a chance you’ll need the money before the CD matures, consider a shorter-term CD or a different type of account like a money market.

With Discover® non-individual retirement account (IRA) CDs, you can opt to have your interest paid out monthly to give you some access to funds during the CD’s lifetime.¹ You can also change your interest payment settings at any time.

Tip: Build a CD ladder for more flexibility: If you’re attracted to the higher interest rates CDs offer but prefer being able to access some of your money periodically, a CD ladder strategy might help.

To build a ladder, you split your money among two or more CDs with different maturity dates. For example, you could open 1-year, 2-year, and 3-year CDs at the same time. When each CD matures, you can withdraw the money if it’s needed or renew the CD to continue earning interest. This gives you the option to access some of your money periodically while keeping the rest saved at higher interest rates.

How CDs compare to other savings options

CDs typically offer fixed interest rates—unlike the variable rates offered by most traditional savings, checking, and money market accounts. In exchange for this fixed rate, you agree to leave your money in the CD for the full term.

Savings and money market accounts allow you to withdraw money at any time, but their interest rates are not guaranteed. However, CDs may offer a higher interest rate than these other types of accounts. Consider comparing rates across different types of savings products, and keep in mind that different CD terms may have different rates.

It’s also worth comparing CDs to other investment options like stocks or bonds. With CDs, you know exactly how much interest you’ll earn, and your principal is protected up to Federal Deposit Insurance Corporation (FDIC) limits.

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Investments like stocks have the potential for higher returns but a greater risk of losing money. Diversification across asset classes is often a smart decision—but the right way to allocate your savings and investments will depend on your risk tolerance and time horizon.

With these considerations in mind, determine what works best for you. Keep in mind that the renewal policies below are specific to Discover non-IRA CDs. Other banks might handle renewals differently, so check your bank’s specific policies.

Option 1: Renew the full amount of the CD for the same term

If you do nothing when your CD matures, Discover will automatically renew it for you after a 9-day grace period. The new CD will have the same term as the old one. So if your CD was for 1 year, the new one will also be for a 1-year term.

The interest rate on the new CD will reflect Discover’s current rate for that term on the day the CD matures. This rate might be higher or lower than the rate you had before. If you want to simply renew the CD for the same amount of money and length of time, you don’t have to actively do anything.

However, if you’d like provide instructions online or via the mobile app, you can do so starting 30 days before the maturity date and your CD will be renewed on the maturity date. Please note that if you contact Discover via phone or through the Secure Message Center to renew your CD for the same amount and term, the agent will simply allow the CD to auto-renew as scheduled. 

Remember, the new interest rate is not locked in until the maturity date of the CD you had previously, even if you give instructions before that time. Your new rate will reflect what’s available on the day the CD matures for your selected term.

Option 2: Renew the CD but change the amount of money invested and/or its term length

You can choose to renew your CD but make changes by updating the amount of money you put in and/or the length of the new term. For example, you could add more money to the CD to help it grow faster. Or you could select a different term that offers a higher interest rate.

To update your CD terms, you can provide Discover with instructions starting 30 days before the CD’s maturity date. You also can make changes during a grace period of up to 9 days after the maturity date. If you give instructions before the CD matures, Discover will make the changes on the maturity date, and the CD maturity grace period will no longer apply.

To set renewal instructions for your CD on the Discover mobile app:

1. Log in and select your CD.
2. Tap View Account Details at the bottom.
3. Select Maturity Instructions, then Modify and Renew.
4. Follow the steps to make changes.

To set your renewal instructions online:

1. Log in to the Discover banking website and select your CD.
2. Click Account Settings, then Edit next to Maturity Instructions.
3. Follow the steps to make changes.

You can also add or receive funds online via an internal transfer (between Discover accounts) or an ACH transfer from a linked external account. If you want to add to or take money from the CD by check or wire transfer, contact Discover by phone or secure message.

Option 3: Close the CD and withdraw the money

When your CD matures, you can choose to close it and withdraw all of the funds.

In order to cash out a CD at maturity, contact Discover by phone or secure message. Tell us that you want to close your CD and specify how you want to withdraw the money. There are several options for how to withdraw money from a CD account. You can transfer it to another eligible Discover deposit account or linked external account. You can also get your money sent to you by check or wire transfer.

Penalty for early CD withdrawal

Can you close a CD early? Technically, yes. But if you close a CD before its maturity date, you’ll probably pay a penalty. So it’s best to wait until the CD matures to close it—unless you really need the money sooner.

Tip: If you close your Discover CD before its maturity date, you may face an early withdrawal penalty. Discover’s CD early withdrawal penalty structure is as follows (see the account agreement for more details)²:

• For CDs with terms of less than 1 year: 3 months’ simple interest
• For CDs with terms of 1 year to less than 4 years: 6 months’ simple interest
• For CDs with terms of 4 years to less than 5 years: 9 months’ simple interest
• For CDs with terms of 5 years to less than 7 years: 18 months’ simple interest
• For CDs with terms of 7 years to 10 years: 24 months’ simple interest

Why choose Discover for your CDs?

Discover is a great place to open CDs for a few reasons:

• We offer a wide range of CD terms to choose from, including IRA CDs. This means you can find a CD that fits your money goals and timeline.
• We have competitive interest rates on our CDs. Having a better interest rate helps your money grow faster.
• We keep your money safe. Discover CDs are FDIC-insured up to $250,000 per depositor, per deposit ownership category.
• There are no fees to open a Discover CD.³

Remember, you worked hard to save this money! Make sure it keeps working hard for you. With a Discover CD, you’ve got a safe place for your money to grow until you need it.

Ready to open a new CD or renew an existing one? Visit Discover’s website or log into your account to get started today.

¹ This interest arrangement is specific to Non-IRA CDs. If the interest payment has already posted to the account, there are no penalties if interest funds are withdrawn.

² Beginning on the 8th day after your CD is opened and funded—and for the next 22 calendar days—we will deduct each day’s simple interest on the issue amount withdrawn from the funding date to the date of withdrawal. Thereafter, the Early Withdrawal Penalty will be calculated as described above. See the account agreement for more details.

³ A penalty may be charged for early withdrawal from a CD.

There is no minimum deposit required to open a Discover CD. You have 45 days after opening the CD to fund the account.

The APY will be determined and fixed for entire IRA CD term once account is opened and correctly completed documentation and funding is received. We will send you written confirmation of the interest rate, APY and maturity date of your IRA CD after it is opened or funded. Applies to personal accounts only. A penalty may be charged for early withdrawal. No minimum deposit required to open an account. The account must be funded within 60 days of account opening. Consult a financial advisor or tax professional for guidance.

Articles may contain information from third parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third party or information.

The information provided herein is for informational purposes only and is not intended to be construed as professional advice. Nothing contained in this article shall give rise to, or be construed to give rise to, any obligation or liability whatsoever on the part of Discover Bank or its affiliates.