A lot of people opened certificates of deposit when rates were high, and a lot of those CDs are coming due. If you have one, you’ve probably got a letter or email from your bank with a maturity date on it, and maybe a line about a “grace period.” That short window matters more than most of the CD itself, because what you do (or don’t do) during those few days decides what your money earns for the next year or longer.
Letting a CD quietly renew is the default, and it can be an expensive one, so it helps to know how maturity works and what the bank owes you in the way of notice.
What “Maturity” Means
A CD is a deal: you agree to leave your money alone for a set term, and the bank agrees to pay a fixed rate for that term. The maturity date is the day the deal ends. On that date, you can take your money and the interest it earned without paying an early withdrawal penalty.
The catch is what happens if you don’t respond. Most bank CDs are set up to renew automatically. If you do nothing, the bank rolls your balance into a new CD, usually with the same term length, at whatever rate it’s paying for that term on the renewal date. You never sign anything new. The money is simply locked up again.
The Grace Period
To give you a chance to change course, banks offer a grace period after maturity. During that window you can withdraw the money, add to it, or move it into a different term, all without a penalty. Once the window closes, the renewed CD is treated like any other, and pulling money out means paying the early withdrawal penalty.
Grace periods are short, and they vary by bank. Bankrate notes that they typically run 7 to 10 days. Wells Fargo, Chase, and Ally give you 10 days. E*TRADE from Morgan Stanley gives 7. Bank of America offers 7 days on CDs of 28 days or longer, and just one day on its shortest CDs of 7 to 27 days. One day is not a lot of time to notice a letter, compare rates, and log in.
What the Bank Has to Tell You
Federal rules say you’re supposed to get a heads-up before any of this happens. The Truth in Savings Act is carried out by Regulation DD, and its section on subsequent disclosures covers CDs that renew automatically.
For an auto-renewing CD with a term longer than one month, the bank must mail or deliver a notice at least 30 calendar days before maturity. There’s an alternative: if the CD has a grace period of at least five days, the bank can instead send the notice at least 20 calendar days before the grace period ends. The CFPB’s official interpretation gives an example. A bank with a 10-day grace period could send the notice as late as 10 days before the maturity date.
What goes in the notice depends on the term. For CDs longer than one year, the bank has to give you the full account disclosures for the new CD plus the date the current one matures. For CDs of one year or less (but longer than a month), the bank can send a shorter version: the maturity date, the new maturity date if it renews, the new rate and APY if they’re known, and any terms that will be different from your current CD.
That “if they’re known” part is important. Banks often don’t set the renewal rate until close to the maturity date. In that case, the rule only requires them to say the rate hasn’t been decided yet, tell you when it will be, and give you a phone number to call for it. So the notice may not show you the number that matters most.
CDs that don’t renew automatically get a lighter rule. If the term is longer than a year, the bank must tell you at least 10 calendar days before maturity when the CD matures and whether it will keep paying interest after that date.
Why the Default Renewal Rate Is Often a Bad Deal
The rate on your renewed CD is the bank’s current rate for that term, not necessarily its best one. Many banks advertise promotional or “special” terms, like 7 months or 13 months, at much higher rates than their standard 6-month or 12-month CDs. If your CD was opened on a special, it may renew into a plain standard term at a far lower rate.
The spread between an average CD and a competitive one is wide right now. The FDIC’s national rate for a 12-month CD was 1.76% in October 2026. Meanwhile, NerdWallet’s list of top one-year CDs, updated November 6, shows CFG Bank at 4.65% APY, with Popular Direct and NASA Federal Credit Union at 4.60%.
On a $10,000 CD, a year at 1.76% earns about $176. A year at 4.65% earns about $465. That’s close to $290 lost simply by letting the default happen at a bank that pays around the national average. And because the renewed CD comes with an early withdrawal penalty, fixing the mistake after the grace period means giving up some of that interest you’re trying to earn.
Brokered CDs Work Differently
If you bought your CD through a brokerage account, the rules of the game change. Brokered CDs typically don’t renew. At maturity, the principal and final interest land as cash in your brokerage account, where they may sit in a sweep fund or money market until you decide what to do. There’s no grace period because there’s nothing to escape from. The risk flips: instead of being locked in at a low rate, your money might sit idle earning very little until you reinvest it.
How to Handle a Maturing CD
Put the maturity date on your calendar, along with a second reminder a few weeks earlier. Bankrate suggests one alert about a month out and another on the maturity date, which lines up nicely with the 30-day notice the bank is supposed to send.
When the notice arrives, find the renewal rate. If it’s not listed, call the number in the letter. Then compare it to what other banks and credit unions are paying for the same term. Some banks, Ally among them, let you give maturity instructions ahead of time, so you can tell the bank to pay the money out to savings instead of renewing.
If you aren’t sure you want another CD at all, moving the money into a high-yield savings account during the grace period keeps it liquid while you decide. And if you’re opening a new CD somewhere else, check how long the transfer will take. With a one-day or seven-day grace period, it’s safer to request the payout to your linked checking or savings account first than to hope an outside transfer lands in time.
The grace period is the only part of a CD where you have full flexibility without paying for it. Knowing exactly how many days your bank gives you is the easiest way to make sure the next term pays what it should.
