Should You Renew Your CD?

From $107.88 $24.99Subscribe to KiplingerWith rate cuts impacting earnings, we examine if now is a wise time to renew CDs. When you purchase through links on our site, we may earn an affiliate commission. Here’s how it works. After you put money in a certificate of deposit, you can sit back while it collects interest over its term. Once it reaches maturity, you’ll face a decision: Renew it or withdraw the funds.Typically, you have a grace period of about seven to 10 days after a CD hits its maturity date to decide what to do. Your bank may send you a notification a few weeks before the certificate matures.When you open a CD, it’s also a good idea to put a reminder on your calendar of when the certificate is nearing the end of its term. With this in mind, we'll explain what happens if you miss your grace period, whether now is a smart time to renew with rate cuts and where to find the best CD and savings rates.Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special IssuesProfit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.Profit and prosper with the best of expert advice - straight to your e-mail.If you don’t act during the grace period, most banks will automatically reinvest the funds into a CD with the same term or a similar one, and the interest rate will typically match what the bank is offering for that maturity on new CDs.Whether you should renew depends in part on how you’d like to use the money. If you don’t need the cash now, reinvesting may make sense as part of your longer-term savings plan.Evaluate the interest rate. "Rates on top-yielding CDs are still outpacing inflation," says Ted Rossman, senior industry analyst at Bankrate. However, as the Federal Reserve lowers short-term rates — it made cuts of a quarter-point in September, October and December, with more reductions likely on the way — CD yields also fell.If you have a CD coming up for renewal soon, you may want to reinvest in a high-yield certificate, whether from the same institution or a different one, to lock in the yield before rates drop further.We’ve listed top-yielding one- and five-year CDs (check the institution’s current rates before you invest).AccountAPYMin DepositEarly Withdrawal PenaltyLimelight Bank4.05%$1,0003 months of interestColorado Federal Savings Bank3.90%$5,0003 months of interestPrime Alliance Bank3.85%$5003 months of interestMountain America Credit Union3.85%$5003 months of interestBask Bank3.85%$1,0003 months of interestAccountAPYMin. DepositSchoolsFirst Federal Credit Union4.00%$500Credit Human3.90%$500Marcus by Goldman Sachs3.90%$500MYSB Direct3.80%$500The Federal Savings Bank3.80%$5,000EFCU Financial3.75%$500Securityplus Federal Credit Union3.60%$1,000Lafayette Federal Credit Union3.56%$500You can also compare rates at depositaccounts.com/cd.If you’d rather not commit to a CD but need a place to park your cash, consider a high-yield savings account.AccountAPYMin. opening depositNewtek Bank4.35%$0Ivy Bank4.25%$2,500Bread Savings4.10%$100Jenius Bank4.05%$0My Banking Direct4.02%$500Poppy Bank4.00%$1,000BrioDirect4.00%$5,000Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.Ella Vincent is a personal finance writer who has written about credit, retirement, and employment issues. She has previously written for Motley Fool and Yahoo Finance. She enjoys going to concerts in her native Chicago and watching basketball. Kiplinger is part of Future US Inc, an international media group and leading digital publisher. Visit our corporate site. © Future US, Inc. Full 7th Floor, 130 West 42nd Street, New York, NY 10036.